Woolworths vs Coles: Which supermarket is cheaper?

Whether it's a dash to the local store or a regular expedition to the vast aisles of a major supermarket, buying food is one of life's certainties.

But grocery shopping as we know it is about change.

First, on the horizon is pressure to lower prices, with major chains, Coles and Woolworths, called before a Senate inquiry into price gouging and profiteering (due to wrap up in May) and an investigation into the effectiveness of the Food and Grocery Code of Conduct underway.

This comes after data from the Australian Bureau of Statistics showed shoppers spent $10.8 billion in supermarkets and grocers in October 2021 (around $420 a person), but as of October 2023 that number had increased to $11.9 billion ($445 each).

Then there's all the new subscription-based players that offer product-specific home deliveries that undermine the tradition of single-supermarket loyalty.

Perhaps the biggest change, though, is the raft of technological advances set to revolutionise the very nature of shopping.

As Sarah Megginson, personal finance expert at Finder, says, an increased appetite for convenience has fast-tracked a revolution in grocery shopping.

"Just five years ago, our options were pretty much limited to shopping in-store with a traditional checkout. But now you can do your shopping  and check it out yourself, and in some stores you can scan your items and check them out as you move through the store.

"You can also do an online shop from a supermarket or instant grocery delivery service like Milkrun [owned by Woolies] or Uber Eats, or have it delivered direct to your boot at a store pick-up point."

Is Woolworths or Coles bigger?

Traditionally Australia's two major chains, Coles and Woolworths, have dominated the market.

Together they operate almost 2000 stores across the country and are estimated to have a market share in the 65%-70% range. But there's a battle going on with rival supermarkets trying to grab larger portions of this market for themselves.

Since launching in 2001, the German discounter Aldi has established itself as the third largest player in Australia with 591 stores and 10% of the market share, while US retail giant Costco has rolled out 15 stores since coming to Australia in 2009.

Then there's Metcash (which supplies its network of around 1600 IGA, Foodland and Friendly Grocer stores), Harris Farm Markets and regional players such as Drakes Supermarkets.

Are Woolworths and Coles losing market share to online retailers?

Coles and Woolworths are also being challenged by major online retailers, such as Amazon, which are appealing to customers seeking better value, especially on non-perishable goods.

A survey by the investment bank UBS revealed that while most Australians who shop for groceries online do so primarily with Woolworths (44.7%) or Coles (28.8%), both have lost online market share since the pandemic.

Meanwhile, online retailers Amazon (9.4%) and Catch (4.1%) have increased their share of the online grocery pie in recent years.

Other shoppers are gravitating towards businesses such as Who Gives A Crap (toilet paper and tissues) and Zero Co (cleaning and body care products) that not only provide the convenience of online ordering but offer products that appeal to the environmental or sustainability values of their customers.

Which supermarket is the cheapest?

All the traditional and emerging options give grocery shoppers more choice which, Megginson believes, is ultimately a good thing for our wallets.

"It's almost always in your best interest to shop around and compare. In September, we did a price analysis between Aldi, Coles and Woolies on a basket of 46 items and no surprises that Aldi came out about 7% cheaper than Woolies and Coles, which were very similar.

"But it depends on your lifestyle and the benefit you'll get from it. I've got one friend who, every Thursday, will look at her list and go through Coles, Woolies and Aldi and do a shop at each of them. She reckons she saves about $40 a week doing it that way, which is about $2000 over the year."

And while there's nothing wrong with sticking to the one supermarket - whether out of choice or necessity - it's worth appreciating the tricks that supermarkets employ to keep your loyalty.

"Supermarkets are very keen to get your business and keep it, and there's a whole bunch of psychology that goes into that to keep you engaged and shopping with them," says Megginson.

"One example is both Coles and Woolies do rewards offers where, if you spend a certain amount every week for four weeks, you'll get a discount off your next shop. That's great if you're already going to spend that money, but for some people it will be an incentive in the back of their mind to spend more."

Does it cost more to buy groceries online?

Whereas many Australians have been shopping online for clothes for years, the uptake in online grocery shopping didn't really kick off until the onset of the pandemic, when many people either couldn't, or didn't want to, venture into a supermarket.

The benefits are pretty straightforward. For some, it's simply more convenient to jump online, plug in their grocery list, choose a delivery day and window and then wait for their groceries to arrive at their door.

Despite this, the number of people who do most of their grocery shopping online appears to be relatively small, according to 2022 data from market researcher Appinio.

Only 1.7% of Australians reported doing their entire grocery shop online, while 11.5% said they shopped mainly online and a further 34.7% did a mix of online and in-store shopping. More than half (52.1%) said they only shopped in a physical store.

So why the reluctance to get onboard with online supermarket shopping?

Online grocery shopping isn't without its drawbacks. The first is the extra cost for delivery or shipping, though some may argue that delivery fees are a small price to pay for convenience and petrol savings.

Looking at Coles and Woolworths, delivery fees range from $2 to $15 depending on how quickly you need your groceries and the time of day you want them delivered. Delivery is free at Coles with purchases of $250 or more.

For super-fast deliveries, Coles and Woolworths charge higher fees than instant grocery delivery services, such as Uber Eats and Milkrun, but it's worth remembering that the instant delivery services add a price premium to each item you purchase.

What are the downsides of online delivery?

Another dilemma faced by online grocery shoppers is the quality of the produce.

"I've found buying fruit and veg online is tricky and you often end up getting green bananas, limp lettuce or avocados that are still a week away from being ripe," says Megginson. "That's the problem with not being there to pick fruit and veg in person, in store."

Then there's the issue of stock shortages.

During the online selection process, shoppers can elect to have an out-of-stock item substituted by a similar product from another brand, though this won't always be a perfect match.

The other option is to tick the 'no substitutes' box, but you're likely to receive a notification that several of the items you ordered are out of stock, leaving you short.

Whether it's an item that doesn't match, is damaged or is missing altogether, online consumers are entitled to their rights.

According to the Australian Competition and Consumer Commission, "online businesses have the same responsibilities to consumers as physical businesses", which means you may be entitled to a refund if the item is damaged or not what you ordered.

How much does online delivery cost?

How can you beat supermarkets at their own game?

• Shop on a full stomach: Bread and milk and other essentials are often placed at the back of the store to increase the odds that you'll be tempted to add pricey convenience and junk foods to your trolley along the way. Instead, head straight to the essentials and fill your trolley with these first. To help you resist the tempting convenience foods placed in your path, only shop on a full stomach.

• Pay attention to trolley size: Avoid the over-sized trolleys unless you think you really need one and pick up a basket, or one of the smaller trolleys on offer. You'll be less likely to 'fill 'er up' to the brim with non-essential, costly items.

• Keep an eye out for product placement: Brands pay more to have their products placed at eye level on the middle shelves so you spot them first. A similar strategy applies to how products are displayed online. Instead check the top and bottom shelves first, where you're more likely to find better value items.

• Recognise price anchoring: Supermarkets use this strategy to establish a price point in a shopper's mind. Placing more expensive items next to cheaper ones has the effect of making the expensive item look like a better quality product even if it's not, and the cheaper item look like a better deal to bargain hunters when it's not. Keep this in mind when shopping and get into the habit of looking around more before deciding on a product.

• Don't be fooled by supermarket meal ideas: Supermarkets tend to group the makings of a meal 'for your convenience' to encourage you to buy pricier items. Instead, plan your meals before shopping and you'll be less likely to reach for products you wouldn't normally buy.

What does the future hold for supermarkets and shoppers?

From the emergence of self-serve checkouts to the arrival of new players, the grocery landscape has already been transformed in recent years, but there's more to come.

Here are some of the trends that are tipped to grow in the coming years.

• Online shopping: Unsurprisingly, it is expected to grow as more people become hybrid or omni-channel (as it's now called) shoppers. And online deliveries could be made even faster and more frequently in the future by driverless vans or drones.

• In-store experiences: If online shopping does become the norm, will that change the function of physical supermarkets? A report on the future of shopping published by PwC envisages a world in which grocery stores focus more on produce, premium items and in-store experiences such as cooking classes and even virtual reality-enabled demonstrations.

• Checkout-less shopping: Amazon Go stores arguably popularised the move towards checkout-less shopping in the US, but closer to home Woolworths has started to adopt the same model with Scan&Go. Shoppers use an app on their phones to scan items as they move through the store, then once they finish, they pay in the app and walk out.

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