We're constantly bombarded with advertising for supermarket specials, but is any one chain consistently cheaper than the others? A new investigation by consumer advocate CHOICE suggests not — and highlights again how much more we pay for brand-name goods rather than house brand alternatives.
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CHOICE examined the cost of a basket of 31 items at Coles, Woolworths, ALDI and IGA at 93 supermarkets across Australia. (Major supermarket chains generally claim to have consistent pricing across each state, but there are often variations between the eastern states and those further west.) CHOICE noted prices for both major brands and the house brand equivalents.
The big conclusion CHOICE reached was unsurprising, and is one we've highlighted many times before: you'll save a lot of money if you choose to purchase house brand goods rather than the nationally famous brands. The average price for its basket of goods in Coles ($174.97) and Woolworths ($176.77) was much higher than in ALDI ($87.68). To a large extent, that reflects the fact that ALDI generally only stocks its own brands, except in a handful of cases (Vegemite, Coke and a few others).
The difference was still apparent — though much less marked — if the same basket used the house brand items in all three stores. In that case, the Woolworths basket added up to $119.40, the Coles basket to $114.24 and the ALDI basket (again) to $87.68.
What lessons can we learn from this? Firstly, it's always worth checking out house brands to see if they meet your needs. There are no absolute rules here: some will be fine, and some won't be. Even if you're incorporating other principles, such as only buying Australian-made goods, there are still house brand options in many categories.
Secondly, the price difference between the major full-service chains isn't huge — only $1.80 between the Coles and Woolworths baskets when filled with "brand name" products. Given that specials oscillate between supermarket chains on a regular basis, it's a reasonable assumption that if the survey had been conducted two weeks later, the difference might have fallen the other way.
This point is evident in the following table, which shows the average price of a basket from Woolworths and Coles in each state with specials included, and with specials ignored. This also reminds us that prices vary across states, though not by a really massive amount. (CHOICE's research focused on populated locations where there were competitor supermarkets operating; I'm sure prices are much higher in rural areas with just a single operator and higher freight costs.)
Supermarkets monitor prices at their rivals keenly and match pricing on most goods, both at the cheap and expensive end of the scale. That phenomenon also suggests, as we've discussed recently, that ALDI may be better off sticking to its no-frills roots than trying to compete in this space.
We've not said much about IGA here, but the reality is that as an independent alliance of stores, its products are almost always more expensive. IGA often operates in areas where Woolworths and Coles don't believe they can be profitable, and its pricing reflects that.
The bottom line? The rules for sensible supermarket shopping don't change. Hunt down good specials on items you like, identify products where you're happy with the house brand alternative, and monitor prices carefully. That works no matter which chain you end up using.
Lifehacker's Loaded column looks at better ways to manage (and stop worrying about) your money.