Aldi, Costco drive down grocery prices in Western Australia

AldiInternational grocery giants Aldi and Costco are driving down fruit and veg prices in Western Australia at a faster rate than anywhere else in the country, according to new research.

Analysis conducted by Bankwest has found that Perth shoppers spent 6.9 per cent less on fruit and veg in the year to September 2017 than the previous year, signalling a step up in competitive intensity among Australia’s major supermarkets as discounters increase their investment in the state.

Overall food and non-alcoholic beverage prices declined by one per cent in the twelve-month period, 0.3 per cent higher than the nationwide average decline of 0.7 per cent.

Over the last three years prices have declined by 1.4 per cent in Perth, with average grocery basket price declining by 5.1 per cent from $177.7 to $168.6 in the year to June 2016.

Richard Bator, Bankwest’s general manager of business banking in WA, said that discounters are rapidly growing their market share out west.

“The supermarkets industry is now one of the most fiercely competitive industries in the nation due to the rapid growth of international retailers competing for a share of the $100 billion industry.”

German entrant Aldi began its expansion into Western Australia in 2016 and has been investing heavily in the market, while American giant Costco unveiled plans for two Perth locations by the end  of 2019 in March.

In the year to June 2016 the average price of a grocery basket in Western Australia declined by 5.1 per cent  from $177.7 to $168.6 – prices have declined 1.4 per cent over the last three years.

Smaller retailers have been adversely impacted by the increase in competition, particularly as Coles and Woolworths move to improve their fresh offers to shore up their own operations.

Bankwest found that the number of grocery retailers employing less than 20 staff fell by 10.6 per cent in the year to June 2016.

The story is more positive for the overall market, Bankwest said, which is projected to grow by 9.3 per cent in the five years to June 2022.

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