Who's coming out on top - Coles or Woolies?

It’s official, the cheapest place to shop between Coles and Woolies is Coles, by as much as $400 a year – which is quite a bit in grocery terms.

This week the Macquarie Bank has released its MICAWBER report, which basically compares the cost of two shopping baskets, one from Coles and the other Woolies. Coles came out on top for being the cheapest by approx 3.5% on a weighted basis.

It’s an eye-opening report that shows the importance of having a sound and focused strategy in business, and especially in grocery.

So what does this mean for Woolies?

Supermarket wars have certainly been a hot topic in 2015, and with Christmas fast approaching the battle has never been greater.  With the expansion and success of Aldi, both Coles and Woolies have had to come out guns blazing with key messages for their customers around quality, service and price.

But what we’re actually seeing is a smarter war being played out by some of the players. Coles have the upper hand strategically because their approach demonstrates a better understanding of their competitors and the market they’re in.

The report states that “Fresh is the primary driver of the price differential, which includes fruit, vegetables, meat and dairy related categories.” Coles have understood and focused in on what differentiates them from Aldi, with an understanding that many Australians still buy their ‘fresh’ food from them and more of their staples from Aldi. Rather than fight it, they have embraced their differences and focused on ‘Fresh’

Coles ‘Prices are down’ campaign focuses on fresh and has resonated much better with its audience than Woolies ‘Cheap Cheap’ campaign which misses the mark by focusing on everyday goods.

Whichever way we look at it Woolies just seems like they are fighting a losing battle. The question is how strong are they and what new tactics and strategies will their commanding officer bring in 2016? They need to be more strategic, more focused on specific differentiators and play to their strengths. ‘Everyday Low Prices’ should be a given, not something new and worthy of a big media spend.

Whatever the game plan, Woolies needs to reassess and come back fighting if they are to make any headway. We all know that sometimes you have to lose a few battles to win the war. Bring on the new year, I say.