👉 Background: Woolworths is Australia’s largest supermarket chain with nearly 37% of the grocery market. In fact, Woolies has over 1,100 stores across Australia — that's more stores than Maccas!

‍👉 What happened: While Woolies has been steadily increasing their grocery prices over the last year, March was a totally different story — Woolies cut their prices in March significantly, according to JP Morgan. The goal has been to bring the grocery price gap with Aldi to the lowest point in two years.

‍👉 What else: The timing is suspiciously convenient - especially since Woolies and Coles are under pressure from the ACCC’s investigation. On top of this, politicians are in full “crackdown-on-greedy-corporates” mode ahead of the election. In particular, Woolies and Coles are fearful that they may face new price-gouging legislation.

‍

‍What's the key learning?

‍

‍💡Supermarkets know the biggest threat to their empire isn’t reducing their margins on toilet paper, it’s tighter regulation. And right now, Woolies’ and Coles’ biggest fear is any legislation that will stop them from growing market share and growing profit margin.

💡Right now, there are a number of laws in place to protect consumers:

• Laws that stop price fixing between supermarkets
• Laws that stop predatory pricing to wipe out smaller competitors
• Laws to stop misleading price signage
  

But there’s no law stopping a supermarket from just jacking up prices to make more profit, which the government is calling ‘price gouging’.

💡As part of this election campaign, there have been suggestions that price gouging might become illegal too. So, it’s no surprise that as these threats come in, Woolies and Coles are dropping prices - making them only 7.8% and 8.5% more expensive than Aldi compared to 11%+ just last year.