👉 Background: Woolworths is one of Australia’s Big Two supermarket giants in Australia. In fact, together with Coles, they control around 73% of Australia’s $100 billion grocery sector. But Woolies has had a rough PR run over the past couple of years:

• CEO missteps
• ASIC probes
• Aussie customers' changing preferences with their main supermarket

‍👉 What happened: Now, Woolworths' CEO has announced plans to cut prices across nearly 400 products at an average of 10% reduction. And, the Woolies CEO says it’s all about “rebuilding trust” (code word for trying-to-recover-lost-market-share).

👉 What else: The plan is to invest over $100 million in this pricing shift. And, like Coles has done already, the focus is on deeper but fewer discounts… in particular on the “Known Value Items”.

What's the key learning?

💡Known Value Items (aka KVIs) are products that consumers purchase often and are highly price-sensitive to. Think: milk, bread, pasta, eggs. Pretty much all the products that politicians get quizzed about… and often get wrong.

💡Research by Bain shows that shoppers don’t remember every special they see, but they do remember the price of milk, bread and pasta. So if a supermarket nails the price of KVIs, customers assume everything is cheap.

💡By cutting prices, Woolies is hoping that it will change how shoppers view their brand long-term — especially when Aussies' preferences for Woolies as their main supermarket declined to just 37% from 44% pre-pandemic.