ALDI and Costco are saving you money, even if you don’t shop there

Even if you don’t shop at ALDI or Costco, the two grocery giants are still helping to save you money at the supermarket checkout, research shows.

According to analysis conducted by Bankwest, just the presence of ALDI and Costco stores in a local area is enough to drive down the cost of fruits and vegetables for all shoppers, with other supermarkets forced to cut prices in light of the competition.

The research found the trend to be most prevalent in Western Australia, with shoppers in Perth spending 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 the discount grocery chains increase their investment in the state.

Overall food and non-alcoholic beverage prices declined by one per cent over the 12 month period, 0.3 per cent higher than the nationwide average decline of 0.7 per cent, according to Bankwest.

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

The drop coincides with German grocery giant ALDI’s expansion into Western Australia in 2016, while American giant Costco recently unveiled plans for two Perth locations by the end of 2019.

Richard Bator, Bankwest’s general manager of business banking in WA, said that ALDI and Costco are set to 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,” he said.

However, the research also found that some smaller retailers have been adversely impacted by the increase in competition. It found that the number of grocery retailers employing fewer 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.

Shoppers on the move – but convenience is still key

Canstar Blue’s latest survey of supermarket shoppers found that just four out of ten (39%) do all their grocery shopping at the same chain, while 28% said they have started using a different supermarket in the last year.

Of those shoppers that have switched supermarkets, saving money was the most commonly-reported reason for doing so, ahead of the convenience of shopping at the new store. However, one in five survey respondents said they switched supermarkets in search of better quality products.

Of those consumers that have not switched supermarkets over the last year, convenience was the most significant factor behind their loyalty, followed by the familiarity of knowing where everything is at their current store.

About one in four respondents also cited rewards points as a factor behind their loyalty, while just 24% said it’s because their supermarket has the best products and just 28% said it’s because their supermarket is the cheapest.

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