Ayrshire milk. Or the convenient salads, especially if one is in a hurry. Have you tried the chicken and avo on sourdough bread? Yum. Stay away from the vanilla fudge. What is your favourite?
But is Woolies really more expensive than the rest? These days one is forced to be price conscious. The eyes are like radars looking for ‘special offers’ and I must say, here and there you do find something that is reduced. Retailers have obviously developed it into a fine art to tweak prices in a way that makes you think that you’re winning. And why should they not? That is the science of the business. That is why not everyone can jump up and open a Spar, PnP, Shoprite-Checkers etc.
I used to have a lecturer that insisted that inflation is behaviour driven. His argument went something like this: The fuel prices goes up, say by 10%. The manufacturer now pushes up his price accordingly. This works its way to the retailer who simply passes it on to the consumer. You and me. So that tin of Milo is now R45 (R39 on special). He further argued that we should as a collective simply refuse to buy the Milo (sorry Nestlé) at that price. We should agree that say R35 is the right price and not buy it at R45. Over time the price will begin to gravitate towards the R35. If we are stubborn enough we will hold out until they’re left with no option but to put it on the shelves for the reduced price of R35 – at which time we put it in the basket again. I quite like his idea.
But here’s the problem: over time, and more so in good times, we gradually up our standard of living. We become more brand conscious and don’t really mind when our preferred product increases on a monthly basis by R2. We don’t care, because that’s us, only that product hits the spot. And all the while someone is sitting there checking what impact the increase in price has to the quantities. Maybe they push, check, push, check again until they can see that doubt is beginning to creep in to the consumer’s mind. Then they keep it there for a while. And so they play these games with us and get away with it. Or am I oversimplifying it?
Talking of Woolies, I really think they must have changed their business strategy at some stage. There was a time when Woolies was more expensive than the rest. But at some point the internal conversation changed to something like: we can take market share from our competitors. They have already established the brand in the hearts and minds of people as ‘quality’ and people value it immensely. People love to hear about their organic farm project in the Karoo. It resonates so powerfully with them. No, these guys are very smart- you have to give it to them.
I personally think Woolies can drop their prices even more and still make huge profits. The more they do the more people will perceive it as greater value for money. Because while I still have the physical ability to walk into a Woolies shop, I target only certain products. And I’d like to think that other discerning (price-tracking) consumers do the same. And while they would not worry too much about the loss of revenue because of my changed habits, it’s the principle really. But the reality is that going to PnP, Spar or Shoprite-Checkers does not necessarily mean that you will save.
I remember a time when I was deeply concerned that the price of petrol was getting dangerously close to R9; whereas now we’re well on our way to R15 a litre. It’s sound blasphemous but if we follow the trend on the graph then at some stage it should (let’s hope it does not, but!) get there.
So shopping at Woolies is not about trying to keep up with the Joneses for me personally. I would rather pay R12 for a product that went through a stricter quality control than pay R10 for another which did not. There’s nothing elitist about it. Analysis of till print-outs or camera footage for the last 4-5 years will reveal that only certain products fell within my range anyway. What one would like to see is that one of these major players unleashes a price war and drops their prices across the board. (Wishful thinking?) But let’s say for a moment one does it, then the others will be forced to respond. And actually, it’s not that far-fetched. Where they used to make R2.75 on a product they may make only R1.50 but they will push more volumes. Something like this: R 2.75 x 10 = R 27.50 but R 1.50 x 30 = R45. And R45 > R27.50?
Maybe someone in this industry can enlighten me?
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