Tuesdata: How the supermarkets stack up in a cost of living crisis

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Did you know that we are in the midst of a cost of living crisis? It’s been hard to avoid the media headlines around the current economic environment.

When it comes to the general population, there are few areas where a cost of living crisis will hit general consumers more than groceries. 

According to a recent report from Canstar Blue, the average Australian household spends $152 per week on groceries. That differs from state to state, of course, with Tasmanians (sorry Tim Burrowes) paying the most at $160 per week and Western Australians paying the least, at $143. 

Residents of the most heavily populated state, NSW, sit somewhere in the middle at $151 per week on average. 

A recent UBS analysis revealed that in the last three months from June, the price of groceries had risen 5.3 percent at Coles and Woolworths. The report suggested that rises will continue as the year progresses. 

And if the Canstar Blue statistics are correct, don’t look to Aldi for relief. The average weekly grocery bill of an Aldi shopper was the highest, at $157, ahead of Coles, Woolworths and IGA, the latter somewhat surprisingly coming out with the lowest average. 

Despite this, the supermarkets have come up as winners in the trust stakes. Recent Roy Morgan research placed Coles, Woolworths and Aldi all in the top five most trusted brands in Australia. 

This week we’ll be looking at satisfaction levels amongst the main supermarket players – Coles, Woolworths, IGA and Aldi, based on data from the YouGov BrandIndex. We will also compare that year on year and take a look at the marketing strategies that have been put into play over the last year.

A brand can technically score as high as 100, although a good score is generally anything in positive territory, with some brands (not on this list) falling into negative territory. The YouGov data backs up the trust data with all supermarket brands well into positive territory.

Like the average weekly cost at the different supermarkets above however, the results are somewhat surprising. Savings don’t always equal satisfaction.

The supermarket satisfaction wars 

Aldi

2022: 79.6 / 2021: 82

Aldi’s communications has recently focused on its ‘Good. Different’ proposition while pushing its reputation for savings with slogans like ‘Aldi Super Savers’ and ‘Switch and Save’.

The irony however is that the same business that delivered Aldi an overall five star rating for customer satisfaction (Canstar Blue), also labelled it as currently the most expensive of the supermarkets on this list. 

The most obvious conclusion is that customers are so satisfied with Aldi that they are willing to forgive its price rises that take it beyond Coles and Woolworths. For now, anyway. 

Aldi’s most recent marketing campaign from BMF focuses on its special buys found in the middle aisles of the supermarket. It steers clear of any mention of discounting. 

While its satisfaction rating has dropped from its peak, it gained significantly in the middle of the year as the economic environment became more perilous for the consumer. It was the only brand to register a score above 85 at any stage this year and has a clear lead on its competitors.

Coles

2022: 73.4 / 2021: 71

The battle with Woolworths has never been so intense, and that shows as well with the YouGov BrandIndex ratings. 

2022 has been a year of upheaval for the brand. In March this year it went to pitch as it looked to introduce a new agency model for the business. Around the same time it started investing heavily in its retail media arm, Coles Media, hiring Nine’s Paul Brooks to head up the charge. 

Coincidentally, it was just before this period that Coles took its biggest satisfaction hit. January to March saw it fall around 10 points and go from being slightly ahead of Woolworths to trailing its direct competitor. 

It was a position it remained in until the June period where it again swapped with Woolworths before another slump. 

Since July, however, it has overhauled the fresh food people and remains narrowly ahead. 

Its most recent play would have done it no harm, directly addressing the cost of living crisis by partnering with News Corp to offer its readers a month of various discounts. 

IGA

2022: 56.6 / 2021: 63.9

Statistically the Independent Grocers of Australia (IGA) has the most work to do when it comes to customer satisfaction, somewhat ironic considering that it prides itself on its community-focused strategy.

Its latest work focusing on this very strategy was announced to the market just yesterday. 

The work is still fronted by personable actor and comedian Shane Jacobson, although the previous work clearly hasn’t impacted the satisfaction ratings. 

2021 saw the gap between IGA and the rest heighten significantly in H1 before closing up just after the middle of the year and then taking another big dive. 

While its competitors were playing above the 70 mark, IGA was down around 55.

This year saw it make gains in H1, even briefly overtaking Coles to be number three in March. But that was followed by another dip and a return to the circa 55 mark before another shot at closing the gap recently.

While it increased its score, so have the rest. Although year on year, the margin is a lot smaller than it was before. 

It has to be noted though that IGA works more as a collective of different small businesses as opposed to one larger business like Coles or Woolworths, meaning that the customer experience from one IGA to the next could potentially differ greatly.

Woolworths

2022: 74.5 / 2021: 70.7

While close competitor Coles has been in the headline wars and making significant changes to its marketing and communications strategy, there has been no such challenge for Woollies. 

That said, its customer satisfaction has been more variable this year by comparison to the same period last year. 

2021 saw it head Coles for the vast majority of the year, while 2022 has seen more of a close fought race. A race at times that it has been losing. 

It has made some marketing moves which may have swung things slightly. The launch of the sustainable Disney Fix-ems as a bonus for shoppers roughly coincided with an uptick in customer satisfaction that allowed it to catch back up to Coles. 

Currently Coles and Woolworths are almost tied for satisfaction and both have recently just completed a collectibles run. Coles finished up its sustainable Harry Potter collectables around the same time Woollies ended its Fix-ems campaign.

Knowing that the results of Coles’ strategy shift will be seen soon will have Woolworths and its associated agencies working hard on the next play.

Subdued performance on a subdued day

The market played second fiddle to what has potentially become the most watched TV event in history with the funeral of Queen Elizabeth II taking all the headlines on Monday.

Not that much happened with all Unmade Index businesses shedding value aside from HT&E and Enero. 

Seven West Media’s 2.22 percent fall sees its market cap back under $700m by a narrow margin. HT&E meanwhile gained 2.29 percent.

Having inched close to the 700 point mark again, the Index now sits at 688.9.

Southbound 

Time to let you get on with your Tuesday and perhaps some thoughts about your next trip to the supermarket.

Tomorrow I’m heading to Melbourne to work on an upcoming event for Unmade. Stay tuned for more details on that. If you’re in Melbourne you will want to be part of it. 

I’ll be flying Rex for the first time on my way back. I look forward to giving it my own customer satisfaction rating. 

Stay safe,

Damian

damian@unmade.media