«It’s also becoming increasingly important for customers to not only feel like they’re getting a good deal, but [that] they can trust the price that retailers are putting in front of them. We often see that price trust is consistently one of the key metrics of store choice.»
While customers are always looking for specials … it is only a great deal for that individual week.
Woolworths director of buying Peter McNamara
Mr McNamara said instead of breeding loyalty, weekly specials were «eroding trust» in the supermarket chain.
«While customers are always looking for specials, and we see them being a part of our business for a very long time, it is only a great deal for that individual week.
«Over the last two years in our grocery area, we’ve actually reduced our promotion intensity by 17 per cent. It’s higher than I’d want it to be, but it’s much lower than it was a couple of years ago.»
In lieu of the weekly price markdowns, Woolworths is committed to expanding its permanent discounting through the ‘prices dropped’ and ‘low price always’ stickers on shelves.
Mr McNamara said the supermarket hoped these programs would help «the customer transition from a reliance on yellow specials to a more fairer, consistent model».
«We don’t have a set target, there’s no ambition to get to a [certain] percentage, but building price trust is a key strategy for us,» he said.
In February, Woolworths reported half-year earnings growth of 4 per cent from its supermarkets, which offset softer results from its bottle shops and the struggling Big W chain as consumers reduced discretionary spending.
Woolworths’ position follows Coles initiating a similar review of its promotional strategy.
Coles acknowledged on Tuesday it spent a decade trying to move from an «over-reliance» on discounts instead of lower prices across the board.
Meanwhile, Woolworths is continuing to expand its plan to localise its range by providing different products at different stores to meet local demands.
One example was the growing trend towards eating healthier, said Woolworths’ director of fresh, Paul Harker.
«It’s not all quinoa and it’s not all plant-based, it’s also providing healthier alternatives to the things people want without necessarily being truly healthy.»
While quinoa and superfoods might appeal to some shoppers, «in some communities it’s helping them take sugar out of their diets while they’re still eating a lot of food and drink that they’re accustomed to,» Mr Harker said.
Woolworths shares closed down 0.3 per cent to $31.49.
Josh Dye is a news reporter with The Sydney Morning Herald.