Supermarket blames energy for upcoming price hike

One year into the top job at Woolworths, chief executive Brad Banducci is coming to the realisation that the comfortable “duopoly” that Woolies has shared with competitor Coles has come to an end.

For a long time, the two supermarket giants traded customers and products but enjoyed being the two biggest shops in Australia.  However, in recent years as other organisations like Aldi have eaten into their market share they have started to feel the pressure.  With the anticipated debut of the worldwide shopping juggernaut, Amazon expected to land in Australia this year competition for your shopping dollar has never been bigger.

Now, Mr Banducci is saying that you can expect the prices to rise at your local Woolies because of growing energy prices.  Talking to The Sydney Morning Herald Mr Danduuci said, “We manage what we can manage with energy efficiency. But given the cost increases that are coming through right now, we are trying to outrun a bear, but I am not sure we can”.  He continued, “We will have to in some way, very cautiously and carefully, pass those through to our customers, unfortunately.”

Mr Banducci also says that Woolies will need to reduce the number of products that are on special while increasing the price on everyday products such as bread.  Right behind labour and rent, energy is their biggest expense and just like Woolies customers they too are feeling the pinch from increasing energy costs.

What do you think of what Woolies is going to do?  Do you think it’s understandable or an excuse to raise profits?