Woolies cuts prices

Johannesburg - As Pick n Pay tackles its suppliers on why food prices have not been lowered, Woolworths has cut prices on 245 lines.

The retailer said the new pricings would kick in on Monday February 9 2009.

Woolworths said prices on essential products like cooking oil, pies; some beverages and luxury treats like wines and cashew nuts had been reduced. "Other savings are in selected frozen foods, bread, spreads, biscuits, toiletries and sweets," it said in a statement.

Woolworths has been on a drive to tackle consumers' perceptions that its prices are higher than those of other retailers.

For the six months to end-December, Woolworths reported a 9% increase in sales at its food stores, and average food price inflation of 12.1%, which it said was materially lower than the market.

According to Statistics South Africa, food prices rose by 17.1% year-on-year in December 2008.

In late January, media reported that Pick n Pay CEO Nick Badminton had sent a letter to 30 of that company's biggest suppliers urging them to "exercise serious restraint" with their increases.

Following a meeting between Pick n Pay and its suppliers on Wednesday February 4, suppliers blamed their suppliers, in turn, for persistently high prices and suggested their were areas of monopolistic practices in the packaging, tin, paraffin wax, glass and fertiliser sectors. Pick n Pay encouraged its suppliers to refer any anti-competitive practices to the Competition Commission.

Julian Novak, the divisional director for foods at Woolworths: labelled the savings as "big" in a statement: "These are significant savings for our customers. Woolworths worked in partnership with [its] suppliers over the last six months to find ways to reduce the price of hundreds of products.

"We have the flexibility of having largely own brand products to bring customers great value. This gives us greater control of the production process and helps us to reduce input costs. We have, however, been able to reduce prices on selected branded products," said Novak.

Novak said the company had realised savings by reviewing its supply chain, reducing packaging, improving logistics and monitoring the costs of lower commodity prices like wheat and passing savings on to customers. He said: "We have cut prices considerably over the last two years and the basic grocery lines like bread, milk and cheese are now extremely competitively priced and often cheaper than other retailers."

Examples of savings include a 29% reduction in the price of a 750ml bottle of sunflower oil to R16.95, and a 7% reduction in the price of a two-kilgram bag of Tastic basmati rice, now selling for R87.95.

- Fin24.com