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Coles and Woolworths Price Hike Paves Way For Amazon Shake Up

Supermarket prices surged in the final quarter of 2016, with fresh fruit and vegetable prices at Coles, Woolworths and IGA rising by 15%.

Q4 2016 saw the biggest fresh food price hike since mid-2015 according to the Supermarket Price Index from Deutsche Bank, which analyses the price of a fixed basket of products from the major supermarkets on a weekly basis.

Fresh food prices increased by 7.2% year-on-year in Q4 2016 driven by the 15% price hike for fruit and vegetables. According to Deutsche Bank, fresh food prices were down by 0.7% in Q3 2016. Overall, food prices increased by 3.2% in Q4 compared to an 0.3% increase in Q3.

As the major supermarkets look to improve profit margins with price hikes, attention is turning to the potential effects of Amazon’s long-rumoured launch in Australia. The company is currently expected to arrive in September this year.

Amazon reportedly delayed plans to launch in early 2017 so it could simultaneously launch the Amazon Fresh service, which will see the company provide same-day fresh food delivery along with physical storefronts around the country.

Chief investment officer at Watermark Funds Management Justin Braitling told the AFR in November that Amazon plans to undercut Australian retailers by 30%.

 

 

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