Coles' move to drop popular fruit and vegetables prices by 50 per cent will attract budget-conscious customers but leave the local greengrocers' business largely untouched, a Queensland University of Technology (QUT) marketing expert says.
Dr Gary Mortimer said the discount was another step in Coles' strategy to up their market share by winning over traditional Woolworths customers to their new-design refreshed stores, and keeping them.
"It is fundamentally an attack on Woolworths who are promoting their 25-year anniversary as 'The Fresh Food People'," he said.
"I don't see this having a massive impact on your local green grocer as they service a different market.
"Customers who shop at local green grocers, butcher, bakery or delicatessen do so for excellent quality, variety, range and expert advice.
"Supermarkets operate on low margins and so can't meet the needs of those consumers, and aim to deliver low prices instead."
Dr Mortimer, from QUT's School of Advertising, Marketing and Public Relations, said Australian consumers were a savvy bunch who understood quality and value for money.
"Fresh produce customers consider a wider array of product attributes, including quality, country of origin, size, freshness and taste. Shoppers will continue to pay a premium for high-quality fresh fruit and veg, but this offer will attract the economic/budget conscious customer," he said.
"It will be vitally important that, operationally, Coles gets this offer right in their stores right across the country.
"Clearly, there will be new customers in their stores, so quality, freshness and in-stock will be vitally important."
Dr Mortimer said fresh produce was an important category for supermarkets nationally and internationally.
"These departments sit at the forefront of every supermarket across Australia. If you win the customer over on fruit and veg, you win them for life."
He said some commercial farms would have booked their production and locked in prices with Coles many months ago and these farmers would gain from greater volumes.
"Smaller farmers will generally not supply the major chains, but will focus on supplying smaller independently run green grocers. I don't see a significant impact to their businesses."
Media contact: Niki Widdowson, QUT media officer, 07 3138 2999 or n.widdowson@qut.edu.au
Dr Gary Mortimer is available to comment to media on 0448 048 433.
