The Warehouse says its breakfast foods are cheaper

Friday, 13 May 2022

The Warehouse says its breakfast foods remain cheaper than at the two major supermarket chains.

Food prices have become a hot issue amid rising inflation and as the Government prepares to respond to the Commerce Commission’s grocery market study. The two main supermarket chains, Foodstuffs and Countdown, have in recent weeks announced they will either freeze or cut prices.

Countdown has frozen prices on some items, while Foodstuffs will cut the price of a range of “essentials” by an average 10% from Monday.

The Warehouse Group chief executive Nick Grayston said on Friday that an average basket of breakfast foods was $6 cheaper at The Warehouse than at the major supermarkets.

The comparison is based on an average full-price basket of eggs, bread, milk, coffee, butter, oats and Weet-Bix on May 12, which cost $25.87 at The Warehouse, $35.83 at Pak ‘n Save and $35.42 at Countdown.

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“Our customers trust us to provide the best value for money and we're committed to this,” Grayston said. “Kiwis know they can come to The Warehouse for the best deals on their household essentials. Making sure Kiwi families can afford a great breakfast is something we’re very committed to.”

The Warehouse has had a “fantastic” response to its $4 price on a 500g block of Tararua butter and would maintain the price as long as it could, he said.

“While the cost of goods continues to increase, we’re holding or dropping prices where we can across essential grocery and pantry items like bread, milk, cereal and pasta as well as essentials to keep families warm such as children's flannelette pyjamas and merino clothing,” he said.

“For some products there will be unavoidable cost increases, but you can expect to see us continue to look after our customers through the winter with everyday low prices.”

Grayston has said the recent Commerce Commission report on supermarkets was very clear that competition was not working well. The Warehouse has launched its own brand range called Market Kitchen, which included products such as flour, dried fruit, nuts and sauces, with wider range of new products to be launched in the coming months.

“Kiwi families tell us that they’re not getting good value from supermarkets and they want to have more grocery options available at The Warehouse,” Grayston said.

“It’s something we’re seriously considering and we’re watching with interest to see what steps the Government will take to make a difference to New Zealanders and allow other players like us to enter the grocery market in a bigger way.”

The Warehouse Group reported third-quarter sales in the 13 weeks to May 1 fell 2.5% to $771.6 million on the year earlier, as in-store foot traffic fell 13% as a result of the country being in the Covid-19 ‘red’ setting for 74 out of 91 days during the quarter. Online sales rose 7.4%.

Since the move to the ‘orange’ setting on April 14, foot traffic numbers had improved but were still down on the year earlier, he said.

“The trading environment continues to be very challenging with high inflation impacting consumer spending, shipping delays affecting the group’s stock availability, and some customers remaining hesitant to return to stores in person,” Grayston said. “Despite these factors, Q3 has held up relatively well with a solid performance across the group.”

Sales at The Warehouse fell 2% in the quarter to $401.9m, due to the impacts of the Covid-19 Omicron variant on store traffic. In-store foot traffic fell 11.4% while online sales increased 25.8%.

Grocery was a standout category, particularly in health and wellbeing, pantry and chilled, and petcare.

The Warehouse Group also owns Warehouse Stationery, Noel Leeming, Torpedo7 and TheMarket.com.

Grayston said product supply was disrupted in the quarter due to ongoing challenges in the supply chain.

While stock continued to flow, shipping costs remained high and there was an increase in the time it took for product to get to the shelf, which together with staff absences due to Covid-19, had contributed to some availability gaps in store, he said.

The company expects shipping schedules will remain constrained through the fourth quarter and into next financial year.

CLARIFICATION: This story has been clarified to make it clear that Foodstuffs’ price reductions take effect from Monday. Updated: May 13, 12.25pm