In Australia, the frequent implementation of specials on fresh produce by major supermarkets is presenting a challenge for local producers. According to Michael Crisera, Grower Services Manager at Fruit Growers Victoria, the reduction in retail prices does not translate to cost absorption by retailers; instead, growers and suppliers bear the financial impact. This practice can jeopardize the profitability of growers, as they are often compelled to supply their produce below production costs to align with promotional pricing strategies.
Supermarkets, including Coles, Woolworths, and Aldi, employ distinct approaches to specials. Coles and Woolworths typically dictate the timing and pricing of specials, expecting suppliers to conform to the reduced pricing structure. Aldi, however, adopts a loss leader strategy, maintaining the purchase price while absorbing the cost of specials.
This strategy aims to increase store traffic without altering the financial arrangement with suppliers. Despite the potential for increased volume sales during promotional periods, the frequency of specials places pressures on growers, necessitating a balance between competitive retail pricing and sustainable grower compensation.
Source: 9news.com.au
Photo source: Dreamstime.com