Will supermarkets change prices in line with fuel costs?

Many Australians have expressed concern that home delivery fees or click and collect orders will increase in line with rising fuel prices.

Coles and Woolworths confirmed they would not change the fee structure of their online delivery services, which have increased in popularity through the pandemic and earn over $2 billion in revenue for each company.

In some situations, the current price of fuel would make it cheaper for customers to have groceries delivered rather than drive to the supermarket themselves.

Delivery drivers may be paying more at the bowser, and Steve Fanale, chief executive of last-mile courier service Drive Yello, says drivers are feeling the pinch of higher fuel costs, which are now passing through to retailers.

“I assume they’re absorbing it at this point, but obviously, if it becomes a long-term rise ... I’d say the end consumer will cover some of that eventually,” he said.

However, while supermarkets are absorbing the increased costs, delivery and click and collect still provide significant value for consumers. Still, a survey of online grocery shoppers revealed they’d be willing to pay between $6 to $8 for click and collect services.

“For Woolworths, we estimate the current subsidisation of their online channel is $350 million,” Tom Kierath, an analyst at investment firm Barrenjoey told The Age.

“This is a pretty big drag on the profitability, which is great for customers, but not necessarily great for shareholders who have to essentially fund the investment.”

Coles’ general manager of e-commerce Karen Donaldson said the supermarket is happy to help Australians through the current cost of licing crisis.

“We know that cost of living pressures facing Australians right now means many rely on the convenience and value of our free click and collect service so we have no current plans to change this at a time we know our customers need it most,” she said.

Woolworths also has no immediate plans to raise its delivery costs.

“We continue to review our offering on a regular basis to optimise customer value and sustainably grow our eCommerce business,” a spokesperson said. “We are mindful of cost of living pressures and remain committed to delivering value to our customers wherever we can.”

Do you use click and collect or delivery services?

4 comments

I only use delivery service for bulk items like potting mix.

So the increase in cost should not affect me greatly.

Of course the supermarkets will raise the prices whatever we do.

Luckily I have a Woolies less than 3 minutes drive away so I go in person early in the morning once a fortnight for my major shop.

I heard on the Morning Show this morning that in the past 3 months

Woolworths grocery prices rose by 4.2% and Coles prices rose 3.2 %

Howerver they did not cite the staring stats.

My grocery bill used to be about $40 or $50 a week it is now over $100

4 comments



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