Background
Coles and Woolworths (the big 2) are publicly listed companies on the ASX (Australian Stock Exchange). They regularly update the ASX with business results (QTR, half year, annual). Their results are compared to suggest who is ‘winning’ in the supermarket industry. This simple blog suggests this analysis is of limited use.
During the last 25 years there has been a significant change in the Australian supermarket industry. International entrants (e.g. Aldi, Amazon, Costco) have commenced operations in Australia. Australian shoppers, that historically were disloyal, continue to shop at numerous stores, including overseas marketplaces. This means the important question is how are Coles and Woolworths competing vs the rest of the world?
Australian supermarket players
Australia is still the most concentrated supermarket industry, in larger economies. The Australian government suggests Coles and Woolworths have approx 65% market share. For comparison, in the UK supermarket industry, the top 4 have a similar share.
During the last 25 years many new international players have entered the Australian supermarket industry. Aldi 2001, Costco 2009, Amazon 2017 (online grocery, not physical stores) have larger global sales, number of warehouses / stores etc. This means Coles and Woolworths are now competing against larger multi-nationals, not each other. Another way of viewing this situation, is that Coles and Woolworths are trying to keep their shoppers and not lose them to the new players in the market.
Industry numbers suggest Aldi Australia has approx $14B sales, Amazon Australia $7B (including non-grocery items) and Costco $11B sales (including non-grocery items). For comparison, Coles (supermarkets) $40B and Woolworths (Australian Food) $51B. The numbers highlight how popular these retailers are with Australian shoppers.
Many in the industry would agree the new entrants have already changed the industry. The arrival of Aldi has led to increased use of EDLP (everyday low price) and an improved P/L (private label) offer from supermarkets. Costco has highlighted the opportunity of larger packsizes and ‘food to go’ offer (I do love their hot dogs). Finally, Amazon has led to an improved online offer (more SKUs, faster delivery times including click and
collect). This means the new entrants are already having an impact on Coles and
Woolworths businesses.
In addition to new supermarket players other retailers are also competing with Coles and Woolworths. Roy Morgan research suggests in 2025, Temu had 5 million Australian shoppers (+700,000), and Shein had 2.9 million Australian shoppers (+600,000). Amazon
grew to 9 million shoppers (+500,000) in the same period. Combined Amazon, Shein and Temu sales were $12B (+20%).
New entrants entering the Australian supermarket / retail industry highlights a fundamental structural change in the industry. It is now Coles and Woolworths vs the rest of the world (not each other). The challenge is how Coles and Woolworths can maintain shopper numbers (ideally loyalty too) and compete with multinationals with global experience, retail expertise and deeper pockets.
Australian shoppers
While most grocery buyers have a supermarket they mainly shop at, a relatively low proportion of them shop exclusively at that supermarket. They do not seem to have any great sense of loyalty to their main chain,”
Andrew Price, GM consumer products, Roy Morgan Research
For people outside the industry, it may sound strange that the Coles and Woolworths duopoly is struggling to increase shopper numbers, grow sales / share. This is due to Australian shopper behaviour – in particular low loyalty. This is not a new behaviour due to the internet etc. Historic research highlights that Australian shoppers regularly switched stores due to a number of factors, including price promotions. Recent research suggests Australian shoppers have become more disloyal as technology allows them to easier compare prices / offers.
Interestingly 2015 Roy Morgan research suggests IGA shoppers are the most loyal (30% only visit IGA). This may be due to IGA having a number of stores in regional areas i.e. no local competition. Only 24% of Coles shoppers and 25% of Woolworths were loyal. Logically only 7% of Aldi shoppers were loyal i.e. limited range meant Aldi shoppers shopped elsewhere.
In 2025 Canstar Blue awarded Aldi the most satisfied supermarket customers award for the 8th year in a row. This award (and other industry research) highlights that some Australian shoppers are switching and preferring other supermarkets, such as Aldi. Even with this high level of shopper satisfaction Aldi still has low shopper loyalty. Simply put the limited range means Aldi shoppers do shop elsewhere. Aldi understands this and even had a TVC (tv commercial) supporting this shopper behaviour.
A number of factors (not just other retailer offers) can affect loyalty to supermarkets. For example, Coles and Woolworths were the most distrusted brands in 2024 (Roy Morgan research). This outcome was in part due to the Senate inquiry into supermarket prices. Currently the ACCC have on-going court cases, re misleading pricing, against Coles and Woolworths.
Coles and Woolworths have had on on-going battle for decades to grow shopper numbers. The challenge is that Australian shoppers have low levels of loyalty so they must fight every week for the shopper. A number of factors drive shopper loyalty, including offers from other retailers and trust in their brands. Their duopoly (large sales/share) is no guarantee of shoppers continuing to shop with them.
Summation
It is normal for many to focus on the Coles vs Woolworths supermarket battle. Numbers are analysed, results compared to suggest there is a ‘winner’. This analysis is of limited use because it does not include what other retailers are doing and importantly how shoppers are behaving. In my jargon you need to run the business by shoppers not spreadsheets.