Aldi's private label ranges are proving to be a hit with consumers. "In the battle for foot traffic that's going on in Australian grocery, I think private label is an extremely important theme." About 12.5 per cent of packaged grocery sold by Woolworths, Coles and independents are private label. Mr Bone is channel insights manager at market research company IRI. IRI has developed a picture of supermarket sales through the scan data of Woolworths, Coles and independent supermarkets supplied by wholesaler Metcash, and its inhouse Shopper Panel consisting of 10,000 people. IRI's research shows that Australian supermarkets are discounting more frequently, and more deeply.

Supermarket specials - not so special? Credit:Facebook "In the last two to three years, we've seen the reliance on promotions marginally increase year on year," Mr Bone said. "We're looking at around a third of units that are sold in packaged grocery being on a discount of 10 per cent or more. And what was most significant about last [financial] year was the spike in deeper discounts. There was a 31.1 per cent increase in packaged grocery products with a discount of 50 per cent or more." Fifty-four per cent of IRI's shopper panel agreed they were buying what was on special rather than their favourite brand. The discounting might encourage people into stores and is great news for thrifty shoppers, but Mr Bone said a continual reliance on deep promotional activity was "not necessarily engendering trust."

"While it creates volume uplift [the supermarket] in the short term, consumers feel frustrated by ... price cuts and increases and it forces them to do more work than they need to." And it has having an effect on the bottom line. Of the 182 categories IRI covers, 57 per cent experienced a price per unit decline, with hair care, confectionery, biscuits, sports drinks, frozen pies and pizza among the most frequently discounted products. Tobacco and baby products such as formula were among the few products to hike prices. ​The entry of Aldi has helped pave the way for the decline in fortnightly or weekly shopping, Mr Bone said. People are now shopping more frequently, and likely spending less per shop. "Thats why you're seeing Woolworths putting more emphasis on its Metro [smaller stores with 'grab and go' meals] stores. That is something that's played out in the UK ... Tesco, Sainsbury's have smaller stores that cater towards the urbanisation of the population. We're really starting to see that now in Australia, albeit five to 10 years after the UK."

From a share of grocery trips perspective, Aldi has 12.6 per cent share as at September 2016, he said. Woolworths had 36.7 per cent, Wesfarmers-owned Coles had 35.5 per cent and Metcash-supplied independents had 13.1 per cent. Eight years ago it was a different story. In 2008, Woolworths had 40 per cent of visits, compared with about 30 per cent for Coles. Aldi and independents had about the same share. The data also shows that people are shopping across the chains, but they are not loyal to brands either. "We have a select number of brands that matter to us, and shop between those stores to maximise our money," Mr Bone said. Loading Mr Bone's commentary is backed up by ANZ Research. It said "price pressure in supermarkets has been intense and shows no sign of fading. To date, the bulk of the margin compression in the supermarket space has occurred at the wholesale level leaving retail margins above global norms.

"Coles and Woolworths are already feeling the impact of [US retailer] Costco and Aldi. Woolworths has invested $1 billion in cutting prices while Coles has extended its 'every day pricing' promise to over 4,000 products. Coles' average prices have recorded 23 consecutive quarters of deflation."