A war to capture the dwindling spending power of SA consumers is raging in the retail sector, with promotions and aggressive pricing the weapons of choice.

In the food segment Woolworths continued to roll out trading space aggressively, adding 7.9% in the latest update period. It bought the retailer a feeble 0.3% increase in sales volume after adjusting for 9.2% internal inflation. Like-for-like sales volume fell 3.6%, a poor showing compared, for example, with Pick n Pay, which upped like-for-like sales volume 3.5% in its six months to August.

Woolworths, it appears, has no alternative but to discount food prices heavily.

“It has the luxury of high margins to do it,” says Alec Abraham of Sasfin Securities.

The food margin of Woolworths was a hefty 7.2% in its year to June, way ahead of closest rival Shoprite’s 5.6%. But whether lowering its margin will generate a commensurate rise in sales volume remains to be seen.