High demand from consumers for better efficiency and price competition in supermarkets has led many supermarket retailers in Australia to cut their product prices.

This information comes from a report from the Institute of Public Affairs (IPA), which has shown how consumer activity has affected and driven supermarket competition in the country.

“Pressure from consumers to increase efficiencies, scale and competition are cutting supermarket retail prices by at least five per cent,” said IPA director of the IP and free trade unit Tim Wilson in a June 24 statement.

“Over the past two decades supermarkets have been consolidating and extracting efficiencies of scale through their logistics and supply chains to meet consumer demand for lower prices.”

This increased demand has meant that many supermarket retailers have had to sacrifice how much they are making from the sale of products in order to maintain a presence in the market.

“Consumer-driven competition is pushing supermarkets to extract maximum value from their high volume, low margin business models to deliver lower prices,” said Mr Wilson.

“There is still room for more consumer-focused competition by removing regulatory barriers that make it harder for new stores to be opened, increases costs that are passed through to consumers in higher prices and makes it harder for new players to establish themselves.”

Large retailers can offer lower prices for products and create a strong level of competition in the market.

Retailers in Australia that are experiencing price competition may want to look into meeting with a retail specialist to update or create a retail strategy.

Doing this will enable business owners to create ways to correctly price products, and identify strategies to help keep sales volumes at a desirable level.