Is Woolworths losing the supermarket war?

Woolworths’ plan to slash grocery prices has so far done little to turn around turn around business profits, instead hinting that the supermarket giant may losing ground to its competitors.

The retailer’s recent sales figures aren’t good news for the supermarket giant – food and liquor sales declined 0.9 per cent during the 13 weeks to April 2, when the figures are adjusted for Easter.

Also read: Angry shoppers threaten to boycott Aldi after latest revelation

Non-adjusted figures show sales edged only slightly higher by 0.4 per cent to $10.7 billion.

Total group sales for the third quarter were also down 0.3 per cent to $14.9 billion, compared with the same period last year.

Meanwhile, rival Coles recently posted a 4.9 per cent increase of food and liquor sales over the same period.

Also read: Cheap chickens help Coles sales

The decline shows Woolworths continues to leak market share to archrival Coles and German discount retailer Aldi.

Even after investing more than $400 million to lower grocery prices by 2.4 per cent during the third quarter, the supermarket giant has been unable to translate the price cuts into improved sales figures.

Following aggressive competitor price activity, particularly in fresh food, Woolworths has increased its investment in April to ensure it is price competitive, the supermarket giant said in a statement to the ASX.

The retailer also plans to spend a further $150 million in the second half of 2016 to further lower prices and raise customer service curing the fourth quarter.

Also read: Shoppers want low prices, not rewards

“Getting our customers to put us first is our priority and good progress has been made on delivering better prices and improved service to our customers,” Woolworths Group chief executive Brad Banducci said in the ASX statement.

“The sales performance in Australian supermarkets continues to be impacted by high levels of deflation, predominantly from our price investment.”

“However, we are encouraged that customers are starting to notice the improvements we are making,” he said.

“It will be a five-year journey to rebuild Woolworths supermarkets, but we are confident we are on the right track.”

Also read: ALDI’s share of the Aussie market still rising

Analysts put Woolworths’ market share at just under 40 per cent of the Australian supermarket grocery market, with rival Coles close behind with 32 per cent, and Aldi continuing to strengthen with a current 12.1 per cent share.