A cheapskate she knows I am, but my wife is still bemused about how we split our weekly shop with one going to Coles and the other to Woolies.

So what's wrong with texting each other the specials?

Don't laugh, we also get two lots of petrol coupons and more chance of a trolley without wonky wheels.

Even better, an Aldi​ is opening soon. That will cut prices again, even if we don't shop there, judging by a recent survey by Choice.

Apparently an Aldi opening "within one kilometre" will reduce the prices at Coles by 5 per cent, and ours will be not 100 metres away.

If we do shop there, where everything is a home or private label brand, it'll be a whopping 23 per cent to 27 per cent cheaper than Woolies' or Coles' equivalents, Choice's secret shoppers found.

And that's only cheap versus cheap. Compared with the big brand names bought at Coles or Woolies, Aldi's offerings would almost halve your grocery bill.

Even without an Aldi in sight, Choice's undercover shoppers saved 35 per cent by switching to the Coles and Woolies (Select/Macro) brands.

Move to Canberra and a typical supermarket shop of "28 leading brand products and three fresh food items" would cost $163.60 compared with Melbourne's $166.96 or Sydney's $167.40. But even I say that's getting desperate.

But is Coles or Woolies cheaper?

At Coles, prices are "down down" and at Woolies' "cheap cheap", perhaps in deference to Tony Abbott who also likes to repeat himself. More recently the "cheap cheap" have been joined by red spot specials at Woolies.

If you ignore specials and buy name brands only, Choice says the difference is just $1.80 on a $175 basket of goods, in Coles' favour. Buy home brands only – which would limit your shopping somewhat – and it was $5.16, again in Coles' favour.

But who'd ignore specials, anyway?

These change every Wednesday, so UBS has been canny enough to lean on the Australian Food & Grocery Council to ask supermarket suppliers which one they think is cheapest. They should know since they watch the shelf prices of competitors all the time.

As it turns out, they back Choice's secret shoppers: Coles has a slight edge. It seems Woolworths has more of them, but Coles has bigger discounts.

Woolies has about one-fifth of its products on special, with what Macquarie Research analysts Bryan Raymond and Elijah Mayr call an "average depth of promotion" of 30 per cent.

At Coles, about 15 per cent of stock is on special but discounted by a heftier 40 per cent on average.

The competition

IGA, never the cheapest in surveys, is taking a different tack. Its "price match" strategy is to take "hundreds" of the lowest Coles or Woolies "everyday" – but not "special" – prices each week and match them.

That way, it claims "you'll never pay more at your local IGA". Guess you won't pay less, either.

Although Aldi, no surprise, beats them all, the suppliers think it's more like 15 to 20 per cent cheaper.

Most of them also expect, or maybe hope, Aldi compatriot and look-alike Lidl​ will open in Australia. Lidl has reportedly been in talks with the Victorian state government in advance of setting up shop over here.

That'd be a dream come true for shoppers and the worst nightmare for Wesfarmers and Woolworths shareholders.

"Aldi would likely respond by dropping prices to drive price perceptions in the lead up to a Lidl entry. All retailers would lose out of this," UBS warns.

A price war in Britain  between Aldi and Lidl bought the supermarket behemoths Tesco and Sainsbury's to their knees.

In any case, UBS tips that the chains will move to fewer but deeper discounts.

Meanwhile Woolies and Coles are pushing their own brands to the hilt, at the expense of what little is left of manufacturing.

They're a win-win for the stores because they're cheaper – impresses shoppers – yet more profitable because of the higher margin – good for the share price.

But how can home brands be cheaper yet more profitable?

UBS can explain with this example: Say the brand name is $10 on the shelf and the home brand $7.50. The cost of promotion is a lot for the supplier but negligible for the supermarket, since you're already shopping there and all it needs to do is pick an eye-level shelf and stick a price tag on it.

Also, through their sheer market power and promise of mass sales, the supermarkets can drive down the manufacturer's profit margin.

So the $10 brand has a gross margin of 28 per cent but for the supermarket brand it's 39 per cent.

No wonder 82 per cent of the biggest suppliers in the UBS/Grocery Council survey said they were "losing range to private label" products. Their own brands are being elbowed out.

Shoppers are complaining too. Familiar brands are suddenly disappearing from the shelves.

In Choice's words "copycat packaging" is squeezing shelf space and is "aisle-way robbery" though you'd have to hand it to IGA that there's no mistaking its no-frills Black & Gold brand.

"We understand both retailers have plans to reduce range, with Coles being the most aggressive with plans to cut some categories by 30 per cent over three years," says the UBS report.

There's not much reward for loyalty at Woolies or Coles either.

Spending $100 a week on groceries will take Fly Buys members 100 weeks to earn $50, or 109 weeks with Woolworths Everyday Rewards, according to finder.com.au.

Spend $250 a week and it's the other way around, but you'll still have a big wait.

It'll take 35 weeks shopping at Woolies and 40 weeks at Coles for a $50 voucher.

Who'll come out on top?

So who's going to have the upper hand, shoppers or shareholders?

Let's just say our supermarkets are the most profitable. Woolies with an 8 per cent margin is twice as profitable as the global average and even Coles, with 5.2 per cent, beats the 3.9 per cent global average, according to estimates by UBS.

But it is expecting the first fall in profit margins in 15 years, the brunt borne mainly by Woolies, according to suppliers.

And here's a twist. Aldi's estimates of Australian supermarket margins are slightly lower, but despite its much lower prices, it still places itself just ahead of Coles in profitability. Guess that must make us soft touch best practice.

Both the big supermarkets are listed, along with Metcash​ with interests in IGA, and for years Woolies was the market darling.

No more. It's missing a chief executive and stands to lose the most margin in the trolley wars having started from a higher, world record-breaking, base. Most analysts rate the stock a sell. UBS says "it has clearly lost its way" due to "a focus on profit over customer", a criticism you don't often hear from a broking analyst, I can tell you.

Woolies also has its problems with Masters and Big W.

Although not a fan either, Wilson Asset Management's portfolio manager Chris Stott says under new management and strategy "it might be on our radar in six to 12 months." Coles last month had "its greatest-ever lead over Woolworths," according to UBS retail analyst Ben Gilbert.

The fact is, we're at the point where Woolies has more to gain than Coles in an all-out price war.

Coles accounts for about 45 per cent of the profit of the Wesfarmers conglomerate, which includes Bunnings, Officeworks and coal mines, among other things. Analysts worry the stock is a bit pricey.

For Metcash, which owns or licenses the IGA brand but is basically a wholesaler, the recommendations are split evenly between buy, hold and sell, even though, or perhaps because, it's lost two-thirds of its value in the past year.

Aldi is an even bigger threat to Metcash than to the big chains because it's expanding into South Australia and Western Australia, where independent grocers are strongest.

Still, Metcash's store refurbishments are paying off. Its partly-owned Ritchies Super IGA, with stores mostly in Victoria and NSW, is forecasting its first profit growth in four years.

"Metcash has an excellent supply chain. The issue is upfront with their leases and the inconsistency of their stores," says Gilbert.

ACTION PLAN

• Never shop at a supermarket without a list.
• Displayed unit prices are your friend – use them.
• Don't be conned by petrol coupons – there are far bigger discounts filling up on the right day of the cycle.
• Aldi is much cheaper than other supermarkets, but has a narrow range.
• Home brands are often a discounted version of a well-known brand. The proof is in the eating.

@moneyPOTTS