Last week we were treated to a bizarre week of self-congratulatory media releases by Coles and Woolworths. Was this just another round of spin from the chains or were we finally seeing some real “action”? Well, only time will tell and until will see all the details from Coles and Woolworths the jury will be out.

Minister for Competition Policy Craig Emerson hits the aisles.

Let’s look at the PR trail last week. First, we had Coles announce on Australia Day that as of 1 February it was moving to a single national price for 8,000 grocery items and that 97% of products would have the same price within a State.

Why Australia Day? Well there are a couple of theories. Announcing price changes on Australia Day could be seen as patriotic. The other possibility being that Australia Day is ordinarily a “slow” day for business media stories and a “feel good” story may get some attention.

Well, attention it did get, but probably not the attention that Coles was expecting as their announcement sparked strong calls from the media for Coles to “come clean” on the full details of the pricing changes. The media was picking up on the obvious lack of detail in the Coles media release. There was no list of products affected. There were no details on how or whether the prices of individual products would change.

So was the Coles announcement just spin or truly “ground breaking”?

Of course, we can’t tell until we get the full details from Coles. A “trust us” approach from Coles was not going down well with the media and, more importantly, with the customers. The questions for Coles came thick and fast and suspicions of a PR stunt were fed by Coles’ repeated refusal to publish full details on their website. “Let consumers see the full list of products and let them judge for themselves” became the catch cry for the talkback hosts around the country.

What was the Coles’ response to the growing calls for full transparency on the pricing announcement?

In a nutshell “Trust us, it’s all good” but still no details of the actual products involved and any actual price changes. How do we explain the Coles reaction? Well, either the Australia Day announcement was just a PR stunt or any possible savings from the pricing changes are so small or marginal that the media and consumers would be left disappointed if they got the full picture. Of course, if the possible savings were significant, then Coles had missed a golden opportunity to prove how wonderful they really are, something they could have easily done by giving us the full list of affected products and price changes on the day of the media release.

With the relentless questioning of the Coles announcement it was somewhat surprising to find Woolworths making its own pricing announcement that it had moved to a single national price for 12,000 grocery items and that it had “slashed” the price of 3,500 products in the “last few months.” Apart from listing just 16 items in the media release, there were no details from Woolworths regarding all the other products affected and by how much the prices on each of those products had changed.

The lack of full transparency from Woolworths on its pricing announcement just 2 days after the lack of full transparency from Coles on its pricing announcement kept the media interest well and truly alive. Suspicions kept growing that this battle of the media releases from Coles and Woolworths was just another PR stunt.

Why did Woolworths join the battle of the supermarket media releases? Well, with Woolworths unlikely to have appreciated the attempts by Coles to try and upstage Woolworths on pricing issues, there was a “me too” flavour to the Woolworths pricing announcement. “Hey consumers look at us” seemed to be an underlying and recurring theme in the Woolworths response.

The only problem for both Coles and Woolworths was that the media and consumers were not being impressed with the self-congratulatory pricing announcements by the chains given their steadfast refusal to publish a full online list of affected products and any price changes. The sad reality is that Coles and Woolworths could have put the suspicions about a possible PR stunt to rest by simply giving consumers complete transparency on the pricing announcements.

Interestingly, the battle of the supermarket media releases has had one very important outcome and that’s the fact that Coles and Woolworths are telling us that they have a single national price for “thousands” of products. In-store ads at Coles supermarkets around NSW boldly proclaim “same low prices across NSW.” If that’s the case then surely Coles and Woolworths would have no objection to putting that single low price for each product involved on their own website. Once again, consumers need complete transparency from Coles and Woolworths and telling consumers the actual products that have a single low price is critical to consumers making informed choices about where they shop.

The other very important fact to come out of the battle of the media releases is that Coles and Woolworths have joined the food discounter ADLI in recognising the importance to consumers of the chains having a single lowest pricing policy for their products. This recognition is an important step towards putting an end to geographic price discrimination, the practice where Coles and Woolworths have historically charged a different price for the very same product even in the same geographic area.

Now that the supermarkets chains have come on board with a single lowest pricing policy, it’s time that the Federal Government also come on board and give consumers a legal guarantee that the chains, in fact, give consumers the single lowest price for a product in the same geographic area. That legal guarantee can quickly be implemented by enacting the Blacktown Amendment, a Private Members’ Bill sponsored by Senators Nick Xenophon and Barnaby Joyce and written by this author.

The Blacktown Amendment provides that companies such as Coles and Woolworths would be legally required to sell the same product at the same low price at all their respective supermarkets in the same geographic area. The same geographic area is defined as covering all supermarkets of a particular chain within a distance of 35 kms of each other and effectively covers all metro areas and regional centres where Coles and Woolworths have supermarkets. 

With three supermarket chains telling us they have a single lowest pricing policy, it’s essential that the Federal Government moves quickly to stop the chains from playing games with the application of that single lowest pricing policy by enacting the Blacktown Amendment.

Most commented

6 comments

Show oldest | newest first

    • T.Chong says:

      06:15am | 03/02/10

      Frank:  I’m all for your idea about the Blacktown amendment - great to see comrades Nick and Barnaby are on board when it comes to at least a little bit of nationalisation. ( although Barnaby appears a dyed - in - the - wool redragger with some of his ideas about breaking up the big banks, and means testing of health insurance rebates)
      Just that if you are going to mandate prices retailed by a private company, then where will it end, what will happen to competition, and choice? the basics of capitalism?
      Again Im all for it, but many here will see it as the sinister hand of communism, right ?  Right Punchers?

    • Iva Tarbell says:

      09:03pm | 03/02/10

      T.Chong you have it so WRONG.

      The Blacktown amendment which prohibits Geographic Price Discrimination within a 35km radius, is all about protecting competition and ensuring the very survival of the free market system.

      Without any prohibition on Geographic Price Discrimination (as is the current situation in Australia), a multi-chain retailer can manipulate prices in different locations.

      Therefore with the anti-competitive weapon of Geographic Price Discrimination in their arsnel of tricks to destroy competition, right across Australia in areas where the Woolworths/Coles duopoly face competition from the independent retailers, they cut prices to cut the throats of those independents to drive them from the market. And once the independents have gone, the duopoly jack up the prices and exploit consumers, and then move on colonise the next area - and this is why Australia has the highest rates of food inflation in the developed world.

      And T.Chong, this is not a theory, all the current affairs programs have fully documented numerous cases, where prices have been jacked-up almost 100% once an independent has been driven to ruin and bankrupty by Geographic price discrimination – and as a Tonight Today demonstrated only this week, it’s the areas where Mr Rudd’s working families live, that end up paying the higher prices becuase of GPD.

      Further, once the duopoly prices has jacked prices up, although economic theory speculates that this will led to “new market entrants” popping out of woodwork - with Geographic Price Discrimination, no-one (other than a giant overseas retailer) is going to enter the market and set up shop to compete against Woolworths, because they know from experience that the minute they do, that Woolworths will leverage profits from stores in non-competitive areas, to cut the throat of any new market entrant that tries to lower prices to consumer - so Australians pay some of the highest prices for supermarket basics in world.

      The Blacktown ammendment still allows Woolworths/Coles to lower prices as a competitive response to the lower prices offered by a more effecient small independant retailer, but they must do so in all stores with a 35km radius - this simply protects fair competition and levels the playing field - and the ulimate winner would be the Australian consumer with lower prices and more choice.

      Instead T.Chong, the vested interests of the Woolworths/Coles duoploy, aided and abbetted this Government have blocked the Blacktown Ammendment - so Mr Rudd’s working familes continue to be punished with the fastest accelerating supermarket prices in the developed world.

      And if T.Chong you consider that a prohibition on Geographic Price Discrimination “is the sinister hand of communism” perhaps you might like to consider what the law of the land is the United States of America.

      In the USA, Title 15, Chapter 1, s13a states;

      “It shall be unlawful for any person engaged in commerce, in the course of such commerce………to sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States….......any person violating any of the provision of this section shall, upon conviction thereof….....or imprisoned not more than one year, or both.”

      Last time I checked T.Chong, the USA was hardly the country to have on their statute books for almost a century legislation to support “the sinister hand of communism.”

      So it might be worth considering in the home of capitalism, Geographic Price Discrimination is considered such an evil and such a clear and present danger to the free market, that its a criminal offence. 

      So T.Chong if you are in favour of free enterprise, you’d be 100% behind the Blacktown Amendment, but if you favour an economic order which is controlled by one player (the sinister hand of communism) or in the alternate controlled by just two players (the Australian grocery duopoly) I suppose you’ll be against it.

    • SteveB says:

      09:27pm | 03/02/10

      I have to agree, if there really needs to be legislation about this then it should only cover the ‘truth in advertising’ aspect, if one of the chains claims to be using single lowest pricing, then they must be able to prove it, it’s a marketing method, like ‘lowest price guaranteed’.

    • Mrs Wainthropp says:

      08:13am | 03/02/10

      The only time you see a real bargain in the supermarket is when they have screwed some poor farmer out of his rightful earnings.
      If let’s say cucumbers are $2.00 per kilo. You know bloody well the farmer is in the red.
      Coles and Woolies don’t have it in their hearts to give the battling Aussie families a bargain in the supermarkets.  The poor growers suffer and are beholden to their price whims.
      It is always about the shareholders .

    • stephen says:

      04:37pm | 03/02/10

      I’m not a farmer - though i have worked on them - and I agree. Whatsmore, I’m sure consumers would pay more for such items if they knew such increases were going direct to the farmer’s pocket. (I’m not joking either.)
      Support Your Local Farmer.

    • stealthpooch says:

      10:02am | 03/02/10

      I went to the supermarket last night and wandered about staring at all the stickers proclaiming that the prices were now standardised.  I’ve lived in Hobart for 6 years, and we’ve recently being paying more for our groceries than more remote capital cities such as Darwin and Perth.  Go figure. 

      If nothing else, this stunt has just proved what opportunistic rip offs the two big supermarket chains are.

      We don’t have Aldi, but we have a lot of great independent fruit and vegie and deli shops, which consistently have much lower prices on fresh, locally sourced items than the two big supermarkets. 

      You gotta wonder why woolies charges $14 /kg for cherries from out of the state in Hobart, when Tassie’s a major cherry producer?! I guess we’re paying for the freight, because the local grocery store stocks juicy big ones from a local farm and sells them for only $7/kg.

 

Facebook Recommendations

Read all about it

Punch live

Up to the minute Twitter chatter

Recent posts

The latest and greatest

The Punch is moving house

The Punch is moving house

Good morning Punchers. After four years of excellent fun and great conversation, this is the final post…

Will Pope Francis have the vision to tackle this?

Will Pope Francis have the vision to tackle this?

I have had some close calls, one that involved what looked to me like an AK47 pointed my way, followed…

Advocating risk management is not “victim blaming”

Advocating risk management is not “victim blaming”

In a world in which there are still people who subscribe to the vile notion that certain victims of sexual…

Nosebleed Section

choice ringside rantings

From: Hasbro, go straight to gaol, do not pass go

Tim says:

They should update other things in the game too. Instead of a get out of jail free card, they should have a Dodgy Lawyer card that not only gets you out of jail straight away but also gives you a fat payout in compensation for daring to arrest you in the first place. Instead of getting a hotel when you… [read more]

From: A guide to summer festivals especially if you wouldn’t go

Kel says:

If you want a festival for older people or for families alike, get amongst the respectable punters at Bluesfest. A truly amazing festival experience to be had of ALL AGES. And all the young "festivalgoers" usually write themselves off on the first night, only to never hear from them again the rest of… [read more]

Gentle jabs to the ribs

Superman needs saving

Superman needs saving

Can somebody please save Superman? He seems to be going through a bit of a crisis. Eighteen months ago,… Read more

28 comments

Newsletter

Read all about it

Sign up to the free News.com.au newsletter