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The supermarkets’ ongoing ‘conspiracy against the poor’

Frank Zumbo

by Frank Zumbo

17 Feb 05:25am

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Filed under: Coles, Competition, Supermarkets, Woolworths

36 comments

Well, well, we’ve had another couple of rounds in the battle of the supermarket PR wars. First, we saw Woolworths and Coles continue their expensive media campaigns telling us about their “single pricing policy.” Then last week came the launch of the Woolworths “price check” website.

We have some great bargains somewhere else

On each occasion we were told how “good” the particular announcement was for consumers only to find that the supermarket chains had failed to give consumers the full picture. Statements were made about “price cuts,” but consumers didn’t get the full list of products affected and the price changes.

Woolworths, for example, repeatedly told us that the price of 3,500 products had been reduced and now the prices of those products were lower than a year ago. We are still to get the full list of 3,500 items and price reductions. We are also yet to be told whether there have been any price rises on any of the other 26,500 or more products typically sold at a Woolworths or Coles supermarket.

Finally, we also need an indication from Woolworths of how many of the 3,500 products are imported or made from imported ingredients. What’s the significance of whether the products are imported? Simple. Given that the Aussie dollar appreciated during 2009 and has remained strong, it’s clear that imported products and ingredients now cost less. The price of imported products and ingredients should be falling and consumers should be getting the full benefit of the stronger Aussie dollar.

This all begs the question: How many of the upwards of the 30,000 grocery products typically sold at a Woolworths or Coles supermarket are imported or made from imported ingredients? One would be expecting the retail prices of all these imported products or ingredients to be falling. Again, we need to see the full picture before we can properly assess the PR coming from the supermarket giants.

This equally applies to the adoption of a single pricing policy by Woolworths and Coles. Woolworths states it has around 12,000 items at the same price nationally, with Coles stating that it has around 8,000 items at the same price nationally. We are yet to be given a full list. Mind you, the adoption of a single pricing policy by the supermarket chains does raise a very interesting issue. Readers will recall that the Blacktown Amendment drafted by this author would legally require a retailer, like Woolworths or Coles, to sell the same product at the same price in the same geographic area. That’s the legal equivalent of a single pricing policy that Federal Competition Minister, Craig Emerson, dismissed as a “conspiracy against the poor.” That clearly raises the question of whether Minister Emerson also views the Coles and Woolworth single pricing policy as “a conspiracy against the poor.”

Sadly, if there is any “conspiracy against the poor” it’s in the form of geographic price discrimination where the supermarket giants have historically charged a different price for the same product in different stores. With regular surveys showing that the same basket of grocery items can cost more in lower socio-economic areas, it’s clear that geographic price discrimination disadvantages consumers in those areas doing it tough. What’s needed is a legal guarantee in the form of the Blacktown Amendment that ensures that Woolworths and Coles charge the same low price for a product whether it’s sold in Blacktown or Vaucluse or whether it’s sold in Footscray or Toorak. Without such a legal guarantee, consumers will continue to be ripped off through geographic price discrimination.

Now that single pricing for thousands of products out of the bag, Woolworths last Thursday turned up the heat in the PR wars by launching its “price check” website. The new Woolworths price check website follows the growing calls from consumer advocates, including this author and the consumer organisation Choice, for the major supermarket chains to publish on their respective websites the prices of all products they sell. Publishing comprehensive pricing information on websites has long been technically feasible and now that the Woolworths price check website is up and running it’s essential that the website is as informative and user friendly as possible.

Unfortunately for consumers the Woolworths price check website currently leaves a lot to be desired. From the outset, consumers are confronted with a legal minefield with Woolworths requiring consumers to accept the so-called “Price Check Terms & Conditions” before being able to access the website. Having a law degree or needing to obtain legal advice should not be a pre-requisite for using the Woolworths price check website. The “price check terms and conditions” raise a host of legal questions and regrettably can give rise to a range of unintended consequences.

Once past the legal fine print, consumers are given pricing information on only about 5,000 out of the upwards of 30,000 or more grocery items typically sold in a Woolworths supermarket. The pricing information on the Woolworths price check website is only a fraction of the pricing information that Woolworths can and should be providing to consumers. Until the Woolworths price check website includes the prices of all products in each of its supermarkets, consumers will not be getting the full picture. If it’s technically feasible for Woolworths to publish on its website the prices of 5,000 products, then it’s surely technically feasible to publish online the prices of all 30,000 or more products.

Even in publishing the prices of 5,000 items Woolworths could do much more to make the website as user friendly as possible. One obvious suggestion is to allow consumers to “create” a basket or shopping list of products while navigating the website. In this regard, the website could easily be improved by allowing consumers to “select” products that can be placed in a “basket” or “shopping list” on the website for consumers to print out as a convenient shopping list they can take with them to the supermarket when they go shopping. Consumers could then mark off the products on the printed shopping list as they go along. Cost conscious consumers could even take such a shopping list along when shopping at, say, a Coles or independent supermarket to see if they could get the product at a lower price from Woolworths.

With the Woolworths price check website having a long way to go the onus is now clearly on Woolworths to keep improving the website to a point where it gives consumers full price transparency in a manner that allows them to make the most effective use of the pricing information.

Full pricing transparency from Woolworths, however, is only part of the picture. With Woolworths now publishing an expanded range of prices on its website, it’s essential that Coles moves quickly to also publish its grocery prices online. The ball is certainly in Coles’ court to do better and publish on its website a full list of products and prices at each of its supermarkets. Consumers deserve the full picture from both the major supermarket chains and it’s up to the Federal Government to ensure this happens.

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    • Henrietta says:

      06:53am | 17/02/10

      The town I live in has more than one Coles and Woolworths, if I drive a kilometer one way to a more affluent area the prices were higher, but if I wanted to spend a few dollars on Petrol and drove 4 kilometers the other way to a less affluent area, the grocery prices particularly at Woolworths were cheaper. Pensioners live in both those areas, and those living closer to the first store paid more as we all did. I can’t comprehend how they price their items , all I know is we pay far more for food than we should. They said the Governement website would not work and now Woolworths seem to have found a miricale cure for the website dilema. We all need to eat to stay alive, but its fast getting to the stage where meat and veg are luxury items

      Reply

    • Iva Tarbell says:

      12:38pm | 17/02/10

      Henrietta you have some good points.

      However, generally it is the less well off areas that Woolworths/Coles charge higher prices for the same items, and/or give lower quality items (but at the same price).

      And its easy to comprehend how they price their items – when there is a Woolworths & Coles next to each other, they operate a cosy club, charging the highest supermarket prices in developed world.

      But if a new small business sets up in competition in the same area, they slash price to drive small business out of the market and to send a message to other not to enter the market. And as soon as the small business is driven out - up go the prices with interest.

      This all would be illegal just about anywhere else in the world, but with Australia’s weak competition laws, a compliant ACCC, a government in their pocket, and the support of the Competition Minister Dr Emerson, Woolworths/Coles know they can get away with such anti-competitve practices.

      And the end result is that Australian families are punished with the fastest rates of food inflation in the developed world.

      And your right, something is rotten with this Government when they prevented Choice from completing their GroceryChoice website by the Government giving the excuse that “it couldn’t technically be done”.

      Are we supposed to believe that in the few months since that there has been some amazing technical break throughout to enable the creation of such price checking website – or was the Government telling lies ?

    • is this all it takes to be a Pofessor? says:

      07:51am | 17/02/10

      When I was six my Mum told me that I should shop around when I want to buy something to try to get a good deal. It was common wisdom then (and it wasn’t very long ago) but it seems to have been forgotten now?

      If the shop near you is expensive, go to another one. If you can’t be bothered doing that, then don’t - its your money after all.

      If you don’t have time to shop around, fine, thats over to you. You are paying more for the convenience. Again, its your money, spend it however you please.

      Just don’t sit there to lazy to too lazy to shop around and winging that it is cheaper somewhere else.

      Why does everyone want someone ese to solve their problems? The solution is in your hands - vote with your feet and wallet. If you don’t like what someone is offering, go somewhere else.

      Prof Zumbo is doing everyone a disservice by taking the ‘sit back and complain’ approach. It would be more helpful to encourage people to look after their owninterests rather than going running to the Government to protect us from our own laziness.

      Reply

    • Harley says:

      10:17am | 17/02/10

      The problem is when I go grocery shopping and spend $300 with a foot-long receipt, it’s hard to tell if I’m getting ripped off.  Maybe the next fortnight I’ll go to a different shop and it’ll only cost $250, but was that just because I didn’t need any nappies, or are the products actually cheaper?

      When a shop has 30,000 items in it, people can’t expect to know if some items are 20c cheaper while others are 40c dearer.

      All of this information is in a database somewhere, there’s no reason it shouldn’t be in an easy-to-access web site.  I do want to shop around, I’d just prefer to do it from my desk, rather than going to the ten local supermarkets and pricing 100+ items every single week.

    • when I was six says:

      11:30am | 17/02/10

      Nice theory.

      But you overlook that “when you were six” and your Mum told you “to shop around” Woolworths/Coles had a combined market share of less than 20%, so back then, it was easy “to shop around”.

      But today, Woolworths/Coles; control of over 80% of the supermarket shelves on the nation, they control every second of today’s corner store (the local petrol station) ,they control the discount department stores (Kmart, Target & Big W), they control over 50% of the liquor market, they are biggest owner of poker machines in nation

      So “when the the Woolworths/Coles near me is expensive”  for any items. I simply have no where else to go.

      So mate, wake up to yourself understand that’s the whole problem – the the failure of competition laws allowing the Australian retail sector to degenerate into the most concentrated in the world (excluding Nth Korea and Cuba), the freedom “to shop around” for many everyday grocery items simply doesn’t exist today like it did when you were six.

    • Ella says:

      11:40am | 17/02/10

      Not everyone has the capacity to shop around. This is particularly true of poorer people - Pensioners who can no longer drive, people who are reliant on public transport to get to the shops.

    • Sherlock says:

      08:52am | 17/02/10

      Dear Mr Zumbo

      Did you actually read this before you posted it. It’s not an opinion it’s a paranoid rant. Talk about “a conspiracy against poor people”, “Blacktown Amendments”, “fluctuations in the dollar” and a fair bit of the rest make you look obsessed. I admit I had a little laugh while reading it.

      Woolworths and Coles are private businesses who are entitled to charge whatever the market will accept for their products. If they exceed that then their customers will shop elsewhere and they will open up opportunities for other retailers like Franklins, Costco and Aldi to eat into their market share.

      I find the talk of some sort of government price regulation on a private business rather scary. Australians vote for Coles and Woolworths every week by spending over 75% of their shopping dollar with these two retailers.
      When somebody does it better the Australian public will start to spend their dollar elsewhere.

      Your paranoid ranting about declaring this and declaring that and adding even more regulation only adds another layer of complexity and expense to the retailer. That’s eventually paid for by the consumer. I for one don’t need or require your assistance with my shopping.

      Reply

    • Iva Tarbell says:

      01:07pm | 17/02/10

      Dear Mr Sherlock,

      It obvious that you didn’t read Professor Zumbo’s opinion piece before you posted your paranoid rant.

      If you had any economic literacy, you would understand that “fluctuations in the dollar” is a very valid point.

      The strength of the Australian dollar over the last 12 months has lowered the costs of goods purchased overseas in US$ or Euros up to 30% – are these costs saving being passed on in full to consumers as they should in a truly competitive market ? 

      You would also understand that the “Blacktown Amendment” was proposal outlaw anti-competition Geographic Price Discrimination in Australia (similar to a law that has existed in the home of free market capitalism the USA for over 70 years).

      But this proposal was defeated by Labor Goverment, at the beck and call of Woolworths/Coles.

      You also seem to fail to understand, that due to the weak competition laws in Australia, that Woolworths and Coles can, and do, use their dominance and market power to prevent opportunities “opening up for other retailers” – especially opportunities for small business, because they know that with their bloated bureaucracies, that on a level playing the big chains be slaughtered by the superior efficiency of small business.

      You also fail to understand that effective competition laws have nothing to do with “price regulation” – in fact effective competition laws do the exact opposite, by protecting the free enterprise system.

      And what I find scary, is that ill informed commentators such as yourself have been seduced by spin to be mindless apologists for the Woolworths/Coles duopoly.

      And finally Mr Sherlock, yes people are laughing, but they are laughing AT YOU- as blog away in support of the vested interests of the Woolworths/Coles duopoly in blissful ignorance of the extent that you are being ripped off every time you line up at the supermarket check out.

    • Sherlock says:

      01:41pm | 17/02/10

      The problem with your argument Iva Tarbell is that one visit to any decent shopping centre proves just how wrong you are.

      Go to the recently upgraded Chatswood Chase centre and see the number of small businesses trading in direct competition to Coles. And where are these businesses situated? At the opposite end of the centre, as far away from Coles as possible I hear you say.

      Sorry, these small businesses are all clustered around Coles as that’s where all the action is. Each one of these business believes it can add a value quality that customers won’t find at Coles and looking at the customers they appear to get I would suggest they’re right.

      As much as it may pain you, larger business selling cheaper because they’re more efficient than smaller business is not a crime in this country and I for one say thank god it’s not. It also not a problem that small business face only in this country.

      All around the world small retailers recognise the futility of taking on supermarkets on price. Accordingly they find other reasons for consumers to shop in their store and many do it very successfully.

      Your anti-corporate rants are simply overblown conspiracy theories that fail to stand up to even minor scrutiny. Furthermore, before you start accusing me of lacking economic literacy, I have an Economics Degree and still work in the area. What about you? I’d say you’re the economic illiterate or you wouldn’t embarras yourself by cherrypicking valuations in the Australian Dollar

      http://ikoz.ii-blog.com/wp-content/uploads/2009/10/AUD-since-1999-graph.png

    • Iva Tarbell says:

      05:05pm | 17/02/10

      Sherlock, you have an economics degree !! WOW, and you still work in the area - we are all very impressed.

      However Sherlock, have you ever considered that might be half your problem -  that you been indoctrinated by economic theories that fail to have any relevance in the real world, and can’t see the trees for the forest ?

      Your comments that larger business are “selling cheaper because they’re more efficient” just shows how you have swallowed a text book,  how little you actually understanding about what is going in the Australian retailing sector, and how you have no understanding about economic efficiencies.

      Firstly, lets take your example at Chatswood Chase. 

      There is nothing special about all food retailers (large and small) congregate together in central location all close to each – it’s been like centuries.

      Secondly do you realize that at Chatswood Chase, Coles only pays a peppercorn rent of around $150 to $250 per m2 (which is below the economic cost of the landlord providing the space) – but all the small businesses that compete against Coles pay $1,500 to $2,500 per m2.

      Now if Coles are truly more efficient than small business, (as you assume) how do these small business manage to survive when placed at such a competitive disadvantage paying 1000% more for a basis business costs such as rent ?

      The answer is simply, these small business only survive simply because they are more efficient than Coles – and this distortion of the free market through 1000% more small business have to pay for rent, simply throws up an umbrella of protection for Coles to hide behind where their inefficiencies fester.
       
      Remove the government legislated privilege and protection from competition that Coles hide behind, level the playing field by strengthening our competion laws and Coles simply could not compete against the superior efficiency of small business.

      If anyone is ranting it’s you, and if the best you can do is show off about your economics degree, maybe you need a couple more degrees to finally realise they you have swallowed the duopolists propaganda hook, line and sinker, and you need to open your eyes and your mind to appreciate what is going on in the real world


      Mr Sherlock, if you really want learn something about free markets and competition, could I suggest that you might get some benefit from reading through the congressional debates that gave rise to the Sherman Act, the Clayton Act and the Robinson Patman Act in the USA - on which the free enterprise system is based.

      So finally Mr Sherlock, hopefully one of things you learned at university was to broaden your mind, well Mr Sherlock I suggest you get started by digging up some of those congressional debates – and only then will you be sufficiently economical literate to engage in a proper debate, rather than bragging and regurgitating the mindless crap that you have written in this blog.

    • Iva Tarbell says:

      10:11pm | 17/02/10

      Oh Sherlock, one more thing.

      Since you have one economics degree (and even still work in the area of the economics) and to overcome your concerns about “cherry-picking valuations in the A$” perhaps you can enlighten us all on how it is possible that over the last decade supermarket prices in Australia have risen FASTER than anywhere else in the developed world – but the value of the Australian dollar over the last decade has increased substantially ?

      http://ikoz.ii-blog.com/wp-content/uploads/2009/10/AUD-since-1999-graph.png

      Wouldn’t economic theory suggest that such a rise in the value of the currency would have LOWERED the costs of the majority of imported food (and imported packaging materials), and muted the effects of rising commodity prices (which are in the main priced in US$) – thereby enabling Australian consumers to enjoy relatively low rates of food inflation compared to the rest of the world ??

      So what went wrong Sherlock ??

      Why is the country with the most concentrated supermarket sector in the developed world also the country that has highest rates of food inflation ??

      Do you think there could be a correlation between increasing levels of market concentration and increasing prices ??

      And have you considered that there might also be a correlation between the higher and higher prices Australian families pay at the supermarket and the growing dominance of the Woolworths/Coles duopoly ?

      And if so Sherlock, is your mind capable of considering that Australia just might need to strengthen its competition laws for the benefit of the nation ?

      Or is your mind closed tight like a steel trap after being indoctrinated at university, that you are not capable of seeing the obvious in the real world ?

    • Jack says:

      08:56am | 17/02/10

      Gee, Frank - lucky we live in a country where the Government gets to dictate the prices that businesses charge for their goods and services.

      Oh, wait a second - nevermind.

      You do realise that this will lead to higher average prices for consumers, right? But I guess that doesnt matter, as long as you manage to appear as a true blue aussie battla good bloke supporting working fambalies and mateship, right?

      Reply

    • Iva Tarbell says:

      11:54am | 17/02/10

      Gee, Jack - don’t you understand that we live in country where the Government has allowed the two big supermarket chains to have such dominance, that they have been able to dictate the prices that they charge for goods in such as manner, that has resulted in these prices increasing faster than anywhere else in the developed world ?

      Oh, wait a second Jack – there is more.
      You do your also realise Jack, that Australian families are already paying higher average prices for groceries than just about anywhere else in world ?

      And you do realise Jack, that similar laws to protect competition and free enterprise that Zumbo writes about exist elsewhere throughout the world, but not Australia ?

      But I guess that doesn’t matter Jack, I’m sure your happy to just wonder into a Woolworths/Coles supermarket every week, and fill up your trolley in blissful ignorance that your being ripped off, paying higher prices that just about anywhere else in the world, right ?

    • Jack says:

      01:21pm | 17/02/10

      The government ‘allowed’ them to get ‘dominance’? How? Did they implement some kind of legislation banning other supermarkets? Is there a secret process through which the government has to approve the opening of a supermarket?

      Or is it just the case that we have a small population which can only support two major chains? If there were such huge opportunities to undercut, how come you dont see massive multinationals coming in and stealing their market share? Aside from the handful of aldi stores, I dont see it happening.

      Anyone who understands even the basics of competition law knows why this (and the equally retarded ‘birdsville amendment’ are nothing more than smoke and mirrors.

      How, exactly, will this scheme enhance competition or lower prices? It wont. It will stifle competition, since the majors will have no reason to try and strategically undercut each other, so say goodbye to your weekly specials. And I’m sure another layer of pointless government legislation is really going to encourage new entrants into the market - you know, the kind who *would* want to reduce prices in some areas to establish themselves.

      But keep bleating. Maybe you can start on the ‘petrol monopoly’ or the ‘banking monopoly’ next?

      And as for ‘paying more’ - we have a tiny, decentralised population on the opposite side of the planet to everyone else and a high company tax rate. Figure it out.

    • Iva Tarbell says:

      03:54pm | 17/02/10

      Wow Jack, you are so ill-formed you really need some help. So let’s go through your wholly mistaken assumptions one at a time.

      You ask how the government “allowed them to get dominance ?  Did they implement some kind of legislation banning other supermarkets?”

      Well Jack the answer to your question is YES.

      The legislation is called “Local Environmental Plans” (LEP’s) and they ban others from competing against Woolworths/Coles.

      Don’t believe me ? Well go and read the decisions in;

      Woolworths Limited v The Warehouse Group (Australia) Pty Ltd and Another [2003] NSWLEC 350

      Woolworths Limited v The Warehouse Group (Australia) Pty Ltd [2003]

      NSWLEC 31 Westfield Management Ltd v. Pine Rivers Shire Council & Anor [2005] QPEC 15

      And then maybe once you have informed yourself with the facts you’ll get an understanding of the kind of legislation that bans others from competing against Woolworths/Coles.

      So Jack, I hope that explains to you how the government “allowed them to get dominance”,

      Further Jack, for the most the history,  in the home of free market capitalism, its been understood that the free market must be protected by effective competition laws; and so in the USA they have the Sherman, Clayton and Robinson Patman Acts all designed to protection competition.

      In contrast, in Australia, over the last century, every attempt in enact similar laws have been rejected by the Government of the day, and without effective laws to protect competition, and Government has simply turned an blind eye to Woolworths/Coles anti-competitive practices in Australia that would be unlawful elsewhere in the world.

      Your second mistaken assumption Jack, is that we have “a small population which can only support two major chains”. 

      This a nonsense argument peddled by those in favour of an economic order ruled by duopolies.

      Just look at history to understand how mistaken your theory is - when Australia’s population was much lower in the 1970’s and early 1980’s - we had many other supermarket chains, and Woolworths/Coles only had around 35% of the market.

      The facts are in the early 1980’s that Woolworths/Coles combined market share was around 30% . So the size of our population has nothing to with the duopoly status of our supermarket sector today.

      The ideology you can only have low prices in large markets is delusional. New Zealand, which has much smaller population than Australia (but a much less concentrated retail sector) has lower supermarket prices (even for Australian made items) than Australia and for years has had substantially lower rates of food inflation than Australia. So Jack you’ve have it all wrong again.


      Next Jack, your claim that Australia has a “high corporate rate” is simply wrong.

      Yes it would be nice if our corporate tax rate could be lower, but the facts are Australia’s corporate tax rate is significantly BELOW the weighted average of all OECD countries. – so please don’t peddle this nonense when you don’t know what you are talking about.

      Further Australia’s corporate tax rate is LOWER than the rate is Japan, USA, Germany, Italy, Canada, Spain, France, New Zealand, Belgium, etc, etc, etc – and all these countries have lower rates of food inflation than Australia.

      Further, over the last decade Australia has lowered its corporate tax rate (a move I fully agreed with) from 36% to 30% - but we still ended up with the fasted accelerating supermarket prices in the world

      And if your really think that the levels of concentration in Australia’s petrol and banking sectors is not a problem, I feel sorry for you.

      But given how you have everything else hopelessly wrong, it won’t be surprising.

    • Jamers Hunter says:

      09:16am | 17/02/10

      in musswellbrook woolworths concider the town a mining town so every one must have loads of money therefor woolworths will charge loads more. if it wherenot for franklins the poorer would have nowhere ssince coles run the same scam
      at east maitland we are fortunate to have an aldi who are raking in money despite their much lower prices. so if they make good money what are woolworths making?

      Reply

    • Pat says:

      09:39am | 17/02/10

      A few facts.
      Woolworths uses fixed price contracts for all fruit and vegies and increases retail prices to reflect market shortages, drought etc. It does not pay any additional cost under any circumstance.
      Whilst quoting reduced prices in product lines there has been an average 20%-25% reduction in content in most consumable products across its product range. This reduction is not reflected in the advertised reduced prices. They quote item by item not content. The wholesale price has been reduced to Woolworths to reflect the 20-25% reduction in content.
      Take ice cream. There is more air in the product reducing the content in a 2 litre pack to 1.5 litres but it is 2 litres by volume because of the air. All confectionary has had content reductions of between 20% - 25% and packaging is made to visually have a similar size to the 250gm block from 12 mths ago. Mars bars are the same. Imported house brand extra light olive oil for example increaes in price each quarter, 20 -30 cents.
      Vegetables and fruit that meet family requirements in size e.g. small to medium sized apples, onions, potatoes, tomatoes and so on are packed in plastic bags or plastic wrap and priced at 4 times loose prices, the weight in these are 2-3 times the weight of the average purchase weight. The large apples for example all sold as loose items.
      While this advert campaign on reduced prices is being run the price of meat and chicken is being increased, some meat has risen by $3-$5 per kilo. A nice revenue and profit compensator.
      Now stand by for the real rub.
      In mid March the Australian Govt will allow Woolworths to import meat from countries that have “Mad Cow Disease” and some that have Foot and Mouth disease, some have both. The major imports will initially beprime cuts from the US.
      The advert campaign provides a nice diversion as the the retail price with good margin in the US is $12 kilo. In Australia Woolworths sells its prime cuts current for between $26-$35 per kilo. The duopoly must have massive political clout because they will import in excess of 500,000 tons of prime cuts which translates to an increased profit contribution of $6billion (at an extra $12kilo). The most recent victory was salmon, before this it was pork, only by the grace of the Senate have they been blocked bringing cheap apples in from NZ (fire blight by AQIS’ own admission will destroy all local pear trees and cause mayhem in te apple industry). Guess what, there is no labelling law to force country of origin to be identified. Can’t calculate the $ arbitrage and over charging without this, can we?
      Imagine the political bribes, er sorry donations, you could make to the ALP and Liberals from the loose change.
      I wonder whether any Professor has undertaken a project to identify the unpaid for waelth transfer to the duopoly and the cost to the rural, regional and city families the power of Woolworths (and Coles) has cost them through higher retail prices than would exist if there were true competition, enforced price taking on farmers and producers through use of market power and tenders forced on producers on a take it or leave it basis by use of this market power.
      It would have to run into $billions per year.  BUT we are getting 3 cents off a bar of soap.

      Reply

    • Sherlock says:

      10:17am | 17/02/10

      Gee Pat. You and Frank should get together for lunch so you can swap conspiracy stories about the evil corporations. Should be fun for the both of you.

    • Iva Tarbell says:

      11:12am | 17/02/10

      Sherlock you obviously cannot distinguish between fact and conspiracy.

      As far as I can see, the only one talking about a “conspiracy”, is your beloved Federal Competition Minister Dr Emerson whom by his actions has shown he prefers looking after the vested interests of the supermarket duopolists rather than consumers.

      Now Sherlock, it’s clear that you have missed the point - either because you have your own vested interests, or you’re a Labor stooge, or you’re simply clueless. (my guess in the latter). The sooner that we repair our broken competition laws in this country (as the Professor has proposed) the better off both consumers - and the nation will be.

      And perhaps Sherlock, you should take note from the home of free enterprise, the USA, which has had a diversture power in their competition laws for over 100 years, to break up those corporations that think that they run the country.

      These corporations are not “evil” but rather vested interests that seek to use their mere size to destory competition as so they can rip off consumer at every turn and manipulate the poltical process -  but they can get away with this with the support of misguided apologists like yourself.

    • Sherlock says:

      01:19pm | 17/02/10

      A labor stooge?  You mean one that believes in free markets and minimal regulation. Well at last I’m not a typical Labor stooge which is perhaps why I’m more often accused of being a Liberal plant.

      “These corporations are not “evil” but rather vested interests that seek to use their mere size to destroy competition as so they can rip off consumer at every turn and manipulate the political process”

      Really? Seriously you need to get a grip on reality here. I mean this is in the realm of “the moon landing was faked” and “The CIA was behind 9/11” conspiracy nutso believers.

      Add to this what you wrote earlier

      “when there is a Woolworths & Coles next to each other, they operate a cosy club, charging the highest supermarket prices in developed world.
      But if a new small business sets up in competition in the same area, they slash price to drive small business out of the market and to send a message to other not to enter the market. And as soon as the small business is driven out - up go the prices with interest.”

      Most of the Woolworths and Coles that I know are situated inside shopping centres. All these shopping centres also have butchers, bakers, fruit shops, seafood shops and myriad other businesses that operate in direct opposition to the supermarkets all of whom have been trading merrily away for years.

      The smallish local centre I shop at is designed to make you walk past all the other shops to get to Woolworths. Like everybody else, I love to save a buck where I can so along the way I note the prices at the fruit shop, fishmongers, butchers and chicken shop so I have a comparison to the supermarkets. You know how often I go back to one of these to buy something? Less than 10% of the time because the supermarket can supply me with similar quality products at a cheaper price. In many instances far cheaper.

      The trouble with you anti-corporate types is that you assume the average person is a moron and you’re acting as the self-appointed defender of the people you judge to be too stupid to look after themselves. This is illustrated by your comment simply because I have the gall to hold an opinion different to yours when you said

                            “you’re simply clueless.”

      In reality the average shopper is fairly canny and is more than capable of sniffing out the best prices and knowing when they’re being taken for a ride.

      Coles and Woolworths are private companies who operate highly successful businesses because they’re good at what they do. If they over step the market competitors will appear and steal market share. In my years I’ve seen a larger number try but I have yet to see someone do it successfully. Niche players like Franklins and Aldi will survive but Coles and Woolworths will continue to dominate until someone comes along who can do it better.

    • Pat says:

      10:45am | 17/02/10

      Where is the conspiracy Sherlock. A fact, is a fact, is a fact.
      Conspiracy is a term used when you have no facts upon which to base an argument.

      Reply

    • Kim says:

      11:41am | 17/02/10

      Pat - I agree with you.  The worst thing is trying to find any aussie grown or bred produce in either woolies or coles.  Even the fish comes from mexico and the prawns from Thailand for crying out loud.  AND, when was the last time anyone saw garlic that wasn’t from China?  Even our local fruit and vege grocer does NOT supply australian products.  It’s a disgrace.  I am now growing my own shallots, tomatoes etc.  At least I know they’re 100% australian and best of all - I don’t have to pay for it.  Unfortunately, I can’t grow my own fish or prawns or steak…...

      Reply

    • John A Neve says:

      01:51pm | 17/02/10

      There is a total failure here to accept the facts.
      Our system is build on three things; Growth, Free Enterprise and Competition.

      Logic tells you, you cannot have continual growth, competition created Coles and Woolies via the free enterprise system. Big fish eat little fish and get even bigger.

      Frank Zumbo writes every few weeks about this and ignores the obvious, as do most of the bloggers here. You cannot fix a corrupt system, you either have government control or free enterprise, you cannot have both.

      Reply

    • Davido says:

      06:15pm | 03/03/10

      This is so wrong it is not even a joke. You most definitely can have free enterprise and government regulation. They often, if done correctly, work hand in hand.

      Indeed, market failures like those allowing unfair competition in Australia require governments to step in.

      And yes, I do have a degree in Economics.

    • Daniel says:

      02:42pm | 17/02/10

      Nothing will change with the supermarkets until we get a Greens govrnment.The retailers lobby should realize that.

      Reply

    • Joe says:

      09:43pm | 17/02/10

      A Greens government? Yeah right. The greens would have some kind of mega ETS tax aiming for a pointless 250% reduction in carbon output. Then they would put taxes on any meat that ever breathed, and another tax if it wasn’t free range. Then they would put a tax on products that didn’t come in the thinest of paper packaging…

      Things would change alright, but not to the benefit of consumer or retailer (just to the great green gods).

    • Agblaster says:

      03:25pm | 17/02/10

      Yeah yeah, yeah yeah.

      Forget the Flat Iron fire. Forget Minimata disease. Forget short weight, chalk in the flour, paint thinner in the petrol. Forget HIH Insurance, Bond Corporation, Quintex, on and on.

      Forget the dodgy insulation installers too.

      Free enterprise all. Never ever corrupt or incompetent in Never Never Neveland.

      Free enterprise good, Government bad. Deregulation good, Laws and Regulations bad.

      Yeah, sure.

      Reply

    • stephen says:

      06:46pm | 17/02/10

      In Coles after 8.00 pm, the cooked chooks are 5 bucks, so I don’t care what else is ‘above board’.

      Reply

    • paul says:

      08:50pm | 17/02/10

      no matter how much we bitch about it nothing will change we will continue to be screwed because the supermarkets have made it an art form the ones we should feel sorry for are the suppliers. the supermarkets may be having a sale but it is the suppliers providing the cheaper price not the sellers, they still maintain the same margin when a grower gets 10c a kilo for product and the retailers sell for 2.99 a kilo who is getting touched, both grower and consumer the middleman always wins

      Reply

    • Joe says:

      09:45pm | 17/02/10

      Barnaby would sort them out given the chance.

      Reply

    • agblaster says:

      07:20am | 18/02/10

      Barnaby the bull-artist from The Bush? The bloke who can’t tell a billion from a million? Yeah, sure he’ll sort it.  Sure he will. Yeah yeah, yeah yeah.

      Reply

    • Jay says:

      12:32pm | 18/02/10

      Iva Tarbell - I love you!

      Reply

    • Davido says:

      06:10pm | 03/03/10

      The real solution is to force transparent pricing on retailers.

      Retailers should be made to show the cost to them of each product along with the price.

      Then we would see some real competition.

      Reply

    • Suzanne says:

      05:09pm | 17/03/10

      Well Coles is absolutely fantastic to shop at.  The small shops are the ones that rip off the customers.  IGA and Aldi are untidy and not cheap.  I think some people seem to think Coles and Wollies should give their items away.  Do not forget the wonderful staff they employ and give the very best of service.  Coles Westfield Bondi and Edgecliffe cannot be equalled.

      Reply

    • Shane says:

      10:47am | 05/12/10

      John A Neve is right. You cannot have government regulation and free market economics operating at the same time. You either believe in one or the other. However, it’s not that simple, because we are not always aware of what goes on behind the scenes, by governments or big business. 60 or more fruit stores and butchers have closed in Brisbane this year, and I believe that this is the direct result of the Labor Party’s grocery reforms. Everybody talks about the grocery sector, but rarely do I hear anyone talk in any meaningful way about the local butcher and greengrocer. There are around 5,000 around Australia, but they are closing their doors rapidly and their confidence is unbelievably low because the focus in the market because of the intro of Aldi is firmly on price - just look at the advertising campaigns at the moment. The first casualties are the local fruit and veg shops and the butchers. The only real ways to force the big retailers to compete is through the market place, and it can be done. Next week we are launching a new website called http://www.less2pay.com.au, and it has the capability of allowing every small greengrocer and butcher in Australia to post their prices and value options for Australian shoppers in their local community real time, comprehensively, and update their info quickly and easily. The senate inquiry into the collapse of grocerychoice decided that there was not the technology available for small business to contribute to this in a meaningful way. We told the Labor Party in 2007 that we had the answer, and that their reforms were dangerous and misguided. The only thing the government should regulate is anti-competitive practices, but these are still happening in ways which are meant to dive out competitors. It is not ‘smart’ business doing underhanded things like checking out shoppers’ reward info to see whether they’re buying F&V and M&P in the supermarket, and if they don’t appear to be, offering them twice the rewards points. This is aimed at a specific business in the same shopping centre, not at a general market, but this is what happens when we have concentrated market power that controls supply and distribution, and if this continues we will pay the price even more in the future.

      Reply

    • Amber says:

      03:30pm | 14/06/11

      That?s raelly shrewd! Good to see the logic set out so well.

      Reply
 
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