Supermarkets

Last week Coles announced that it plans to cut the price of fruit and vegetables by up to 50 per cent. Its major competitor, Woolworths soon followed. The price war sounds like great news for Australian consumers. But while it may provide relief to hip-pockets around the country in the short-term, questions are now being asked about the true impact of bargain basement pricing.

For most Australians, grocery shopping is a chore we have to squeeze into our busy lives. We rush up and down the aisles, tossing products into our trolley while we mentally juggle the household budget and keep the kids entertained. With all that in mind, it’s not surprising that we embrace bargains, specials and sales with enthusiasm.

But how often do we stop to consider the impact our shopping habits have on the wider community? The truth is that someone always bears the cost of cheap produce, whether it be small retailer, distributor or farmer. It may be beneficial to our hip pocket today, but tomorrow that sale price may have untold social or environmental costs.

Continue reading "Coles, Woolies shoot each other, but farmers get shot" »

Have you ever driven around regional Australia and found large discrepancies in the petrol prices at different regional centres? Do you ever wonder why petrol prices are different in different suburbs? And have you ever been annoyed that the price of the same item may be different at different Coles or Woolworths supermarkets in the same neighbourhood?

Well, what you’re witnessing is the practice of geographic price discrimination. It’s common among our major supermarket chains and oil companies. At its simplest, geographic price discrimination means that consumers in some areas are paying a higher price for the same item than they would otherwise have paid elsewhere.

There are plenty of examples of geographic price discrimination. Petrol pricing is a well known example. Those who live in the city see it every day when they drive to work, school or the shops. Petrol prices will vary from suburb to suburb with the same petrol retailer charging a different price for the same petrol at their different outlets.

Continue reading "Regional Australia is being shafted at the bowser" »

Forget about the 3 Rs. In schools these days it’s all about the 3Cs: Consumerism, Capitalism, and Coles.

Store managers are giving prizes to Sydney schoolkids for singing the “prices are down” jingle wearing company t-shirts, surrounded by advertising banners, at school assemblies.

What next? A scholarship to the McDonald’s University for writing a dissertation on how burgers qualify for the Heart Foundation tick?

Continue reading "Aisle be damned if I’ll cop this not so super marketing" »

The mere thought of taking a small child to a supermarket makes me tense. I twist up like a pretzel. One is bad enough, passing through the turnstile with two or more is basically extreme sport.

I watch in awe when I see an adult with a veritable litter in and around their trolley. I try not to stare when the adult agrees to: a fistful of Wiggles toothbrushes; the laxatives that their two year old is convinced are a chocolate bar; and a Disney torch, just to keep the peace, just to keep moving.

Then, and only when the trolley is half full, the one year old has commenced imitating a car alarm and the two year old is opening the laxatives, I overhear the four year old make a most compelling and specific case for locating the bathroom instantly.

Continue reading "Don’t let your little darlings near the Kit Kat aisle" »

Well, the time has come for Graeme Samuel to finish up as ACCC Chairman. His departure will no doubt provoke mixed feelings and for that reason it’s worth pondering some of the alternative perspectives on Samuel’s tenure at the ACCC.

There will be those that will applaud his departure for the simple reason that they believe that Samuel could have done much more to promote vigorous and effective competition in a wide variety of sectors. With key Australian sectors having become more highly concentrated during Samuel’s time at the ACCC, there is a real and growing danger that consumers will increasingly be price gouged.

Samuel doesn’t appear to be too concerned about the growing concentration in key sectors. Free market theorists like to say that Australia is a small market and because of that we shouldn’t be too concerned if we end up with just a couple of large and powerful companies dominating particular sectors.

Continue reading "ACCC boss departs not with a bang but a whimper" »

With the debate raging about the carbon tax and whether the initial carbon price of $23 will lead to any meaningful reductions in greenhouse tax emissions, a new front has opened up in the debate concerning the real possibility that businesses will use the carbon tax as an excuse to price gouge.

Price gouging is already a problem in such areas as petrol, airport parking and even groceries. The petrol rip off is now ongoing in many regional areas and even in the city average petrol prices do not come down as quickly as they should when there are falls in the Singapore benchmark price used to calculate local prices.

Airport parking rates keep going up and visitors to major airports are held hostage to the monopoly power of the airport owners who get nasty with parking infringements if you dare to pick up a loved one from the “wrong” area.

Continue reading "We need CarbonWatch to stop price gouging" »

Tailgating a fussy grocery shopper is a bit like watching porn. All that squeezing, rubbing and sniffing of the stone fruit and the long, fawning glances at the root vegetables.  It’s enough to make you grow your own. Or shop at midnight.

Unfortunately for those of us put off by “touch-feely shoppers”, things are about to get worse. Cue Woolworths new “try before you buy” policy on fresh produce, with Coles expected to followed suit.

Woolworths says their policy is aimed at boosting the “quality of their fresh foods”, but to the shopping weary it’s just another chapter in the “great Australian supermarket wars”. A tiresome battle between our major food suppliers with scant regard for what we actually want from our grocery chains.

Continue reading "Shelve cheap imports, Aussie shoppers want home grown" »

There is a glossy protest poster which rural conservative MPs put up in their parliamentary offices in Canberra last month. It features a bag of groceries under the words “Can you afford to pay Labor’s carbon tax?”

It’s a fair question. Oddly it’s a question being put by the same group of people who are conspiring to make sure that we all pay much more than we need to for our milk.

The National Party and country Liberal MPs have been joined by consumer advocates and competition crusaders in denouncing the conduct of supermarket giant Coles in forcing a price war not only over milk but beer, petrol, even barbecued chooks.

Continue reading "Check out the hypocrisy in the war on supermarkets" »

VB doesn’t strike you as a brand that needs protecting from being viewed as overtly cheap piss. This isn’t to bag VB, but there’s probably a reason it chose David Boon and not David Marr as a mascot.

News yesterday that Foster’s stopped supply of its beers to Coles and Woolworths for a short period this month, after it emerged the warring retail giants were planning to sell VB (and possibly other brands) for as low $28 a case. Carlton & United, Foster’s beer division, have said that they stopped supply to the supermarkets out of fear their beer brands were being undervalued; according to CUB it was done to protect “the brand equity – the image of our brands”.

Now you might be asking yourself how it’s possible to undervalue the Australian gold standard of cheap beer? Well you can, and it’s got something to do with the amount of beer we’re drinking - or more accurately, not drinking.

Continue reading "When a hard earned thirst needs a big cheap beer" »

The so-called supermarket milk price war is not the only thing heating up. The debate surrounding the future of brand name products on our supermarket shelves is also heating up.

Central to both is the growing power of Coles and Woolworths. Together the supermarket giants operate 87 per cent of full line supermarkets over 2,000 square metres. As we know, they have spread their tentacles to petrol, liquor and banking services.

Like major armies on the march, Coles and Woolworths first establish a beachhead in a particular targeted sector of the economy and then spread out to take more and more territory in that sector until they are either stopped or they march their way to “victory.” Once victorious they can impose their “way” on those they deal with, including suppliers and even consumers.

Continue reading "The death of brands is much closer than you think" »

With Australia continuing to have some of the fastest growing food prices in the developed world, you have to wonder if Australian consumers are being milked by the major supermarket chains.

After all, Coles and Woolworths control over 87% of Australian supermarkets over 2,000 square metres. That clearly gives them plenty of market power which allows them to push up grocery prices and hence Australia’s food inflation.

Sometimes, however, they keep us guessing about their real agenda. So while we are hearing a lot about fresh milk prices coming down, we don’t hear much about what’s happening with other prices being charged elsewhere in the supermarket or at petrol bowsers linked to Coles or Woolworths.

Continue reading "Don’t be fooled, the supermarkets are milking us" »

Have you ever wondered where you can buy the cheapest petrol or groceries? Well, if you have, then you would know that such information is not readily available.

You may try and search for the information, but in Australia you will soon find that there is generally no single place to get it. Yes, there may be some pricing information out there but it may be very limited, out of date or not in a readily accessible form.

In practice, this lack of full price transparency places you, the consumer, at a severe disadvantage. How many times have you driven by a petrol station offering one price only to find another service station down the road offering a cheaper price? What if you had decided to go into the first service station to buy your petrol only to later drive by the cheaper service station down the road? We have all been there and felt ripped off in the process.

Continue reading "Transparent fuel and grocery prices: time for another go?" »

While politicians are always quick to say “feel good” things about small businesses being the “engine room” of the economy, few MPs from either side of politics are ready to act to ensure that we have a vibrant small business sector.

Why? Simply because the big end of town is very quick to shoot down any proposal that puts the spotlight on attempts by the big players to drive small businesses out of business in any way they can. Similarly, any MP that dares suggest such proposals is dismissed by the big end of town as some sort of heretic or “maverick.”

Clearly, big business and their hired guns always want their way and they will whinge loudly when they don’t get it. Sadly, they are also very good at making self interested and, even personal, attacks on those proposing stronger competition laws.

Continue reading "Is anyone really standing up for small business?" »

Do consumers want cheaper prices and greater product choices? Of course they do and that’s why it is essential that more Costco supermarkets open up around Australia.

Costco is a US company that operates retail warehouses where people can become members for a yearly fee which then entitles them to shop at a massive warehouse offering products at substantial discounts to competitors.

By way of background, Costco has about 563 warehouses worldwide with around 410 operated in the US, and the remainder operated in Canada, Mexico, the UK, Taiwan, Korea, Japan and Australia. We currently only have one Costco in Melbourne’s Docklands which opened on 17 August 2009.

Continue reading "People get Costco, but does the Minister?" »

It’s taken a few tests but I’ve finally figured out why it’s so hard to watch the new Kmart ad without grimacing. Have you seen it? It’s the one where an attractive young mum pushes a stroller through Kmart with one hand, balances a two-year old on her hip and talks on her mobile phone with the other, while the older child (my guess about five years of age?) runs ahead of her. 

Cue super helpful Kmart guy who comes to the rescue, somehow managing to both read her mind and reach for the most hard-to-get kettle on the shelf, deposit it into the hands of the renegade five year old and not for a single second interrupt the woman’s phone-call. 

The result, a wonderfully apt depiction of all the things that drive me nuts about shopping centres, specifically supermarkets and the pesky little habits they bring out in even the best of people.

Continue reading "Don’t bring your kids and other supermarket rules" »

With a federal election fast approaching it’s time for voters to start evaluating Mr Rudd’s performance on supermarket issues.

For Mr Rudd there is no escaping that grocery prices remain literally a bread and butter issue for all Australians.

With struggling families certainly not pleased with ever rising grocery prices and with swinging voters unlikely to be impressed with the fact that Australia still faces some of the highest levels of food inflation in the developed world, Mr Rudd certainly has some convincing to do.

Continue reading "What are you really doing about grocery prices, PM?" »

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.

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.

Continue reading "The supermarkets’ ongoing ‘conspiracy against the poor’" »

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.

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.

Continue reading "Check it out - a bizarre week of supermarket spin" »

We live in a society where almost everything can be purchased single serve, individually wrapped and stuffed with enough preservatives to last a life-time – a very short life-time for most of us if we don’t pick up some slack.

A simple fact of life is that some things just come in packets. Bread, even from a bakery, comes in a plastic bag. We don’t go the butcher to be handed a handful of mince meat, and a carton of milk wouldn’t be much chop without the carton.

Beyond that simple carton of milk, it is easy to cut corners with pre-packaged ingredients: garlic from a jar, powdered stock, instant noodles, canned vegetables and packet mixes. I too am guilty of pre-prepared ingredients in times of need. It seems easy to buy a packet mix, add meat and pre-chopped vegetables and microwave some pre-boiled vacuum packed rice than cook from scratch – but it’s not real food. We are sacrificing our health, and the environment, to eat food that brings instant gratification but no satisfaction - the idea that it takes a long time to make something from scratch is a myth.

Continue reading "The nine biggest sins of packaged food" »

As with all governments there is the irresistible urge to pass the buck as a way of trying to deflect voters from the government’s inaction on a particular issue.

Sadly when it comes to buck passing the Federal Government has been in top form during 2009.

We saw the buck passing on the GROCERYchoice debacle in June when the Federal Government pulled the plug on the consumer group Choice before Choice could launch a new revamped website to bring about much needed real transparency on grocery prices.

Continue reading "Thanks for doing nothing for consumers in 09 Mr Rudd" »

The journey started a few years back when a tomato and pumpkin self seeded in the mulch in our backyard.

And it’s culminated now with me doing my best to avoid the supermarket for fruit, vegetables and meat by producing my own.

And in between - while I profess no inside knowledge about trends in food shopping - I have concluded that when blokes like me start talking about self sufficiency, the retail supermarket giants have to lift their game.

Continue reading "My goats say a lot about supermarkets" »

It’s easy to lay the blame of rising food prices at the feet of the large retailers and it also makes for a sexy, albeit misguided, headline. The easy target is often the large target, but if you strip the emotion out of this debate and look at the facts, its clear there isn’t much of a story in it at all.

It is true food costs more than it did 10 years ago. Like other products and services including education, healthcare, the cost of living increases over time, but so do wages. Australian private sector earnings have risen by nearly 51 per cent since 2000.

Australia’s real growth in wages is the second highest of 10 developed nations. But you won’t see critics talk about this when they talk about food prices. It ruins the hot headline.

Continue reading "The real facts about food prices spoil a good yarn" »

It’s official. We are getting ripped off on food and grocery prices.

A review of OECD statistics over the past 10 years clearly demonstrates that Australia consistently has some of the highest levels of food inflation in the developed world.

This is a wake-up call for Federal Minster for Competition Policy and Consumers Affair, Craig Emerson. The evidence of the power of the supermarket duopoly is now overwhelming and the Minister must move quickly to inject new competition into the Australian grocery sector.

Continue reading "Mr Emerson, tear down this supermarket duopoly" »

Nothing hits a family’s weekly budget harder than increases in the costs of daily essentials like food. Price hikes at the supermarket make consumers angry and politicians nervous.

And all shoppers know that the price of many staples have increased over recent years.

This was highlighted by the latest OECD figures showing the cost of feeding an average family has risen about 40 per cent in Australia over the past decade. So who is to blame – major supermarkets, manufacturers, the government?

Continue reading "It might look bad, but food isn’t actually that expensive" »

With the 4 major banks pushing up interest rates at will and the Federal Treasurer, Wayne Swan, looking increasingly impotent when trying to bring them into line, it’s clear that competition in the banking sector is being killed off quickly and dramatically to the detriment of struggling Australian families.

So, what’s killing off competition in the banking sector?

Well, the answer is the same as to what’s killing off competition in groceries, liquor and petrol; just to name a few.

Continue reading "Why do the big four banks rule? Go to the supermarket" »

So how do companies like Coles and Woolworths protect themselves from competition?

Well it’s simple really. All they need to do is keep out new competitors through a variety of practices designed to lock out any potential new rivals.

For starters, Coles and Woolworths have been entering into leases with shopping centre landlords preventing the landlords from allowing other supermarkets into the shopping centre.

Continue reading "Coles and Woolies are still getting away with it" »

Everybody loves to complain when the price of bread, milk, cheese and other household staples creep up.

Like rising interest rates and the price of petrol, increasing food prices provoke anger and frustration among many struggling Australians families.

So it is not surprising that fluctuating food prices are regularly blamed on food and grocery companies and supermarkets.

Continue reading "Don’t blame supermarkets for price rises" »