Grocery inquiry throws down the gauntlet
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The ACCC says the big two supermarkets account for 50 per cent of fresh food sales. (www.flickr.com: Darius, file photo)
The casual observer could surmise that when it comes to competition the grocery inquiry would like to have a bob each way. The Australian Consumer and Competition Commission (ACCC) argues the supermarket sector is 'workably competitive'.
But there's one key line tucked away in the 600 plus page report which consumers need to remember, without being distracted by the trolley loads of politicking, jockeying and rubbishing from the rival camps and retailers:
"Australian consumers would significantly benefit if Coles and Woolworths faced more competitive threats that encouraged more aggressive pricing strategies."
In other words the competition might be workable but it could still work a lot harder for the benefit of shoppers' wallets.
Note the word 'significantly'. There have been long been arguments about just how powerful the market concentration of the two major chains has been. The term duopoly is often bandied about.
The Australian Competition and Consumer Commission says the big two account for about 70 per cent of the sales of packaged goods and 50 per cent of fresh food sales such as meat and fruit and veggies.
Competitive threats
There's no doubt the two rivals watch each other's moves very closely particularly in terms of price. So much so that, as the report states, if one chain tries to lead certain prices down the other will slavishly follow making it hard to win over each other's customers.
What's needed are new players armed with rather more effective 'competitive threats'. The ACCC report holds the German ALDI up as a shining example. CHOICE's own grocery price surveys have found a basket of goods at the no-frills chain costs only a little over half that of the majors.
Our research and that of the ACCC has shown if you have an ALDI in your area the prices in the local Coles and Woolies will be cheaper. Consumers benefit even if they never darken ALDI's doors.
But ALDI is only currently found on the east coast of Australia and in the ACT. And these retail knights in shining armour do not spring up overnight. The Federal Government has already moved to give foreign investors more time to develop commercial property in the hope of encouraging more such entrepreneurs.
They now intend to refer the anti-competitive impacts of various state and local zoning and planning laws, which it's said limit the number of large supermarkets with lower prices, to the Council of Australian Governments (COAG).
All this will all help drive competition, but are medium and long-term initiatives designed to reduce the barriers to entry. What can be done in the short to medium-term to put any kind of downward pressure on prices?
Downward pressure
This question bring us to two of the most seemingly innocent but contentious initiatives of the grocery inquiry - unit pricing and the grocery price website.
On the face of it they both simply increase the level of price transparency, which in turn should increase competition and help reduce prices. But the scare stories have begun - it's all a political stunt, they won't work and could cost consumers more than they save.
Unit pricing is widespread in the western world. It permits shoppers to judge the true value of products by seeing the ticketed price and the price per unit - which may be per 100 grams or 100 milliliters. It will save shoppers time (no more mental arithmetic in the aisles) and money as they move to better value brands and home-brand products.
Money is of course the key question - just how much? Estimates vary and it depends how well and how quickly consumers engage with the new practice. The same can be said of the GroceryChoice website which gives a snapshot of local grocery prices.
You punch in your postcode and are told which outlets are best value this month for a range of different food baskets ranging from fresh meat and fish to snacks and staples.
It might not sound very dramatic but if people use it the website, which is run by the ACCC and not associated with the consumers' association CHOICE, it contributes to price transparency, can make shoppers switch supermarkets in pursuit of keener prices and again drive competition.
The costs of both plans need not be onerous and the benefits could be considerable.
Food prices have been climbing for a range of economic and environmental reasons: growing demand in Asia, climate change, drought and crops being diverted into biofuels.
The Federal Government can't do much in the short term about any of them. But it can do something to dampen the upwards trend in prices by encouraging greater competition.
The ACCC grocery inquiry has thrown down the gauntlet. So while we await the arrival of more white knights armed with 'competitive threats', more immediate measures such as unit pricing and even the grocery website will do very nicely, thank you.
Christopher Zinn is media spokesman for consumer group CHOICE.
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Comments (67)
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bjh:
06 Aug 2008 9:09:57am
*Grocery inquiry throws down the gauntlet
A gauntlet is a heavy armour plated glove worn by knights of yore and to have one thrown down at you meant that you in for the fight of your life and one from which there was a better than even odds you would survive.
*one key line tucked away in the 600 plus page report* that suggests that something should happen, maybe, but if it doesn't that would be OK too, does not exactly say life or death, all-guns-blazing battle to me.
To me it's more white flag time, whimper whimper, its too hard because they are too strong time
so perhaps the journo who wrote this could choose a more appropriate metaphor. this is more a limp fish in a silk glove than any blood stained, glory drenched gauntletAgree (0) Alert moderator
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Stev0-P:
06 Aug 2008 11:37:49am
You're on the money about the white flag, bjh (9:09am).
I think supermarkets would welcome unit pricing to prove that the larger serving is nearly always cheaper per unit, even if the shopper gets a quantity of product that ultimately may be wasted.
There's already so much clutter on a price ticket before this additional info is mandatory in supermarkets, I've seen people bring in their own magnifying glasses!
This enquiry was just an exercise for ACCC's Graeme Samuels to give his inquisitor role a popular aspect. He was quoted as saying that he found it hard to believe that Woolworths / Coles together had less market share than they claimed. Gee, Mr Samuels, why don't you read the statistics? Even the IGA buying group's own adverts claim to service 1300 supermarkets, compared to around 850 each for the other 2.
Another false alarm from the Labor / Rudd election campaign.Agree (0) Alert moderator
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Dianne:
06 Aug 2008 3:03:54pm
I like the idea and it certainly cant hurt. It's never been claimed that it will make a huge difference and certainly nothing I based my vote on but I welcome anything that gives consumers more information.
Allowing supermarkets to build close to each other is a great idea and I have no idea why that wasn't allowed years ago, as it plainly increases competition.Agree (0) Alert moderator
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Jim Bendfeldt:
06 Aug 2008 3:04:48pm
Instead of cluttering supermarket labels with unit prices, which I'm sure anybody with the most basic primary school level maths can work out, I'd like to see more appropriate labelling of products themselves, e.g.
- Whether the product contains trans-fats;
- Saturated fat & unsaturated fat content;
- Quantity of sugar;
- Quantity of 'filler' (to bulk it up);
- Colours and preservatives likely to send your kids hyperactive;
- Country of origin;
- GM content;
- Percentage of 'air' in over-sized packaging;
- Manufacturing and use-by dates;
- Flammability (clothing, fabrics, cleaners);
- Whether my kids can choke on it;
- Potential allergy problems;
.... just to name a few.
These would help me determine which items to buy, not a $per unit price, which would only encourage me to buy larger quantities, and throw away what I don't use.Agree (0) Alert moderator
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John R:
06 Aug 2008 3:39:10pm
Unit pricing is good for brand comparison. It makes it much easier to compare brand X in the 436g container, to brand Y with the 523g. Sure you can calculate or guess it, but it makes it much easier to have it calculated by the store computer and displayed.
It doesn't target the supermarkets, but rather the manufacturers and packagers who choose odd quantities for package sizes to trick consumers.Agree (0) Alert moderator
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John Michaels:
06 Aug 2008 9:09:04pm
It wasn't a journalist, it was Christopher Zinn from consumer group CHOICE. The easiest way to bring down prices is to reduce what you need to buy from the big 2. If you go in there with a very specific list of what you need such as toilet paper, tinned tomatoes, cooking oil, and other items then you are shopping to a budget. If people started growing their own fruit and veg then you could also cut costs. Don't tell me you can't do it. I had corn, tomatoes, chillis, potatoes, onions, and herbs growing on a 1 metre by 2 metre balcony in Melbourne. Find out who the independents are and choose to shop with them instead of giving your hard earned to faceless shareholders that only want more every year.
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Skeptical:
06 Aug 2008 9:14:37am
Yeah ... but. The ACCC findings discounted the big issues - the predatory marketing, and that the current system is not competitive. Yes - food prices have risen mostly due to external causes and not profiteering.
Ok we knew more widespread competition is healthy (is it all the time?) and that "zoning" needs to change (do I want all these supermarkets?)
The rest is just veritable small fry.
Now really - a web page a solution to assist shoppers - you must be joking. Specials here - specials there - and the whole thing is a Dud.
A lot to do about nothing in the end.Agree (1) Alert moderator
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Will:
06 Aug 2008 9:20:29am
More of a throwning down of the wet lettuce. It's dissapointing and toothless. Shoppers and farmers will continue to get royally screwed.Agree (0) Alert moderator
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Dianne:
06 Aug 2008 4:23:23pm
"On the face of it they both simply increase the level of price transparency, which in turn should increase competition and help reduce prices. But the scare stories have begun -."Agree (0) Alert moderator
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Norm McMullen:
06 Aug 2008 11:31:36am
Skeptical, specials in one lane - prices up in next lane by the same amount the specials were reduced by! Zippety-do-da zippety........open another check out!
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billy:
06 Aug 2008 11:40:30am
Competition is the key!, was watching A Current Affair and they went to 2 woolies in the liverpool (sydney) area, not even 10 minutes drive from eachother and the fruit and veg had a 200% mark up from 2.99 for say a lettuce at liverpool woolies and 3.99 for the same lettuce 10 minutes away at moorebank, its not even 10 kilometres between the 2 yet one charges half the other does... why is it?, Liverpool has fruit shops, butchers etc by the dozens, Moorebank has 1 fruit shop in the same complex as Woolies, less competition = higher prices, and the poor bloke at the fruit shop in Moorebank has no option but to raise/lower his prices to match/beat woolies, sometimes cutting his prices below what he paid for them, and it did show him lowering his pricing to match the woolies, but they lowered the price again within 15 minutes of the fruit shop owner dropping his.... tell me that is fair?
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John Michaels:
06 Aug 2008 9:16:15pm
Farming can be a lucrative industry or it can take the blood from you until you die. I understand why tinned tomatoes are cheaper from Italy, it's because their Government supports the industry. I think the only Australian owned cannery left is Golden Circle and the vultures have been circling for years. They can no longer compete with cheap subsidised European imports. If the Government is not going to do anything then you must CHOOSE to buy Australian owned and manufactured goods. I am not trying to be protectionist just realistic. People are buying food from the other side of the world that should be more expensive than food made in Australia. If the European Governments are going to subsidise their farmers then maybe it is a good idea to start slapping import tariffs on them to help create a level playing field for Australian farmers.
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Wagner:
06 Aug 2008 9:16:03am
So how soes this stop the "rampant price fixing" which the ALP said was in existence prior to the last election?
Oh that's right...the ACCC said it didn't exist...
Furthermore, how is knowing the price of eggs on 1 September going to help me when I go shopping on the 14th? Once a month price updates are useless; who's to say the supermarkets won't just alter their prices for this one day then raise them back up agin once the figures are published?Agree (0) Alert moderator
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Spank:
06 Aug 2008 10:53:07am
I agree. Spend the money on making it more attractive for competitors to get into the market. Once a month price updates is just absolutely useless.
Another pre-election scare tactic. Surely people must be starting to see now that the current governmet lead them up the garden path.Agree (0) Alert moderator
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John Michaels:
06 Aug 2008 9:19:18pm
I agree too however I think they should spend the money on giving free advertising to independents so that people know where they are, what they sell, and what the prices are. Why should it just be a free ride for Coles and Woolworths when there are lots of struggling small businesses out there that could use this system to their advantage over the giants.
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Lean:
06 Aug 2008 9:31:50am
My parents can not use the computer at all, let alone the internet. They do most of the shopping. This web site will just like another big brother show. It creates excitement for 1-2 years but lacks of substance, waste people or business time / money and will be washed away. In the area with one supermarket, people wont have much choice at all.
I found the weekend open market is cheaper than any supermarkets around and it is more fun to shop. These open markets will give the big and bully supermarkets a run for their money. Open more of them every day.
No need for another web watch dog, they wont work and wont reduce the price people pay at the check out. Change the law, allow more competition for smaller players and the market will take care of the price itself.Agree (0) Alert moderator
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Wendy Bunce:
06 Aug 2008 3:30:27pm
Local markets are great fun & are often much more vibrant & more interesting, than huge plastic electronic supermarkets. And local markets are good value for food & for people & are better for our natural environment as well. Plus markets also help bring a community together. And if more markets are held locally it would also dramatically help to save on food transport costs & shipping costs as well. By buying & selling locally, more organic farmers could hopefully get real money & genuine appreciation for their fresher healthier goods. And quite rightly, consumers are increasingly demanding less environmentally damaging foods, yet affordable choices with the food that we buy. The big are too big & their real costs are unsustainable.
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John R:
06 Aug 2008 3:41:40pm
Even if they could use a computer, it wouldn't help them. It doesn't show individual store price trends anyhow, but only aggregated across half the state.
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John Michaels:
06 Aug 2008 9:22:04pm
If only Governments made it easier for people to actually be able to get to weekend markets without the use of a personal vehicle. It's fine in Melbourne where you have a lot of choice for daily markets and weekend markets however somewhere like Brisbane is sort of infrastructurely screwed when it comes to a lot of these markets where you can get produce for a quarter of the price that the supermarkets sell it for.
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SFA:
06 Aug 2008 9:42:21am
'Australian consumers would significantly benefit if Coles and Woolworths faced more competitive threats that encouraged more aggressive pricing strategies."
What rocket scientist came up with this amazing revelation - and how much did it cost the Australian taxpayer
'
Onya KRuddAgree (0) Alert moderator
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chalkie:
06 Aug 2008 10:28:12am
Perhaps there might be a case for forced breakups of this duopoly, a la Standard Oil.
While they are at it, perhaps do something about the Coles / Woolies pub duopoly. Perhaps set maximum market share for individual players? Is this even possible under our rules?Agree (0) Alert moderator
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SFA:
06 Aug 2008 11:47:02am
Yeah, but Comrade Krudd has apparantly already solved the grocery problem because he has now moved on to telling the IOC how to do their job
http://www.abc.net.au/news/stories/2008/08/06/2325691.htm
Guess someone else will have to take the next step of actually doing something rather than just talking about it
the guy is a joke!!!Agree (0) Alert moderator
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Barbara:
06 Aug 2008 9:53:36am
bjh agree with you , do you remember why the Government ordered this enquiry ? it was to find out why we are the dearest in the world,where is the answers to that report , and now the ACCC are saying the International competition is going to be the magic cure yet they also say the zoning laws will be lifted in various states to allow this , am i reading this wrong or what? why not ALL states
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Ford:
06 Aug 2008 11:00:22am
Dearest in the world?
Really?
I suggest you not stop by Zimbabwe for groceries anytime soon.
We're not the dearest in the world, what rubbish.Agree (0) Alert moderator
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Spank:
06 Aug 2008 11:51:00am
Ford, i agree...but, it was thrown around by labor pre-election that we had some of the highest prices in the developed world as a direct result of the coalitions inaction.
Now that is rubbish.Agree (0) Alert moderator
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Dianne:
06 Aug 2008 7:08:14pm
A long long way from being the dearest in the world actually but we always want to be better off than we already are, just human nature.
Spank, i dont recall that. Do you have any examples?Agree (0) Alert moderator
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peter crisp:
06 Aug 2008 10:02:02am
If you read the full ACCC article their appears to be a problem with the independents supermarket wholesale, IGA Metcash.
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sally:
06 Aug 2008 10:02:52am
It never ceases to amaze: how some consultants and spokespersons for special interest groups, such as the Zinn, expect we will swallow their spin is beyond me. Of course supermarkets will charge whatever they can get away with. Of course they are out to make a dollar. And of course the current government's price enquiry is a waste of tax payer dollars. Anyone with half a brain can see it.
No-one is forced to buy anything and if one shops around, there are plenty of bargains to be had. The problem is, people just expect to be served up with exactly what they want without making any effort themselves. Don't expect governments to make any difference with the price of groceries. They just anted your vote. Fools.Agree (1) Alert moderator
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John Michaels:
06 Aug 2008 9:57:07pm
Probably the sanest post I have read so far. The simple fact is that in Australia it is extremely difficult and expensive to get "certification" in any form of farming enterprise. The wholesale sell off of relatively close to the city farms for development have pushed transportation expenses even higher. You are right though Sally, no-one is forced to buy anything they don't want to. If people took a pro-active approach and maybe planted their own citrus trees and introduced a vege garden to their back yard they could relatively quickly reduce their reliance on mass produced cold stored foods sold in Australia now.
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cam:
06 Aug 2008 10:09:54am
Not to disagree with Christopher's points, but I think the ACCC has downplayed the role of <A HREF="http://go.worldbank.org/3AT6Y80QU0">biofuels pushing up agricultural commodity prices</A>, and how climate-change is and will continue to impact food supplies.
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Doh:
06 Aug 2008 10:10:08am
Quote: You punch in your postcode and are told which outlets are best value this month for a range of different food baskets ranging from fresh meat and fish to snacks and staples.
Hmmm. I looked up my postcode of 4879 and was placed in the North Queensland area which includes Cairns, Townsville, Mount Isa and Cape York. That is an area somewhat bigger than Victoria and not all that far short of NSW.
We then get treated to the price of a basket of items averaged across chain outlets in the area. Never mind that the price of bananas will go from $1.60 per kg to $3.00 per kilo overnight despite the fact that they are grown locally, or that Mainland cheese is routinely cycled through a price range of $8.00 per kg and $12.00 per kg.
In the immortal words of John McEnroe you cannot be serious.Agree (0) Alert moderator
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John R:
06 Aug 2008 3:07:09pm
So true. Data aggregated across such regions is totally useless. If it were on a per-supermarket basis, then maybe it might hold some accountability to individual store managers, and give consumers some information to use in their choice. But those combined figures are useless.
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Eric:
06 Aug 2008 10:24:14am
"Throwing down the gauntlet" - rubbish. More like "Stamping my little feet" and chanting "No fair, No fair".
I actually think the website idea is pretty good. Not everybody needs to be able to access the information, just enough to make it worth the retailers while to get a high ranking.
The elderley listen to news bulletins and the radio/tv journo's and newspapers will interpret the web pages daily. We get hourly reports on what the Reserve Bank is doing and thinking so I see the same thing happening with Price Watch websites.
This and opening up the market to more competition will sort them out.Agree (0) Alert moderator
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sally:
06 Aug 2008 11:24:34am
Eric, it will be another Fuel watch, to be sure, to be sure.....
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Eric:
06 Aug 2008 11:53:54am
I think we should give Fuel Watch a go too.
If either of them actually work toward better competition and benefits do flow to consumers, then all the critics will clamber to explain they were the ones who invented it.
Rather than all the empty headed braying from the tory side we should give it a go and if it doesn't work then we can critique the results.Agree (0) Alert moderator
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John R:
06 Aug 2008 3:46:46pm
GroceryChoice could be a useful tool, but it's been crippled by not reporting on individual stores in the area. When you put your postcode in, it could show up the nearest 5 supermarkets with a graph comparing the price of each over the past 6 months. That would put pressure on each store to be competitive and tell people something about where to shop. But as it is, it doesn't give any useful information to shoppers.
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TroppoTom:
06 Aug 2008 11:35:26am
Another NATO (NoActionTalkOnly) stunt from the Rudd govt. This inquiry would please Sir Humphrey of YES MINISTER as it comes up with suggestions like refer planning matters to State/local governments. This means years of marathon meetings to produce a discussion paper.
There is to be a web site clone of the FOOLWATCH petrol site, a tired stunt if there ever was one.
Otherwise the report is like a sermon: a good recounting of the ills of the world (wouldn't it be great if there was more competition) but short on practical solutions.
Oh yes: presumably groceries cost more now than they did when this "Claytons" inquiry was set up??Agree (0) Alert moderator
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Pat:
06 Aug 2008 11:45:56am
I'm one who believes that there is price collusion when we are burdened with a duopoly of international proportions. But the ordinary "mums & dads" of this country can beat them with a few simple self-help exercises: grow your own vegies (get hints from the daily newspapers, gardening mags., tv shows); join with neighbours to run a few hens (to return eggs, and even fresh chicken for the frypan); and buy locally produced in season. A return to the past will be a big step into the future - and think of how much our carbon footprint will reduce (not having to pay for massive transport costs).
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Wayne:
06 Aug 2008 5:01:18pm
Nice idea Pat and I agree fresh is better and cheaper. But, it won't happen across the board, because we are working longer, and getting lazier - when did you last wash your car? No, those days are gone, soon we will be popping a steak and kidney pill and washing it down with a synthetic vege shake. Fresh food? Nah, causes too much of a carbon footprint.
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John Michaels:
06 Aug 2008 10:01:18pm
It is very difficult to call it price collusion. What really happens is that the 2 opposing sides send in staff to record the others specials and regular prices. Then they send that info back to HQ and HQ put their cone of silence on and decide that they will start charging as much or as less. The other problem is that "major" suppliers will offer "specials" to either of them on a rotational basis which is why you can get certain things on special one week at one place and the same item on special at the other place the next week.
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Richard M:
06 Aug 2008 11:51:57am
Another waste of tax payers money, time and lie from this government. This report is politicaly motivated. How is it this website has appeared so quickly? Perhaps the election promises were built into it via political pressure?
I have worked in the retail industry for 23yrs and we all know this is a political stunt.
Check the website, apparently the independants are a whole $3 cheaper, but which store exactly? There are about 15 in my local area, and which products (brands) are in the basket? This website is as useless as a wet fart in a snow storm.
As for competition there probably is a good reason overseas retailers havent come here.... it is too competitive and the good sites are already owned by Coles / Woolies.
Freeing up zoning laws is a good idea, but the 'impact' is going to be marginal at best, not significant. Think of it this way the same population + more retailers = reduced turnover, which drives up the cost per product.
Visit your local stores, (Gigianis in Adelaide is great for cheap food), you can get cheap veggies at your local market (so cheap it feels wrong) and support you independants.
I used to work for a national chain, now I hardly ever shop there. If you want convineince then you pay Coles / Woolies for it, otherwise there are plenty of options that will save you a lot more than the 'politicaly driven website' or any report the ACCC will release.
We do live in a free society, not a communist country, although I think labour would prefer the later.Agree (0) Alert moderator
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Henderson:
06 Aug 2008 9:19:47pm
I have also worked in the retail industry for several years including the big national chains. I find the ACCC's findings completely incredible. Not that long ago, Coles was slapped with a hefty fine for anti-competitive behaviour over its Liquorland outlets.
Both retail giants (not mentioning any names), play around the edges to try and dominate the market with whatever tactics they can get away with. As a former employee, I was often appalled at the dishonesty that goes on with marketing and advertising as well as the enormous mark- up on items. As Krushchev famously said, "All shopkeepers are thieves."Agree (0) Alert moderator
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sinekal:
06 Aug 2008 12:01:53pm
It seems there are some Australians who believe politicians care about food prices. What politicians care about is the public perception that they care and the sensitive close understanding they have of the consumers plight.
How much fuel is used by carbonated drinks companies freighting bottled water backwards and forwards across Australia. Is that the supermarkets fault or marketing pressure from the supplier?
Same for milk and a whole range of perishables. That is why bananas are $3.99 a kilo 100 metres from the plantation and $3.99 a kilo 3,000 kilometres from the plantation. Where is the politician who cares about this? Is it outside his electoral
sphere of influence?
In Western Australia eggs and potato's are subject to price fixing by Govt regulation. If supermarkets colluded for the same result it would be illegal. Yes the supermarkets are not blame free.. but we should not be too quick to forgive the manipulators behind the scenes who make political donations.Agree (0) Alert moderator
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Chicken Little:
06 Aug 2008 4:54:38pm
If this Labor Govt was concerned with competition why did they campaign and ultimately win Government on removing competition in the labour market by rolling WorkChoices.
You have your labour cartels back running the show. Any possibility of a small operator competing with the big guys is erroded by the inflexability of labour laws and all the baggage that comes with it.
You got what you voted for so stop whinging (at least the 52.7% of you Socialists that is)Agree (0) Alert moderator
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Pricey:
06 Aug 2008 12:11:29pm
I can't believe the ACCC doesn't see anything untoward in the pricing!
Why is it I can buy Australian Beef in New Zealand for $8.99kg and I have to pay over $20kg here in the NT where I might add we have a cattle industry!
The ACCC blamed the drought, global markets and natural disasters for rising food prices. Just like the fuel inquiry is blaming everyone else but the greedy chains!!!!!
Creating another "watch" is not going to do a damn thing especially when the entire country is not included. (NT not included in the fuel inquiry either)
If you want to do something find out why I am paying more at the checkout and fuel bowser the the other states. Our petrol prices took nearly 3 weeks to decline after the price/barrell went down considerably. Then DO SOMETHING ABOUT IT!Agree (0) Alert moderator
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Candy Islington:
06 Aug 2008 2:48:50pm
Ah Pricey, if you live at the top end it's expensive. It always has been and it will be for a while yet. Could it be related to the long haul to get things up there? And of course there's less competition. Look, if it's any consolation, I live in a city where a supermarket with no competition in one suburb is 10% dearer than the same supermarket chain's store ( it starts with W) in a nearby suburb where there IS competition. That's a fact, so we go shop in the next suburb to save money.
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John Michaels:
06 Aug 2008 10:04:41pm
Pricey it is called subsidisation to initiate an industry in a foreign country. A lot of people, Governments, industries do it so that they they can expand. Then there's the tax issues of running a business offshore that's making a loss. It starts to get a little complicated but I think you get the idea.
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cynical:
06 Aug 2008 12:11:53pm
I suppose it had to happen. We are now so gullible we just accept this nonsense from our politicians and the media. To think the supermarket chains will take notice of a website is simply rediculous.
It's not surpising though, because most of the members in the current government don't understand business. It's just something most of them kind of look at and wonder about. But if you have spent most of your working life in a union office or a minster's office, you would wonder about the real world, wouldn't you?Agree (0) Alert moderator
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davo:
06 Aug 2008 3:22:42pm
Perhaps the previous government were out of touch as well. Struggling to decide which brand of caviar to choose. Most of them would have no idea what it is to try to raise a family, provide food, accommodation, housing etc etc on a wage of even $50,000, others are doing it on even less.
At least the members of the Labor government have their roots in the working class who do it a lot tougher that the strugging elite of the Libs.
I am glad that the previous administration understood business whos basic tennet is to increase profit at all costs and gouge as much as they can from their captive customers.Agree (0) Alert moderator
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Peter:
06 Aug 2008 4:50:14pm
Gee, I didn't realise how far we still have to go before we get a generation WITHOUT a chip on their shoulder regarding free enterprise. I suppose once a worker, always a worker, eh?
Look, maybe one day we will agree on one thing: there's no free lunch and you can't expect the government to solve much at all. The supermarkets are in business to make a profit, whichever way they can. If people get suckered into paying too much, then they only have them selves to blame. I see people at supermarkets filling their trolleys with all sorts of garbage they obviously can't afford and actually don't need. Is that the supermarket's fault? I think not. if you knew how hard the big chains screw the farmers to keep prices down low, you'd start to understand that the deals on offer aren't all that bad.Agree (0) Alert moderator
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BJ:
06 Aug 2008 12:21:19pm
This is not popular to say, but the retail side of grocery marketing is very competitive in Australia, especially in the metropolitan area.
People are generally sensitive to their weekly shopping prices. A sharp jump will prompt them to try elsewhere and see what they can get their weekly shop for. Any one retailer raising their margin too high will lose market share. This is the market doing what it is supposed to do.
Anyway, as Sally noted earlier, there are many bargains to be had every day of the week for the wise shopper.
Rudd's proposal for unit pricing is a fantastic idea.Agree (0) Alert moderator
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David Keig:
06 Aug 2008 2:36:40pm
Retail is just not that competitive in Australia.
Dominant players in a small market just about says it all.
And when you look at most malls, the retailers have negotiated a solus deal in all but the biggest.Agree (0) Alert moderator
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bjh:
06 Aug 2008 3:40:31pm
How on earth can two players controlling 80% of the market be considered competitive
In plain English we have the least competitive market of any developed western economy when it comes to the daily shop
that is unhealthy and anything that can be done to encourage international players in would be great
I'd love to slip down to the Toowoomba Sainsburys!Agree (0) Alert moderator
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JohnBirett:
06 Aug 2008 2:51:20pm
Pricing is not the only way to judge.
Why does Woolworths promote "fresh food" when often the fruit is soggy and spoilt and the meat is so tough, sometimes smelly and a funny colour? What's that worm doing in my apple?
In some suburbs, there are actually two Woolworths, one at each end of town. Why does one have prices at 10 - 15% higher for the same item?
I though the report would lead to a fair system - or at least identify a way ahead.Agree (0) Alert moderator
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Ping Pong:
06 Aug 2008 2:52:13pm
You know, you can shop without spending much at a supermarket if you want. Try your local butcher for better quality meat, your Sunday markets for cheaper and fresher fruit and veges, your local bread shop and so on. Stay away from supermarkets and save.
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Ron T:
06 Aug 2008 3:13:20pm
I have 3 strip shopping centres within walking distance of me (say 15 minutes). No butchers or greengrocers because the supermarkets have squeezed them out. And I live 8 kms from the Melbourne CBD.
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craig:
06 Aug 2008 3:40:35pm
Agree 100%
The majors charge more, and the quality of their produce and meat is terrible...
The local butcher and Fruit & Vege shop get the bulk of my business, and I am saving a lot of money doing that.
$30/kilo for lamb at W (that looks a bit dodgy)! Forget it, try $15/kilo at the deli....Agree (0) Alert moderator
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henalf:
06 Aug 2008 3:32:34pm
Once upon a time,we used th have Co-Operative Societys owned by the members,for the benefit of the members,and no managing director drawing a few millions.It seems those days have gone,and the prospect of Co-Ops coming back,seems remote.Can anyone please give a glimmer of hope,I would certainly support a peoples co-op.
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Wayne:
06 Aug 2008 4:55:59pm
Co-ops don't work, generally. Supermarkets are still the most efficient way to move produce. It's just that some of their produce could be better quality, but in terms of prices, its often hard to beat them. But as someone noted, if you have the time to shop around you can do better at the smaller retailers.
I might also add that it amuses me to see people happily spend $15 on cigarettes or alchohol, and then winge about food prices. Yes, yes, I know many people don't do that and that it is very tough for socially disadvantaged people and pensioners, but hey, I think some of us are short sighted and a bit hypocritical over this whole grocery prices debacle.Agree (0) Alert moderator
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Bruce:
06 Aug 2008 5:06:46pm
I'm all for another enquiry, now the grocery job's done. How about an car enquiry this time? You know, to check if the car amnufacturers are colluding and ripping people off. They must be, they all look so rich. And cars have become so expensive. They must be corrupt. They must be exploiting working families. Come on Mr Rudd, do something to make cars cheaper. And why stop there, how about houses and overseas holidays as well?
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Paul:
06 Aug 2008 5:19:01pm
I buy cat food (for my cat eh). The brand he likes has gone from 70c a can to $1.05 a can in 2 years; why? 50% inflation?
Why is it The Same price in either supermarket at all times?Agree (0) Alert moderator
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Anna:
06 Aug 2008 5:27:47pm
Why do people want foreign supermarket chains entering the Australian market?
Don't get me wrong, I'm all for increased competition in the market, but at least Coles and Woolies are Australian companies with Australian shareholders.Agree (0) Alert moderator
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Diana:
06 Aug 2008 6:37:06pm
As a parent I am shocked to see most grocery specials fall to the wayside of specials such as potato chips, chocolates or softdrinks..as we are now living in an obese country shouldn't these promtions lean towards specials on fruit and vegetables..
As a child growing up in the the mid fifties we were lucky to receive lollies or softdrinks..only special occassions such as Christmas or Easter..I still have my own teeth..and visit the dentist twice a year..as for having these things in my house..you'll be lucky..Agree (0) Alert moderator
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mikej:
06 Aug 2008 6:52:26pm
does anybody (apart from quantum physicists) think watching something will change anything??? 4c per litre is discounted from an inflated price and they've already covered your $2 discount on 50 litres that has set you back $75
in the store where you had to give them $40. and you had to wait at the pump and the teller an extra 10/15 minutes because it was tuesday and everyone knows thats when fuel is cheapest.ok. you've shelled out $115 ,received $2 in return and somehow you got a discount???? a "discount" of .57%!! whats their markup??? just a 10 minute wait means a life value at $10 per hour! not only are they ripping us off ,they insult our intelligenceAgree (0) Alert moderator
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BJ:
06 Aug 2008 7:05:33pm
What do people want from the Commonwealth Government. Price control ? Price capping ?
The Commonwealth Government cannot do any more than watch prices and fund a statutory authority to police competition matters.
The Commonwealth Government has no constitutional power to legislate for price regulation. Even its extended power to legislate with respect to constitutional corporations would be questionable if legislation largely contemplated price controls.
If you are thinking along these lines, remember it is indisputable that price control will lead to widespread food rationing. Fortunately, Australia has not had to experience rationing for many moons now.Agree (0) Alert moderator
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not so:
06 Aug 2008 7:53:43pm
Let me share two concerns a supplier to the major grocery chains shared with me this this week.
A major grocery retailer more than doubled to the consumer a modest price rise the supplier gave to the retailer.
Another major retailer wanted the supplier to produce a "home" brand for them, supply the retailer with the manufacturing knowledge and formulation of the products and then a future date the retailer was going to put the products out to tender for anyone to produce.
In the first instance this is an example of greedy grocery giants using the smokescreen of rising prices to make additional profit.
In the second and more sinister I think the expansion of "cheap" home brands is threatening the livelihood of Australian manufacturers. Consider the impact on a mid sized Australian manufacturer who supplies Coles or Woolworths who loses the tender for a home brand. Because of the size of the retailers these contracts become a primary source of revenue for these manufacturers. Losing the contact would be devastating. The manufacturers are losing control of their businesses because their brands that they developed are being replaced by "home" brands.
Have a look at how many of the "home" or "select" brands have a label statement indicating the ingredients are "local and imported". I wonder how much is local.
I know of one mid sized Australian supplier who sold under their own brands, was bought by a multinational and now mostly supplies home brands to the two grocery giants. I guess the mulitinationals are the only ones who would be hurt the least by them losing a home brand contract.
Would these suppliers reveal who they are - I would expect not as the retribution I imagine could be very costly.
The politics of business.Agree (0) Alert moderator
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John Michaels:
06 Aug 2008 8:36:13pm
There's a little bit of difficulty to that one line involving "competitive threats" to the big 2. There really is just a few suppliers of shopping centres in Australia and rents are enormous. The chance to have a viable competition to the big 2 was diminished many years ago by State Governments and the public. The State Governments relaxed trading laws to allow the big 2 to operate up to 24 hours a day, the public failed to support their locally owned and operated "niche" market stores such as fruit and veg shops. The wholesale buy out of Australian business since 1996 hasn't helped much. Now if an Italian company gets in trouble they can easily increase prices of Australian made and manufactured products. For anyone that has travelled with their eyes open they will be able to tell you that there is very little difference between any of the overseas competitors. You can entice Geants, Carrefour, and Costco as much as you want by giving them tax breaks to establish an industry however they are still faced with paying "commercial" rents in order to be in any type of competitive position to the current monsters of the market. Until a position exists that encourages businesses to actually invest in property to both establish and cement their position in a particular market area the commercial rents problem is going to still cause problems. The easier way to reduce prices is to go out of your way and avoid buying unnecessary things from the big 2 such as meat, fruit, and veg. People will notice the price of their weekly or fortnightly shopping bills reduce dramatically if they do this and the monsters of the market will be forced into a position that actually tries to encourage people in rather than stand over the community with their hands out for their shareholders.
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