Our survey finds the majority of Kiwis think they’re paying too much for groceries.
Supermarkets are big business. Each year, the stores earn millions of dollars from food and grocery sales. But we’ve been asking whether Kiwis are getting a fair deal on price.
Two big players dominate the market – Countdown and Foodstuffs, owner of the New World and Pak’nSave brands. Our supermarket sector is one of the most concentrated in the world. Concentration in any market increases the risk consumers will pay more than they should.
Our latest survey finds the majority of Kiwis think they're paying too much for groceries. Many are also questioning whether supermarket specials are the real deal.
GUIDE TO THE TABLES Our data are from a nationally representative survey of 1030 New Zealanders, aged 18 years and older, carried out online in February 2021. The survey used a rating scale from 0 (strongly disagree/very dissatisfied) to 10 (strongly agree/very satisfied). Figures may add to +/- 100% due to rounding.
Most of us do our grocery shopping at the supermarket. Nine out of 10 consumers go to the supermarket at least once a week. Forty-two percent make the trip two or three times a week.
For the majority, store choice is based primarily on which supermarket is the closest (31 percent) or which they think is the cheapest (27 percent).
Customer service, and the stores’ much-hyped loyalty programmes, aren’t persuasive factors for most. Just two percent said customer service determined where they did their regular grocery shopping.
Food is the second largest category of household expenditure, after housing. In the past two years, food prices have risen faster than general inflation.
Consumers are noticing the hike. Eighty-one percent think supermarket prices in New Zealand are too high. Half (52 percent) strongly agreed this was the case. Just 10 percent disagreed.
Consumer confidence that supermarkets charge households fairly isn’t high.
Just 17 percent strongly agreed supermarkets were playing fair on price. Only 18 percent strongly agreed the stores had customers’ best interests at heart.
Signs promising “special” offers regularly feature in supermarket aisles. Retailers know shoppers are more likely to buy if they think they’re getting a discount.
Six out of 10 consumers strongly agreed they were more likely to buy a product if it was on special and assumed it would offer better value for money.
However, many questioned whether these discounts were all they were cracked up to be.
Seventy-four percent agreed or strongly agreed that specials had become so common they weren’t sure the savings were genuine.
Price labels for specials were also a problem. Sixty-three percent agreed or strongly agreed these labels could be confusing, making it difficult to work out the actual savings.
Many consumers had also experienced other problems with supermarket specials.
Finding advertised specials were out of stock was the top complaint. Sixty-six percent had encountered this problem at least once in the past two years.
Being charged more at the checkout than the price shown on the shelf label was also a problem: 46 percent said it had happened to them.
Forty-five percent had noticed an error on their receipt that meant they’d been overcharged. Just 14 percent had found an error that meant were undercharged.
A product advertised as a "special" was out of stock
Charged more at the checkout than the price shown on the shelf label
Found an error on my receipt that meant I was overcharged
Found an error on my receipt that meant I was undercharged
Supermarkets make a big deal about their loyalty programmes. You have to belong to these programmes if you want to get selected specials. At Countdown, that means being a card-carrying “Onecard” member. At New World, you need a “Clubcard”.
However, loyalty programmes don’t rate highly with customers when it comes to deciding where to shop.
When we asked about the factors consumers value in a supermarket, loyalty programmes were bottom of the list.
Just 42 percent rated loyalty programmes as very important, a long way behind competitive prices (77 percent), product quality (75 percent) and product range (71 percent). Only four percent said the programmes determined where they did their regular grocery shopping.
Our survey also found loyalty programmes are likely to disadvantage a significant proportion of shoppers. Thirty-one percent said they couldn’t get an advertised special price because they didn't have the supermarket's loyalty card. If you don’t have a card, you’ll be charged a higher price.
There are good reasons why consumers choose to not sign up to these programmes. A major factor is they don’t want to share their personal information with the stores.
Terms and conditions of loyalty programmes allow supermarkets to collect a range of information about shoppers and their purchasing preferences. This information is gold for the stores but the benefits for consumers are questionable.
As with all loyalty programmes, the supermarkets’ schemes cost money to administer. These costs are ultimately passed on to all their customers, whether or not they belong to the schemes.
In November 2020, the Commerce Commission’s investigation of the grocery industry kicked off.
The commission released a preliminary issues paper in December, outlining the key areas for investigation. We made a submission on this paper, highlighting the need for the investigation to look in-depth at:
The commission is expected to release a draft report on its findings in July with the final report due in November.