Supermarket survey: shoppers doubt ‘discounts’ are real

Our survey finds the majority of Kiwis think they’re paying too much for groceries.

21apr supermarket survey hero

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.


How we’re shopping

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.

How often do you go to the supermarket?


Which of the following best describes how you decide where to shop?


What we're paying

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.

Supermarket prices in New Zealand are too high


Supermarkets charge households fairly


Supermarkets have customers’ best interests at heart


“Specials” that aren’t so special

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.

I'm more likely to buy a product if it's on special


Specials have become so common, I'm not sure the savings are genuine


Price labels for specials can be confusing – it's hard to work out how much you're saving

More problems with price

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.

In the past two years, have you experienced any of the following …

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

Loyalty programmes don’t rate highly

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.

Supermarket investigation: what’s happening

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:

  • supermarkets’ pricing and promotional strategies, and whether consumers are being misled about what they’re paying.
  • product categories where supermarkets’ private label brands are growing, potentially reducing product choice.
  • the fruit and vege supply chain, as evidence suggests it’s more open to abuse by dominant retailers.

The commission is expected to release a draft report on its findings in July with the final report due in November.

Can you help?

Can you help?

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Can you help?

Have you been misled by a less than “special” supermarket deal? Have you noticed routinely discounted items being advertised as “special” offers? Have you got examples of confusing pricing from your local supermarket?

Let us know. Support our campaign for fair supermarket prices by sending your examples to info@consumer.org.nz.

Get campaign updates


Keep up with how we're getting on with shining the spotlight on supermarket prices. We'll also keep you up-to-date with our latest news, investigations and invitations to take part in surveys.

Member comments

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Karen S.
11 Apr 2021
I actually save money at my local Countdown

As their shelves are low to almost empty every week. Worse when I buy something regardless of price and they decide to put it on a so called "special". I buy there for convenience more than anything else as I'll have to travel to get to another being a Rural Town. Buying online isn't an option as it comes from the same branch and you get something optional when they don't have it. Very frustrating when it's out of stock for weeks on end hence I tend to buy it weekly when I can get it otherwise I run out, so my pantry is full of boxes of Dentastix and dog biscuits!!

Alan
11 Apr 2021
Think of the Suppliers

I can fully understand the focus on supermarket pricing as it directly affects our pockets, but I think we should keep in mind the effect the duopoly has on prices paid to suppliers, especially fresh food suppliers from within NZ. In the not too distant past we had insights into how unscrupulously the supermarkets screw suppliers, including reasonably large industries, by use of threats of buying from others, charging for prime shelf allocation, requesting payment for making orders etc. Driving down prices paid to suppliers inevitably means lower quality more highly processed food or making food growing businesses marginal to the point of subsistence profits (if any). To me lower supply prices and ever increasing prices charged to consumers means increased and unreasonable profits, more money spent on wasteful advertising (the Consumer survey shows that advertising seems to have minimal influence on supermarket choice), mostly unnecessary spending on brand promotion, and all those activities which enable fat cat operators to clip their share of the ticket. Supermarkets have cunningly managed to get us consumers and suppliers to pay their cost of doing business, and, to add insult to injury, meet the cost of the supposed "reward" schemes. My greatest concern is that the Commerce Commission inquiry will be another example of a slap on the hand with a wet bus ticket (witness the non-effect on the petrol market) and that nothing will slow the rapacious behaviour of our supermarkets.
By the way, did anyone notice that the newish brand 'Fresh Choice' is owned by Foodstuffs and is sewing up the market in smaller districts which cannot sustain a bigger supermarket.

Phil B
11 Apr 2021
Bring on Costco and Aldi

Without doubt there is a cosy duopoly in the NZ grocery trade. Foodstuffs is hugely dominant with its two big supermarket brands plus smaller Four Square and dairy franchises. Thanks goodness for online shopping and the growth of Asian food retailers who do provide a few other options for things like fresh spices. Food is such a major expense for Kiwi families that I applaud everything Consumer can do to improve the situation. Unit pricing should be in a MUCH bigger font at supermarkets to help shoppers understand how to spend their money wisely. I look forward to Costco's eventual arrival and - hopefully - Aldi in the future.

Tony T.
10 Apr 2021
Lack of competition is key

The competition between supermarket chains in the UK (where I used to live) has been quite fierce in recent years. A good deal of this can be attributed to the arrival of the European discounters Aldi and Lidl, who have really forced the established chains to up their game. From visiting rellies in Brisbane, I can see that Aldi have shaken up the cosy setup of Woolworths and Coles over there. Their offer is of very good quality. NZ needs more competition in this market. I'd love it if Aldi moved in here. Why not, if they can set up in Australia?

roy s.
10 Apr 2021
Cost of living

When I moved back to NZ from Sydney I noticed the differences in the cost of living immediately. Food was around twenty percent dearer here and power and telco prices were more than thirty percent dearer. Fuel was also significantly more expensive. Add to that the fact that wages are lower here and it is not difficult to see why so many people here are struggling. Housing was just as expensive over there, but because of the excellent public transport system over there, you could choose to live in a cheaper area without being too negatively impacted by transport costs. I understand that we live in a smaller market with a wider geographic spread than Sydney, but I feel that we are definitely being taken advantage of.

John Boyes
10 Apr 2021
Prices

NZ is a small country, population widely spread, I can understand the lack of outside retailers as our market is so small and freight costs astronomical its not viable . In the South Island I can pay the same price for an item wether I am in Nelson or Invercargill...not a bad deal really. Special prices? you can't have much happening in your life if this is all you have to worry about.

Donna M.
17 Apr 2021
Really

Not everyone is in a position where specials don’t make a difference. Many workers earn below the living wage. When I was living in poverty (nz definition) I often didn’t eat so my child didn’t go without. Specials can be the difference between 3 meals a day or not for many families and our elderly.