Red flags promising discount deals and super savings have become the new normal in supermarket aisles. Special offers are so pervasive that more than half the products in our latest supermarket price survey were regularly on promotion.
This year, we tracked prices for a basket of 30 grocery items over a seven-week period at Countdown, New World and Pak’nSave stores in Auckland, Hamilton, Wellington, Christchurch and Dunedin.
In every week, Pak’nSave stores had the lowest prices. It’s a result unlikely to surprise budget-conscious shoppers and the pattern we’ve seen in nearly every survey over the past 15 years.
Prices were closer at sister store New World, also part of the Foodstuffs stable, and Countdown. On average, the cost of our groceries at New World was about $3 to $5 higher than Countdown. The exception was Hamilton where average prices were level pegging.
A special market
For several years, the results of our supermarket surveys have been static. Pak’nSave, with its no-frills proposition, has claimed the spot as the cheapest store. Bar a couple of exceptions, Countdown typically comes next, followed by New World.
In a fiercely competitive market, you might reasonably expect to see more change in the stores’ placings. The supermarkets claim they compete aggressively on price and point to their regular specials as a sign shoppers are getting good deals.
Price promotions can benefit consumers — who doesn’t want to save on their grocery bill? But some products are discounted so often shoppers may be questioning whether the specials are as special as the stores claim.
At both Countdown and New World stores, the majority of the 30 products in our shopping basket were on special at least three times during the seven weeks we monitored prices.
Some items were on promotion almost every week. Take frequently discounted Whittaker’s Chocolate (250g).
At Countdown stores, the usual price was shown as $4.99. But it was almost always on promotion for $4 or $4.50. We saw a similar trend in our 2015 price survey. Back then, the usual price was $4.90 but it was frequently marked down at prices ranging from $4 to $4.50.
The chocolate was also regularly on special at New World. At all six stores shoppers visited, it was on special more weeks than it was sold at the regular price. Specials on the choc varied from $3.99 to $4.89. The regular price was shown as $4.99 — the same as Countdown’s.
Foodstuffs described the prices we saw as “normal retailing behaviour” with promotions happening week on, week off. Specials on Whittaker’s Chocolate also reflected “a seasonal period” (winter) where the choc was discounted more often, it said.
Countdown also said Whittaker’s would be promoted less frequently at other times of the year. The company said its programme of promotions and specials was worked out over 52 weeks. “If you take a shorter period … some items may appear to be promoted more frequently.”
Other items we found likely to be regularly marked as specials included household staples such as butter, bread, coffee, jam, yoghurt, pasta, snack bars, dishwashing liquid and shampoo.
Regular specials may be business as usual for the stores but the growing advertising noise in supermarket aisles has been cause for complaint.
Pricing practices have earned both chains a place on the Commerce Commission’s roll of the most complained about traders.
In 2015, the commission received 59 Fair Trading Act complaints about Foodstuffs, placing it at number eight on the roll. In the same year, 48 complaints were received about Progressive Enterprises (Countdown’s owner), which landed it at number 10.
Misleading pricing is high on the commission’s hit list of practices with the potential to cause significant consumer detriment. While it’s not currently investigating any complaints, it says both supermarket chains are on its trader compliance programme.
A commission spokeswoman said the two-year programme was designed to improve fair trading compliance “through education and co-operation rather than solely relying on enforcement [a]lthough enforcement always remains an option for the commission when dealing with these traders”.
Both stores say they have internal policies to ensure they comply with fair trading laws.
Foodstuffs says its policies place “significant emphasis on the need to establish the genuineness of any ‘savings’ claim. A key component of that is a return to the ‘non-promotional’ price on a regular basis”. The retailer says it sees the trader compliance programme as “very positive”.
Countdown described the contact it had with the commission through the programme as “extremely useful”. The store says it takes on board “any feedback we receive, whether that’s from the commission or our customers”.
At least on price, shoppers may be looking wistfully to the supermarket scene across the Tasman where discounter Aldi has set up shop. A 2015 survey by consumer watchdog Choice found Aldi’s prices for an equivalent basket of store-brand products were $26 to $31 cheaper than Coles’ or Woolworths’.
Aldi’s arrival has been credited with putting pressure on the two big Aussie chains to drop their prices. The supermarket duopoly this side of ditch is yet to be challenged by a third party competitor, leaving consumers stuck in one of the most concentrated grocery markets in the world.