Kiwi consumers aren’t spoilt for choice when it comes to supermarkets. Countdown and Foodstuffs, owner of the New World and Pak’nSave brands, dominate the grocery trade.
But if you’re shopping on price, our annual survey puts Pak’nSave in the lead for budget buys. For our basket of 30 items, Pak’nSave had the lowest prices in the seven centres we surveyed, including the cheapest prices for milk and budget bread.
The store also claimed top spot in all centres in our 2014 survey, a place it’s held almost unchallenged since 2001.
In the two-horse race between Countdown and New World, New World was the most expensive on the day our shoppers hit the stores. The supermarket trailed in every centre, including Christchurch and Dunedin where it pipped Countdown on price last year.
A significant number of products we purchased at Countdown were on special, giving it the edge on New World for selected items. The biggest discount we found was for 2kg Persil laundry powder, on special at all Countdown stores on the day we shopped. The powder was marked down to $9, an advertised saving of $5.89.
Between 37 and 50 percent of the items we bought at Countdown stores were marked as specials, a pattern we’ve seen in previous years. Price promotions have become a regular feature in the grocery trade. According to market research firm Nielsen, the proportion of groceries bought on special each year is as high as 59 percent.
While price promotions can reduce the weekly grocery bill, if an item is routinely discounted, how “special” is the special price?
To find how frequently products are marked down, this year we also tracked prices for a smaller basket of 10 items over a three-month period. Prices were checked online weekly at Countdown and New World Thorndon, one of two stores at which New World offers online shopping.
At both supermarkets, most of the items in our basket were regularly discounted.
At New World, a 500g block of Mainland cheese was on special in seven out of the 13 weeks we checked. The cheese was marked down from $8.99 to $5.99 on six occasions and priced at $6.99 once. Countdown had the same brand of cheese on special in six out of 13 weeks, priced from $5 to $6.50.
Both stores regularly offered specials on Anchor butter, discounted in six out of 13 weeks. Specials typically alternated between the stores: the week it was on special at Countdown, the butter was selling for its “usual” price at New World.
There was a similar pattern for Fresh ‘n Fruity 1kg yoghurt with special prices alternating between stores. Countdown had a special on the yoghurt seven times and New World on six occasions.
Other items in our basket were on special even more often.
At New World, a 250g bar of Whittaker’s chocolate was marked as a special in 11 out of 13 weeks. Countdown had the chocolate on special eight times.
Countdown also offered a special on 2L Tip Top ice cream in nine weeks. The ice cream was on special five weeks in a row (priced between $4.80 and $5.50), at the regular price of $6.99 for two weeks and then back on special. The average price for the ice cream over the 13 weeks was $5.64, more than $1 less than its regular price.
New World offered specials on Robert Harris coffee eight times. When we began tracking prices, the coffee was on special for $6.49 the first week and $4.99 the next. It then went up to the regular price of $7.99 for three weeks before it was back on special for another four weeks.
Regular specials meant the store offering the cheapest price for our basket of groceries varied. One week, Countdown might have the sharpest prices. The next it could be New World. Over the 13-week period, Countdown had the lead on price in seven weeks while New World took first place on six occasions.
Supermarkets aren’t the only retailers regularly offering specials. In October, we reported on products we found routinely on special at Briscoes and Farmers. Some items appeared to be on special all the time.
Retailers know shoppers are more likely to open their wallets if it looks like they’re bagging a bargain. But stores tempting customers with specials must be offering a genuine deal. If they’re not, they risk misleading consumers about the savings available and breaching the Fair Trading Act.
Countdown’s general manager merchandise Chris Fisher said the store has internal pricing policies to ensure it complies with fair trading laws and Commerce Commission guidance. He said Countdown’s promotional programmes “vary considerably” across the lines it sells.
Foodstuffs also told us its specials varied. Foodstuffs’ corporate PR director Antoinette Laird said price promotions depended on seasonality, occasions such as Christmas and Easter, and brand marketing campaigns.
- Food is the second biggest household expense after housing costs. A sizeable chunk of the weekly food budget is spent at the supermarket.
- Given the concentrated nature of our market, we’ve previously called for price monitoring to shed more light on the grocery trade. The two big chains keep a close watch on each other’s prices. Regulators need to keep regular tabs on them.