We sent undercover shoppers to buy groceries from supermarkets in 7 centres around the country so we could compare prices. One chain leads - but the battle for second place is being hard-fought.
It’s a clean sweep for Pak’nSave in our annual supermarket survey. The store had the lowest prices in all 7 centres we surveyed, reclaiming its spot in Wellington which it lost last year to Countdown. Savings at Pak’nSave on our basket of 40 groceries averaged around $14 (see our Household basics table).
But the ground has shifted in the battle for second place. Countdown edged out New World in Auckland, Hamilton, Palmerston North and Wellington. But in the South Island, New World pipped Countdown in Christchurch and Dunedin. Last year, New World was the most expensive in our survey.
The battle for customers has been heating up since the re-launch of the Countdown brand by owner Progressive Enterprises. With its “Price Lockdown” promotions, Countdown has been positioning itself as a value brand. It’s a move the store credits with helping lift revenue to $5.7 billion this year.
Countdown once again had the most products on “special” – nearly half the items we bought in some stores were discounted. But this didn’t always mean you got a “bargain”. The regular price of at least some of these products was more expensive than at other supermarkets, making the “savings” appear more attractive.
At Countdown in Wellington, a 500g block of cheese was marked down from $8.99 to $6, an apparent saving of $2.99. But the neighbouring New World and Pak’nSave stores had the same brand – undiscounted – at $5.99, 1 cent less than Countdown’s special price.
Top shelf products
This year, we also gave our shoppers a list of 8 “top shelf” products to buy at Countdown and New World as well as at Nosh in Auckland and Moore Wilson’s in Wellington. Our list included espresso coffee, organic milk, multi-grain bread, premium yoghurt, and a Kiwi brand of extra virgin olive oil.
New World was the cheapest on price for these products in every centre, beating Countdown by between $4 and $8 (see our Top shelf table). In Auckland, both supermarkets were cheaper than Nosh. But in Wellington, Countdown was narrowly beaten by Moore Wilson’s.
What about Pak’nSave? The store wasn’t included in our top-shelf shop because it didn’t have all the products on our list. Pak’nSave may lead on price for budget buys but the trade-off is your choice of brands can be more limited.
If you regularly spend more at the supermarket than you intended, it’s probably no accident. Supermarkets are masters in marketing. They know how to entice customers to spend and they’re the biggest advertisers in the land.
Foodstuffs, the name behind New World and Pak’nSave, spent $88.7 million on advertising last year. Progressive Enterprises wasn’t far behind on $81.4m. Foodstuffs has been the number one advertiser in four of the last five years, according to market research company Nielsen.
The supermarkets’ advertising is designed to make you spend. Promotional offers, deals and discounts tempt shoppers with the promise of big savings. You might get a genuine bargain. But some of these “special” offers may cross the line.
Between 2010 and 2013, the Commerce Commission issued compliance advice to Foodstuffs and Progressive for advertising promotions that risked misleading consumers about price. Progressive Enterprises was also warned for advertising discounts on beer that overstated the savings.
For the average shopper, picking the genuine savings isn’t always easy – without at least a calculator or a forensic accountant on hand. How can you avoid the traps?
Unreal deals: With special offers, check the regular price to see how much you’re really saving. Does the special provide a genuine discount? Or is it more expensive than the brand you’d normally buy. Don’t be tempted to put something in your trolley just because it’s a “bargain”. If you believe an advertised price is misleading, you can make a complaint to the Commerce Commission.
Bigger isn’t always better: Buying bigger packs and heading for the bulk bins isn't always the way to save money on your grocery bill. Smaller packs can sometimes work out cheaper. Buying bigger packs or “two-for-one” specials makes sense when there are real savings. But it's a false economy stocking up on items you're not going to use and may end up throwing out.
Headline price v unit price: Quantity surcharges – paying more for larger sizes – are easier to avoid when unit prices are prominently displayed. The unit price shows the cost per gram or ml so you can tell whether a big box of something is better value than a small one.
Both the big chains have voluntarily introduced unit pricing. But you need to look closely: unit prices are often displayed in small type – or sometimes not shown at all. Overseas experience suggests regulation may be the best way to ensure consumers get the full benefits of unit pricing.