Sales and discounts hook people in, but do they really live up to the hype? A recent survey found some supermarket products were on promotion so often that shoppers risked being misled about the savings they were really getting. Consumer NZ’s Belinda Castles explains what they found and why it’s time to put supermarkets under the spotlight.
Update, November 17: The government has officially launched a market study into pricing at supermarkets, looking at whether the sector is as competitive as it could be and ensure New Zealanders are paying a fair price at the checkout. The Commerce Commission, which is in charge of the study, will publish its final report on the study by November 23, 2021.
I’m the first to admit I’m a sucker for a bargain. What’s not to love about a “Super-Saver”, “Special” or “Extra-low” deal as you’re walking the supermarket aisles? Surely if I throw a few special offers in my trolley – even if they’re not on my list – it’s a win for the weekly budget?
For three months, Consumer NZ tracked online prices for a basket of 22 grocery items at Countdown, New World and Pak’nSave stores in Auckland and Wellington. While genuine price promotions are a good thing, we found some products were discounted so often that consumers risked being misled about the savings they were getting.
Bread was a common culprit. At Pak’nSave Lower Hutt, Vogel’s Bread had an “Extra-low” price for all 12 weeks. For two weeks it was $3.49 and for the other 10 weeks it was $3.89. Shouldn’t that mean $3.89 is the regular price?
At New World Lower Hutt, Ploughman’s Bakery Bread was on special 11 out of 12 weeks. For eight of those weeks, it was $3.99. It was only sold at the so-called “regular” price of $5.19 for one week.
The cleaning products on our list were also often on special. The laundry powder and dishwashing liquid we tracked were on special for five weeks at Countdown, six weeks at New World and every week at Pak’nSave. Other products regularly on special included yoghurt, canned tuna, cheese and tea bags.
Even when products were only occasionally discounted, working out how much of a saving you might be getting wasn’t clear cut. On its website, Countdown stated the regular price alongside the special price. But on New World and Pak’nSave’s websites, it was a different story: neither store displayed the regular price next to the special price.
Price matters when I’m shopping – I’ll switch brands or packet sizes to get a better deal, so often I’ll check unit prices. Unit prices show the cost per 100g or per litre so you can tell, for example, if a large box of Weet-Bix is better value than a smaller one. It’s also useful to check if it’s cheaper to buy a packaged versus bulk-bin product.
All three major supermarkets have voluntarily introduced unit pricing. But it isn’t shown on all items. That means you can’t easily compare products, especially when you’re buying online. For example, New World doesn’t show unit pricing online when a product is on “Super-Saver” or “Club Deal”. In my opinion, if you can’t see the unit price on discounted goods, what’s the point?
Over the ditch, unit pricing is mandatory and it should be here too. Australia requires the unit price to be prominent and legible and be displayed in print ads and on websites.
Consumer NZ isn’t the only one with a bone to pick with supermarkets. From July 1, 2018 to June 30, 2019, the Commerce Commission received 97 fair trading complaints about Foodstuffs (the company behind New World, Pak’nSave and Four Square) and 48 about Woolworths New Zealand (the owner of Countdown, FreshChoice and SuperValue). These numbers give supermarkets the dubious honour of making it into the top 10 of the commission’s most complained-about traders.
In June this year, Pak’nSave Māngere pleaded guilty to six charges of breaching the Fair Trading Act. The charges were laid by the Commerce Commission after its investigation found the store was charging higher prices at the till than those advertised.
New Zealand has one of the most concentrated supermarket industries in the world, with two big players dominating the market. That increases the risk consumers will end up paying higher prices because the usual competitive pressures don’t apply. And it’s not only consumers who suffer, but businesses who are also at the mercy of the stores to get their products on shelves.
It’s time this concentrated market is put under the spotlight. Consumer NZ wants the Commerce Commission to use its market study powers to investigate the supermarket industry. These powers mean it could require companies to disclose price data and result in a better outcome for New Zealand’s shoppers.
If you’ve been misled by less than “special” supermarket deals or you have examples of confusing pricing, we want to know. Send your examples to email@example.com