Issues and problems faced by CHOICE
Retailers had been sceptical of the Australian Competition and Consumer
Commission's (ACCC) attempt to develop a survey methodology to ensure like for like
comparisons (e.g. for fresh food, meat and private label brands), with claims
that a reliable method of comparison would be virtually impossible to achieve.
These concerns were raised with CHOICE, which did acknowledge that there were
difficulties, but claimed that on the new GROCERYchoice website they would not
While the consumer will be the ultimate arbiter of shopping
basket composition and perception of quality, and will apply the same shopping
decision-making as they would in the supermarket, the website needed to address
supermarket concerns on the ability to appropriately compare products.
As a result CHOICE developed a detailed methodology to enable
like‑for‑like comparisons. The methodology for fresh food
comparisons, for example, encompassed:
- tangible product features
- ethical food attributes
- common product descriptions
- quality descriptors that are current across fresh food
On the question of comparing private label or home brand packaged
groceries between stores, CHOICE provided the committee with a copy of its
principles for 'Like for like product matching', demonstrating the
organisation's capability to develop and refine product comparison strategies (see
Further discussion of like for like comparisons of fresh produce is in
Collecting price data
Accurate, timely data was to be crucial to the new website's success,
according to CHOICE. ALDI and FoodWorks were said to be cooperative in
CHOICE's endeavours to access grocery data efficiently (as ALDI already applied
consistent national pricing and FoodWorks had identified a technical solution
to provide data).
However, when other retailers became less cooperative:
CHOICE investigated alternative
sources including Aztec Point of Sale prices gathered by supermarkets and on-sold
to manufacturers. We requested access and use of the Aztecprice and location
data from Coles and Woolworths as this was already available to them but the
request was declined. CHOICE also entered into an agreement with Freshlogic to
deliver weekly specials from all the major retailers, a strategy that the
Minister agreed would fulfil CHOICE’s contractual obligations. Scraping
retailers’ websites was also considered as a data source. CHOICE had sought
advice on this strategy to ensure its legality.
Cooperation from retailers
CHOICE stated that the failure of some supermarkets to provide price
data was the primary problem it faced in delivering a website of the quality
originally desired. (Nevertheless, CHOICE said it had developed an 'acceptable
alternative approach' which still would have provided useful information to
The retailers' attitudes from the point of view of CHOICE are described
Woolworths was resistant to the idea from the beginning. They
cited a range of issues from technology constraints to trade practices
breaches, all of which CHOICE was willing and able to address. ALDI and
FoodWorks were supportive and cooperative and while they cited technology as a
challenge, they were willing to find solutions and work with CHOICE. Coles and
Franklins were initially cooperative and open to the idea, but became
increasingly distant. Ritchies and Metcash remained uncommitted until they saw
what action the big two retailers would take. NARGA were hostile to
GROCERYchoice from the outset, based on the fact that their members find it
difficult to compete with the big two supermarkets (because of the Metcash
monopoly), and difficulties in making information available for all stores.
CHOICE therefore took the decision early on that NARGA members would be part of
a post July 2009 strategy.
The entry of the Australian National Retailers Association (ANRA) into the
GROCERYchoice consultations was singled out by CHOICE as a 'turning point' in
the project. Engagement with the retail sector deteriorated as:
Previously CHOICE had dealt with supermarkets individually,
but after a meeting requested by ANRA on 30 April 2009, ANRA members Coles,
Woolworths and Franklins would only communicate through their industry body.
This new strategy gave these supermarkets an opportunity to present a united
front and agree an approach to block progress. Supermarkets stepped away from
the negotiating table and let ANRA do the talking.
CHOICE stated at the inquiry hearing that the supermarkets 'effectively
sabotaged' the website:
I think there is an antidemocratic strain running through
that because it was an election commitment of a popularly elected government.
It is pretty antidemocratic for a body like ANRA and the supermarkets to block
progress in that way.
... The big two supermarkets in particular rarely take to
public platforms or the media on this issue because I think they see it as
damaging their brands in the eyes of the consumer. In a sense, ANRA becomes a
whipping boy ... and a block and a protection to the two supermarkets.
ANRA responded strongly to CHOICE's claims about its 'spoiler role':
I find these comments really offensive and indicative of what
was and is the ‘it must be someone else’s fault’ approach that CHOICE has taken
on this issue from moment 1. ANRA is a not-for-profit body which fulfils its
role as a good corporate citizen by supporting full compliance with the
legislation and policy requirements of a democratically elected government of
the day. We try to assist that process by presenting a unified and efficient
voice to government and other stakeholders on behalf of our members.
The committee heard evidence from ANRA on the chronology of interactions
with CHOICE. ANRA stated that it convened the meeting on 30 April 2009 as a
genuine attempt to:
... bring some focus to the range of issues that, just two
months out from the launch of the site, CHOICE had still not dealt with or
given any real clarity to the retailers on. At the meeting, the representative
of the minister’s office made it clear that the 1 July date for the launch was
far less important than getting the basics of how the site might work right. In
other words, they were flexible about that date and interested in understanding
the stumbling blocks and getting to some sort of workable outcome. From that
meeting, CHOICE committed to deliver to the retailers a draft MOU, and they
indicated they had one pretty much ready to go and would get it to us ASAP with
a copy of the Freshlogic report, which they felt would finalise the issue of
how many items, how often et cetera.
We received an MOU pretty quickly after that, at the
beginning of May. It was a two-page MOU. It was completely inadequate to the
concerns of our members, and we had expressed those concerns at some length. So
we went back to CHOICE and indicated once again what those concerns were, and
in the last few weeks of May we were still waiting for a redrafted MOU. At the
end of May, while we had not received a copy of the Freshlogic report promised
at that April 30 meeting, we did get a list of 7½ thousand items, including a
wide range of clearly top-selling items like birdcage cleaner and a request
that the price checks be done every week, twice a week in each store. When you
do the maths on that it works out at something like two billion price checks a
year, which is a pretty substantial task. 
CHOICE's draft Memorandum of Understanding (MOU) is at Appendix 7. Emails
between ANRA and CHOICE showed the retailers' concern that the MOU needed to be
more substantial and include issues such as:
Clear statements of when one or both parties are liable. For
example, would CHOICE be liable for commercial harm caused to a participating
retailer if CHOICE is negligent? What if any liabilities does a participating
retailer have other than to provide data in good faith?
... How CHOICE will protect the integrity of the data – e.g.
how will the data provided by retailers be manipulated by CHOICE?
What obligations in terms of fair comment, accurate
presentation does CHOICE accept when presenting data?
ANRA argued that it was CHOICE's poor management of the programme and a
reluctance to address the concerns of individual grocery retailers that
necessitated their involvement:
Our feeling is that if CHOICE had managed the program better
and worked with ANRA sooner then maybe a model could have been made to work.
Far from holding up the process, we may have been able to help it being brought
in earlier. CHOICE could have gone to government and said they needed more time
as there were unresolved issues with the major chains. We do no speak for the
government, of course, but I do not think it is unreasonable to suggest that
they probably would have looked at some form of extension and deemed it acceptable
to get the right kind of outcome. This is not what CHOICE chose to do. What
they did do was to go to government and get a contract variation on 26 May,
when they were still talking to us supposedly in good faith by email about the
current contract. This contract variation allowed for them to get alternative
data from Aztec point of sale pricing. Their stated intention in their
submission was to pressure the retailers—to shame them, in effect—to give data
which we knew could not have been accurate.
Coles told the committee that the motivation for involving ANRA was to
'expedite and facilitate discussions around very complex and difficult issues'
and to be able to get 'the insights of other members about how best to resolve
the issues'. Coles stated it was 'extremely disingenuous' of CHOICE to say that
involving ANRA was anti-competitive:
In fact, the intention was to be cooperative and to try and
meet a very looming deadline. We had no confidence in CHOICE being able to
meet its stated obligations.
CHOICE's website proposal was 'extremely ambitious' according to Coles,
which felt that the full product list and MOU promised by CHOICE had been
delivered to retailers quite late ('we were operating in a vacuum for a long
period of time').
Coles described two 'fundamental hurdles'—the lack of legal certainty from
CHOICE about ownership and use of the data, and the inability to 'technically
provide in real time the information they were seeking from us.'
Woolworths described CHOICE's proposal for real-time prices on a website
as 'fraught with significant problems', suggesting that the consumer group had
been 'applying pretty poor project management skills to something that was
At the outset they asked us for 300 items and they then moved
that to 1,500. They then said they wanted 7,500 items across our 800 stores and
they wanted it three times
a week. To do that we would have to build a whole new IT system to create
those data feeds. We
estimated that it would cost about half a million dollars if we outsourced
that work to India. On top
of that we would then probably have the ongoing headcount and capital costs of maintaining it.
Once you get to the point of doing 15,000 price checks per store in a week, the error rate would
start increasing and we would be significantly concerned about price representations that the
website would then be giving consumers.
where we came to our final point with CHOICE. They were not prepared to accept
any of the responsibility for the prices they published. They just wanted to be
the portal. The ACCC, we know, would not accept that. Our trade practices
lawyers would not accept that, and we never got any satisfactory response from
them about the sort of disclaimers we would have to put on the website to tell
consumers that it was not necessarily accurate information.
Woolworths claimed that from its perspective, it had 'never ceased
discussions with CHOICE' and that 'the need to amplify our voice' through ANRA
arose because CHOICE had not been answering Woolworths' questions ('it was a
one-way discussion') or providing the necessary data 'to properly scope out the
ANRA was also critical of the consultations that CHOICE held with
industry. It cited the claim made by CHOICE in January 2009 that the new
website would come at no new cost to supermarkets; this commitment was never
restated in further consultations.
ANRA described the difficulties and uncertainty that arose during discussions
Our large supermarket members began working with CHOICE
towards the end of 2008, and a number of combined and individual meetings were
held. CHOICE came to see me early in 2009 and I expressed a willingness to
assist. In the following months, while ANRA heard little or nothing from CHOICE
despite having indicated a willingness to help, meetings and conversations
continued with our members. In April, retailers were still waiting for clear
specifications and a range of details from CHOICE. For example, was this going
to be 2,000 items or was it going to be 5,000 items? Both numbers had been
discussed by CHOICE. You may or may not be aware from the earlier version of
this particular website, after CHOICE took it over, that, in the frequently
asked questions section, where people asked, ‘Why do you have this number of
items on the site?’ which was somewhere around 300, the answer was: ‘You do not
really need more than 300 because that pretty much sums up the normal things
that ordinary people would buy on a regular basis that should be in a basket.’ I hope you can see our confusion in terms of understanding how we would scope
it at our end when at that stage we still did not know how many items they were
Our members also needed to know how CHOICE were going to
address such things as like for like, concerns that prices would not be
accurate, the impact and liability that represented to retailers and the cost
Further discussion of the potential cost burdens to retailers is in chapter
5. Further discussion of potential breaches of the Trade Practices Act 1974
in terms of data accuracy, as well as ANRA's involvement, is in chapter 6.
The National Association of Retail Grocers of Australia (NARGA)
explained that its representatives met with CHOICE in late 2008 following
reports that CHOICE was negotiating with the Government to take over the
website. NARGA provided a critique of the website, outlining its failings and
strongly advising CHOICE not to proceed 'on the basis that the task set was impossible to achieve'.
CHOICE was advised:
The GROCERYchoice budget was said to be $13 million over four
years and that had been based on one data collection a month – to make the
data timely, data collection would have to be done more frequently and the
cost of doing so was not covered by such a budget.
According to NARGA, CHOICE claimed at a stakeholder meeting that it
would set up a system for publishing weekly or continuous grocery prices for as
many items as possible 'at zero cost to retailers'.
Industry representatives voiced a number of concerns, including:
- the inability to provide weekly or continuous data 'at zero
cost', with costs necessarily being passed on to consumers;
- independent grocery businesses, mostly family-owned and operated,
having to allocate resources to the data collection task with new software
requirements (at an estimated cost of $6,000 per store), given that current
electronic price files included additional commercially sensitive information;
- independents having to allocate further resources to uploading
price data on their entire product range.
Technical aspects of CHOICE's proposal were also questioned:
If even the top 1000 independent supermarket operators agreed
to supply data electronically, CHOICE would require a very large number of
modems and very substantial computer processing power to handle millions of
product and price records.
CHOICE then suggested these stores could fax price changes
once a week; however, NARGA pointed out that an average independent supermarket
has about 3000 price changes a week, meaning CHOICE would have to key in about
three million price changes every week for the top 1000 independent stores.
CHOICE could not explain how it would handle comparison of
prices for fresh produce (fruit and vegetables, meat, dairy) and suggested
omitting such prices - which account for about one third of all supermarket
CHOICE could not explain how it would maintain security on
price data if such data were to be forwarded to them - the data is, after all,
commercially sensitive until price changes are on store shelves.
CHOICE had no plan or methodology to validate independently
any data which might be given to it, running the risk that any incorrect data
might unfairly create the impression that one store or group of stores was
cheaper than a competitor/competitors, beyond a vague idea that its
sympathisers would report if they noticed price discrepancies between shelf and
Having undertaken to consider these issues, on 26 March 2009, CHOICE
emailed NARGA to advise that because of the difficulties raised in relation to
independent retailers, the website would proceed without them:
When asked specifically whether that decision meant
Woolworths, Coles, ALDI and Franklins had agreed to provide pricing data,
[CHOICE] said only that [it] had received "adequate commitment from enough
sources to proceed."
Woolworths, Coles and Franklins later denied any such
commitment. As far as NARGA is aware, if CHOICE has any support for its plans
it is only from ALDI.
NARGA met the responsible Minister, the Hon Chris Bowen MP, on 22 April
... and made clear to him that while we had no problem in
principle with providing price data and did so continuously through shelf
prices, advertisements and catalogues, the prohibitive cost of complying with
CHOICE’s requests and the methodological issues raised with them made
Mr Bowen acknowledged that the independent sector had special
issues because of the large number of individually owned small and medium sized
family businesses in the sector, but expressed the view that industry
representatives should try to reach some form of agreement with CHOICE to allow
the new website to build up over time.
Cooperation from government
Given the retailers' unwillingness to provide data, CHOICE requested the
help of ministers and officials to influence and press the supermarket CEOs:
The Government made it very clear that their preference was
to proceed in a conciliatory manner, giving supermarkets a longer time-frame to
comply rather than increasing pressure on them to act.
In further discussions with Minister Bowen and officials it
was agreed to continue with the launch on 1 July 2009, to increase the number
of products displayed every day, with an acceptance that greater pressure on
the supermarkets may have been required after launch to achieve the original
aims of the project in relation to price information. The Minister agreed to a
series of changes to the contract to reflect this new position.
'A lack of political will to seek legislative and non-legislative
solutions had a detrimental impact on the ability of CHOICE to deliver the website
the public wanted', CHOICE claimed.
Associate Professor Frank Zumbo called the decision by the new Minister,
the Hon Dr Craig Emerson MP, to close down GROCERYchoice just days from its
re-launch, a 'fundamental failure':
The Federal Government had a leadership role to play given
that GROCERYchoice was part of the Government’s election commitment to put maximum
downward pressure on grocery prices. This leadership role was also clearly
essential given that the Federal Government had spent or had committed to spend
millions of taxpayers' dollars on the website.
The Federal Government’s leadership role was particularly
critical given the growing recalcitrant behaviour by the major supermarket
chains towards CHOICE’s work on the new GROCERYchoice website.
... After all, it was the Federal Government that turned to
CHOICE when it became obvious that the ACCC’s version of the GROCERYchoice
website was failing to deliver any relevant information to consumers. It was
only fitting, therefore, that the Federal Government would seek to use its best
endeavours or even its legislative powers to ensure that the taxpayer funded
CHOICE version of GROCERYchoice had every chance of success in delivering
meaningful and comparative pricing information to consumers.
He commented at the inquiry hearing that:
To pull the plug a few days beforehand is just unbelievable
from the simple point of view that the government let its own website run for a
few months to give it a go and see how it went, but they were not willing to
extend that courtesy to CHOICE ... With the CHOICE website ... we would have known
very quickly whether it was a goer or not – and, if it was not, Minister
Emerson could have pulled the plug two weeks after its launch.
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