Concerns of the grocery retailers
Grocery retailers raised a number of concerns in relation to the
GROCERYchoice website, including the survey methodology adopted by the
Australian Competition and Consumer Commission (ACCC); problems with comparison
of fresh food prices; the inclusion of ALDI in product range comparisons; the
inclusion of independent stores with limited floor space; and the potential
cost burdens on retailers which arose from CHOICE's proposal for a revamped
The ACCC website
The National Association of Retail Grocers of Australia (NARGA) argued
that the ACCC's survey methodology was 'seriously flawed and invalid; it had
the hallmarks of a website designed by people who did not personally shop for
groceries and who had no clue about how grocery customers
The system of 61 regions devised by the ACCC was heavily criticised on
the grounds that the regions 'bore no relationship to actual commercial markets
... nor to the demographics of the regions'.
With some regions comparing prices in shops hundreds of kilometres apart, NARGA
Comparing averaged prices for a 'mystery basket' of
unidentified products across ten unidentified stores spread across a region
gave no indication of whether the basket prices identified in the survey bore
even a passing similarity to the price of a basket of groceries that customer
might actually want to buy in his or her nearest store(s).
In hindsight, it may have been better for the website's regions to have
been restricted to metropolitan areas and large towns, instead of the expansive
regions in the ACCC's original design.
Inclusion of fresh produce
The issue of like for like comparisons of fresh produce as a part of the
GROCERYchoice website was a major sticking point for retailers. The
perishability of fresh food, it was argued, made it impractical for comparisons
to be made based on price alone.
The Australian Retailers' Association (ARA) stated that it was
impossible to make timely comparisons of fresh food which took into account
In regard to both meat and fresh vegetables, there are
different grades. For instance, if you take tomatoes and bananas, I think there
are four different grades. First, you have to define the type of product you
are talking about—is it a grade 1 or a grade 4? Obviously the price will vary
in relation to that. You will also get situations in supermarkets where
products come very close to the end of their use-by-date, in particular meat,
and that is often put out on sale as a last-minute thing. So that comes down in
price quite drastically. There are also other products that have use-by-dates
that will be put out from time to time. Those products could be out of date on
the basis that, even if the reporting was done weekly, decisions are made
virtually instantaneously at supermarket levels to clear products towards the
end of their use-by-dates. It will be out of date very readily.
Master Grocers Australia similarly argued:
If you put up the price of apples, what product are you
talking about and what grade of apple are you talking about? It can be very
misleading. My particular store is in an affluent area and we only buy the very
best quality and we charge accordingly. But you can eat every apple in a bag of
apples that you buy from my store. If you go to a Dandenong market and buy a
bag of apples there, they will be a lot cheaper but you will throw out the last
five or six apples in that bag. If my price goes on the website, I am dear in
comparison to the rest of the area. So my products may be perceived as dear,
but in fact it is about the quality of the product.
NARGA stated that it raised the issue of accurate data collection in
relation to comparison of fresh food prices in discussions with the ACCC. Its
submission drew attention to inherent difficulties in collecting such data,
- There are numerous varieties of potatoes, tomatoes, apples,
oranges, grapes, etc., not all available in all stores at the same time – on
which would data be collected?
- Prices vary by the day, depending on availability, weather
events, season, availability of and source of imports, etc.
- Prices vary from location to location, with different regions
ripening fruit and vegetables at different times – even within some of the
- Fruit and vegetable prices may vary by size of the produce
- ... Meat prices vary by both grade and cut – would the data
collectors be competent to distinguish lamb from hogget or mutton, for example?
NARGA claimed that the ACCC ignored such concerns and 'purported to
include price comparisons for fresh foods in its GROCERYchoice mystery
Retail*Facts stated that the ACCC had provided a methodology for
comparing fresh produce, commenting that:
... it is always going to be a difficult assessment; however,
the general assessment was on things such as discolouration. That was one of
the main reasons why we were not to collect a price if necessary, if, in the
case of fresh produce, it appeared not to be of a certain quality.
The committee believes that there were serious difficulties with the
issue of like for like comparisons under the ACCC's version of the website,
particularly given that the consumer was unaware of the contents of the ACCC's
mystery baskets and therefore could not judge for themselves whether a like for
like comparison was reasonable.
The inclusion of ALDI
ALDI is a German-owned grocery retailer which commenced operations in
Australia in 2001. It operates across 207 stores in Queensland, New South Wales,
Victoria and the Australian Capital Territory. ALDI's typical store size is
around 1,200 square metres, with around 1 000 products stocked in each store.
(A major full line supermarket can stock up to 30 000 product lines.)
NARGA suggested that the ACCC 'devised' the special category of the 'basic
staples basket' to allow ALDI to be included in comparisons on the
GROCERYchoice website. Noting that the ACCC's 2008 inquiry into grocery prices
had emphasised the significant competitive impact that ALDI's entry had brought
to bear on the grocery retail market, NARGA asserted that:
GROCERYchoice had to be constructed to include the only
company allegedly providing a "competitive dynamic" to the Australian
grocery industry. ALDI's exclusion from GROCERYchoice would have called into
question one of the ACCC's major findings from the grocery price inquiry.
The problem remained, however, that ALDI did not have product
range, nor the sites, to allow them to be included in the general GROCERYchoice
price survey across Australia. A special category, the "basic staples
basket" was devised by the ACCC to allow ALDI to be included. ALDI has a
legitimate place in the Australian grocery industry, but it is not a direct
competitor with full-service supermarkets or grocery stores offering much
larger product ranges.
If one of the aims of GROCERYchoice was to help price-sensitive
consumers find the lowest prices on basic items at the supermarket, it might
also be argued that including large numbers of other goods in the rest of the
basket categories was a distraction that artificially favoured the large
NARGA was sceptical that the ACCC could have accurately compared ALDI
products directly with branded products, calling into question the ACCC's
'independent testing' regime:
... the ACCC claimed to have hired an independent product
testing laboratory to ensure that product quality was similar – that the
comparison of prices was based on a comparison of "like for like".
The independent product testing laboratory was never identified and no results
of the alleged product comparison testing were ever published.
In its advice to the then Minister for Competition Policy and Consumer
Affairs, the Hon Chris Bowen MP, during the scoping stage of the GROCERYchoice
project in early 2008, the ACCC had acknowledged there would be difficulties in
incorporating ALDI, noting the issue of like for like product comparisons and
its smaller range of products. On balance, the ACCC recommended including ALDI
on the website because it was 'an important aspect of the competitive landscape
in grocery retailing'.
At the time, the ACCC noted that the:
... the website would make it clear that the [basic staples]
basket price is calculated on a 'matched similar product quality' basis rather
than on an 'identical product' basis, and that consumers need to make up their
own minds as to the issue of product quality.
Some retailers were alarmed that the website identified ALDI as being
significantly cheaper in the 'basic staples' category in every region in which
it was present. The ARA called the initiative 'blatant Government brand
promotion'. An ARA press release from 1 October 2008, submitted to the inquiry,
But now the Rudd Government is taking a dangerous turn and
promoting particular big supermarket brands by naming them the 'cheapest' in
Australia. There is no place for Government interference in brand promotion and
marketing of Australian supermarkets. This is overt favouritism of major brands
while local grocers and fruiterers are being ignored.
... The market doesn't need government intervention, like
GROCERYchoice, which discriminates against small independent grocers. It's not
GROCERYchoice; it's GROCERYpromo.
ALDI's response to the claim that its basket of goods could not be
legitimately compared to those of other retailers because of ALDI's limited
number of lines was that the number of lines had no bearing on the quality of
products on offer.
Also, the 'like for like' question raised by NARGA could equally be applied to
major supermarket chains' home brand and private label products being compared
against each other.
Prior to the website's launch, the ACCC had also acknowledged that
making appropriate comparisons across major supermarkets on their home brand
goods would present difficulties:
...particularly since higher quality home-brand products are
now very common and have high market shares. Simply choosing the cheapest
product would create a bias towards supermarkets promoting low quality products.
To ensure that appropriate comparisons between products could be made, the
ACCC engaged expert consultants and undertook industry consultations. The ACCC
has advised that Symbio Alliance undertook the 'like for like' product testing,
at a cost of $13 999 (GST exclusive).
Impact on independent stores
Independent retailers claimed that the ACCC's website placed them at a
significant disadvantage, with inherent biases and shortcomings in its survey
methodology. They argued that issues such as lack of competition in remote
areas and the high costs of delivery (particularly for fresh produce) were not
adequately accounted for and therefore resulted in 'negative press' about
independents once the survey results were published.
Giving evidence to the inquiry, Mr Grant Hinchcliffe of Tasmanian
Independent Retailers, quoted a newspaper article from the Mercury on 7
August 2008, the day after GROCERYchoice went live:
... in southern Tasmania a shopping trolley full of meat,
seafood, fruit and vegetables, dairy, bread, cereals, drinks, snacks and other
household items costs $161.51 at Coles, $162.97 at Woolworths and $185.66 at an
The article also reported that Mr Graeme Samuel, the Chairman of the
ACCC, said that the website only compared supermarkets that were 1 000 square
metres or larger.
Mr Hinchcliffe commented:
I am not sure whether any of my members were surveyed. I do
not know whether it was IGA stores, FoodWorks stores or whatever, but that is
about a 15 per cent price variation. For a price conscious, savvy consumer
sitting at home reading that, it is going to send out the message quite clearly
that independent grocers are very expensive to shop at. In my opinion, 15 per
cent is way over the top, and I would suggest that with the larger
independently owned and operated businesses in Tasmania it would be nowhere
near 15 per cent.
While the ACCC's general principle when conducting the price surveys was
not to include any store with an area under 1 000 square metres, NARGA claimed
that this principle was not adhered to:
We are aware that in some cases, independent stores as small
as 270 metres were included, while similarly-sized petrol station convenience
stores operated by Woolworths, Coles or the large petrol companies – charging
convenience store prices – were excluded.
These smaller stores are not, to use the words of the UK
Competition Commission, "close substitutes for other grocery
retailers" and operate on a different business model. Yet the ACCC lumped
the basket prices of these stores in with those of large independents which
compete head to head with Woolworths or Coles in local markets, skewing upwards
the basket price averages listed for the "independents" category, at
the same time excluding the supermarket chains' petrol station convenience
stores of similar size to small independent grocers.
In Tasmania, it is claimed that the ACCC surveyed the Shearwater Supa
IGA, with 891 metres of retail space, the Value Plus Valley Road in Devonport,
with 312 square metres of retail space, as well as the Festival IGA in
Lindisfarne, with 232 square metres of retail space (at which the proprietor
refused entry to the data collectors).
The ACCC's response was that 'they were the exception rather than the rule'
and that those stores 'identified by industry as being smaller than desirable
[were] removed from the survey list'.
In more isolated regional areas, the ACCC admitted that it ran into the
problem of not having enough large-scale supermarkets in a particular region to
'cover off on the survey work':
In limiting those supermarkets ... it would have been fairly
easy to identify the supermarkets in those areas that were actually being
surveyed and also, possibly, to identify what was in the basket. On our website
we had a notice that said that the GROCERYchoice survey was generally
restricted to those with a total floor area of greater than 1,000 square
metres, and it really was, in the Tasmanian instance in particular, an issue
that we had identified after we started doing the surveys.
Tasmanian Independent Retailers noted that only Tasmania's northern
region has any independent stores in excess of 1 000 square metres—one in an
outer suburb of Launceston, and one in St Helens in the state's far north-east.
It is understood that out of the two, the ACCC surveyed only the St Helens
It should be noted that this store is some two hours drive
from the urban centre of Launceston where there are approximately nine major
chain supermarkets (Woolworths and Coles) of which both are largely serviced
for their grocery requirements by two locally based Distribution Centres. The
Supa IGA supermarket at St Helens is also largely serviced for its grocery
requirements from Launceston.
Unfortunately, the ACCC would not reveal the supermarkets
that were surveyed but it would be fair to assume that it is unlikely the other
supermarkets surveyed in the northern area of Tasmania did not have the
transport disadvantage of being located some two hours from their main
The Western Australian Independent Grocers Association expressed the
concern of its members about the lack of consultation and prior warning about
the price surveys:
... in some cases, the first store owners knew of any website
was when individuals turned up at their door step and declared that they were
there to collect pricing data that could take them up to 8 hours to complete.
... Store owners originally were unsure if the people in their
stores had any legal right to be there and did not know if they should put a
staff member with them for the whole day that they were there or leave them
alone or ask them to leave without collecting the data.
Tasmanian Independent Retailers was also disappointed that there was 'no
protocol established by the ACCC with regard to informing our members that
their premises were to be surveyed'. It was highly critical of the ACCC's
inconsistency on the floor space issue, stating:
... Attempting to compare supermarkets with differing floor
sizes is similar to attempting to compare an aircraft carrier with a speed
At the inquiry hearing, Mr Hinchcliffe elaborated on the reasons why the
comparison of independents on price alone was unfair:
I think it is widely accepted that the smaller the operation
the less opportunity you have to get goods into your store at the same landed
in store cost as a larger store would have—that is, there are obviously
efficiencies in buying if you are purchasing more and if you have the volume to
purchase more. There are also efficiencies with respect to how you operate your
business as well. All of those come into play when retailers are ultimately
seeking their margins. I feel that it would be fair to say that from the
Tasmanian experience, the independent retailers in Tasmania, generally probably
have to accept a lower margin on their grocery items simply to remain
competitive against the might of Woolworths and Coles. Also in some of the
areas obviously freight and distribution come into play such as the outlying
areas that are away from the main distribution centres in Launceston and also
Woolworths have a distribution centre in Hobart. That comes into play as well.
Master Grocers Australia gave similar evidence:
Smaller retailers certainly have less scale than a large,
3,000 square metre supermarket. There is no doubt about it. There are different
costs associated with running those different businesses, whether it be labour,
overheads, rent, wage percentages and so forth. There is a higher cost to
running a smaller store. Subsequently, those higher costs are reflected in
price in some of those stores that are conveniently located. I think it is
generally accepted that the small to medium type stores that are conveniently
located may incur higher costs to operate but the fact is that those stores do
play a role within our community. It is genuinely accepted that the prices
might be slightly higher.
While it is clear that independent retailers do face higher operating
costs that are reflected in higher prices, it could be argued that GROCERYchoice
was not necessarily 'inherently unfair' given that it simply reported what
independents already state to be the case. The question of whether a
price is higher is a different issue to why it may be higher.
Senator Barnett asked Tasmanian Independent Retailers whether any legal
action against the ACCC had been considered for putting evidence into the
public arena that was damaging to independents in a competitive marketplace:
I did consider that briefly but at the end of the day
Tasmanian Independent Retailers is a small business. It is owned by small
business operators and for us to consider legal avenues against the ACCC is
like a David and Goliath fight to be honest. We did issue a press release on
the same day voicing our concerns that the website was false and misleading
with respect to the statements that were contained in that article.
... That press release conveyed our concerns that in
Tasmania, as I have said, with two out of the three regions there were no
independents over a thousand square metres, so from my perspective the ACCC was
clearly operating in breach of its own guidelines that had been set and to date
we have not received any formal notification, apology or correspondence from
Responding to the claim that the website had favoured the major
retailers over the independents, the ACCC said:
If you look at our grocery inquiry report, you will see that
we made the point that the independents have a lot of difficulty competing with
Coles and Woolworths because of the prices that they are charged by their
wholesaler Metcash, and that certainly showed up in the GROCERYchoice website
during the time it was operating. We were doing 61 regions a month for six
months, which gives you 360-odd regional readings. I think in about only eight
of those did the independents come out as being the cheapest. So, even during
those six months, I think the website illustrated the difficulty independents
have competing with Coles and Woolworths.
The committee is of the view that the generalised information
disseminated by the ACCC through the GROCERYchoice website was prejudicial and
unfair to independent retailers, which do not and cannot operate to the same
economies of scale as major chain supermarkets.
The committee recommends that both the Government and the Australian
Competition and Consumer Commission note that the operation of the
GROCERYchoice website was prejudicial and unfair to independent retailers.
Additionally and specifically, the committee recommends that the
Australian Competition and Consumer Commission apologise to Tasmanian
Independent Retailers for unfairly comparing small independent retailers to
major chain supermarkets in its price surveys for the GROCERYchoice website, thereby
disadvantaging smaller operators and contributing to undeserved negative press
in the Mercury on 7 August 2008.
The CHOICE website
Fresh produce comparisons
NARGA also raised its concerns about fresh food comparisons with
CHOICE. At a meeting between CHOICE and other industry participants on 25
February 2009, NARGA claimed that:
CHOICE's initial response was to offer to exclude fresh
produce prices from the data collection process. Industry representatives
pointed out that fresh produce sales account for about 30 per cent of all sales
and any basket of groceries would be unrepresentative if they were not
Woolworths also had concerns about how CHOICE was going to undertake
like for like comparisons:
Woolworths has a quality assurance program, particularly
around its fresh [products] that is unique. It is one of a very high standard.
We know from past experience that when our meat is compared with some of our
competitors’ meat, our meat comes out more expensive, but that is because they
are doing incorrect like-for-like comparisons. They are comparing cow meat with
quality rump. We are very sensitive to that. That was another issue that we
could not get a resolution on that was satisfactory from CHOICE. They were
insisting they were to apply their own standards, and we felt that ignored the
standards of our suppliers and that we abide by within our own store. We were
not comfortable about a third party applying their own standards on information
we give them and then publishing it and then taking the liability for that.
Freshlogic, which had worked with CHOICE to design a system to sort
through and compare fresh produce descriptors (but without making an assessment
of quality), noted that while meat, dairy and deli items ran mostly on weekly
cycles, fruit and vegetables were the most volatile in terms of price and
supply. Pursuing the question of fresh fruit comparisons, the committee asked:
Senator BARNETT—How do you compare a banana that is
four days old and about to go off and a ripe banana or a barely ripe banana?
Mr Kneebone—We do not have a solution for how you
would do that. You would be relying on the retailer’s ability to manage stock
and assuming there was some average quality there.
Senator FISHER—Surely that undermines the very wisdom
of GROCERYchoice for genuine perishables? Standard quality bananas might be
four bucks a kilo, but at the end of their life they may be one buck a kilo. A
price of one buck a kilo might reflect that the bananas are at the end of their
life. On the other hand, a retailer might want to have a loss leader, and thus
sells bananas at one buck a kilo when they are at the top of their quality. How
would a consumer know that? A consumer might second-guess the website and
undermine the purpose of it anyway.
Mr Kneebone—I cannot rule out circumstances like that
happening. My experience is that it is the exception rather than the norm. If
the market price of bananas is $4, there will only be a small number of
retailers selling them at a grossly different price.
Senator FISHER—So a cheap price would mean they were
second quality or third quality, and the consumer would be expected to deduce
Mr Kneebone—It could mean that they were clearing the
product. It could mean they got the stock rotation on a product wrong. It could
mean it was Saturday afternoon and they were not going to open on Sunday. It
could be that it was the last 1½ hours of trade and they were simply clearing
stock. That happens in the fruit and vegetable area more than anywhere else.
Those are the practices in the market, and that is how they are going to recoup
some costs from distressed stock.
Freshlogic did note, however, that the grade of fresh product stocked by
major retailers was quite narrow:
If you look at the grades of product that the major retailers
take, they are not massive in my opinion. You do get some mixing of that going
on—they might buy one or two grades and put them in there. Bear in mind that
when they are communicating their offer to consumers—and they do that quite a lot—they
do not communicate grade, they communicate product and price. The consumers are
by and large being met with a relatively consistent grade. They would get in
trouble if they did that.
CHOICE rejected the retailers' claims that it is impossible to make
valid comparisons of fresh foods:
This is insulting to consumers who are required to make such
comparisons everyday of the week. Consumers make comparisons between fresh food
items all the time, taking into account whatever information may be available
to them at the time which may – or may not (for example, in the case of online
shopping or standing orders) – include physical inspection of goods.
There is a big difference between observing that fresh food
comparisons present some challenges and at the end of the day it is up to the
consumer to place a value on particular qualities that suit him or her (size,
variety, grade), and claiming that such comparisons are not 'valid.'
CHOICE had acknowledged that 'any solution implemented won't satisfy
every retailer and will at best be a compromise'. In correspondence with the
Australian National Retailers Association (ANRA) during development of its
website, CHOICE said it was 'genuinely open to finding a workable solution':
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, CHOICE proposes the following
size as a differentiator where applicable (e.g. small/medium/large apples) or
budget/everyday/premium for meat, as decided by the retailer.
price and other product information provided by retailers and let consumers
The Australian Chamber of Fruit and Vegetable Industries' submission
stated that it would support a price comparison website for fresh produce,
contending that such a website would be:
...feasible [and] would be of value to consumers ... Chamber
members undertake 'price reporting' and this data is used by ABS and ABARE in
ascertaining GVP for fruit and vegetable production.
A GROCERYchoice website could have been designed in such a way as to
allow fresh produce comparisons to a certain extent. For example, to address
the problem of use-by dates for meat or deli products, one could specify
that products for comparison on the website must not be within 'x' days of
their use-by date. While it is true that fresh produce comparison is not as
simple as a comparison of identical branded products, it is worth noting that
the Consumer Price Index relies on a regular analysis and comparison of fresh
food prices. This begs the question: how accurate must the information be
before it is better than nothing at all?
Comparison of fresh food must also be undertaken by supermarkets
themselves when determining their own pricing against those of rival chains, so
the argument that no valid or useful comparisons could ever be made appears
questionable. Woolworths stated that it used 'its own expert staff to assess
quality and price in competitive price checking.'
ALDI had a more favourable view than the independents about CHOICE's
proposed version of the website. As CHOICE had described, ALDI had been
cooperative in providing data for the GROCERYchoice initiative:
ALDI's philosophy is one of consumer transparency. As a matter
of principle, the company was prepared to cooperate with the ACCC, and
subsequently CHOICE, on GROCERYchoice if the website could be established in
such a way that would provide accurate and meaningful information to consumers.
The policy of national pricing, introduced by ALDI in 2008 (with the
exception of fresh fruit and vegetables and bakery lines), ensured that ALDI
was able to provide centralised pricing data fairly easily. Consumers are able
to search for a product or look at product lists on ALDI's own national
ALDI commented that its situation was different to that of its major retailer
competitors, which would have to provide a lot of 'complex and specific
information' in terms of price data.
While ALDI stated in-principle support for a website that is 'able to
deliver transparent, robust and dependable information to the consumer', it did
express concern about the challenge of like for like comparisons:
One of the challenges that is faced in the creation of such a
site is to ensure that we move further away from the technical requirements of
just pasting up prices of groceries and move towards assessing the areas of
comparative quality grocery pricing. That is the like-for-like principle that
is so often discussed. I can give you an example: our Remano basil pesto at
$2.69 a jar is at a 36 per cent discount to the market leading brand. It has 47
per cent basil as opposed to the market leading brand at 27 per cent basil.
They are both Australian made. The question is, if you just have prices up, how
is the consumer to understand what the offerings are that are available to
Cost burdens on retailers
ANRA argued in its submission that CHOICE's proposal to create a system
of centralised real time prices would add significant costs to retailers:
There are some key misconceptions that need to be corrected
in any cogent analysis of grocery pricing. Firstly, no retailer has a
centralised data system which records in real time the prices of grocery items
sold across the chain ... ANRA estimates that compliance with unit pricing has
cost the grocery sector approximately $40m. Provision of real time pricing data
would be expected to impose a higher ongoing compliance cost than unit
pricing. These compliance costs would need to be passed on to consumers
through higher prices.
ANRA asserted that the pattern of local short-term discounting or sudden
shifts in the standard price across retail outlets would render GROCERYchoice
... Shelf prices in individual stores frequently vary from what
might be called the standard price. Store managers have the discretion to
respond to local competition by marking down products. Store managers may also
discount below the standard price to clear perishable products. On a broader
scale, a standard price set on one day can be changed across many stores the
next day as retailers respond to competition. Thus the standard price is often
not the actual shelf price in many stores or may only be valid, for many
stores, for a short period.
Woolworths put forward similar arguments, saying that CHOICE had wrongly
assumed that the retailer had:
...a central database on a computer that sits in our head
office and can tell us exactly the price of a good as it goes through the
register and sells in real time ... We have about six systems that control our
pricing in our business and they do not necessarily talk to one another.
The data feed that would have been required did 'not exist in the IT
form and it was going to cost millions of dollars to get that up and running'.
Senator Joyce clarified with Woolworths that to build such a system to link up price
databases, the initial quote was for 'about $500 000'.
Even if such a system were built, Woolworths claimed it would 'have no need for
it from a business point of view' and the only reason for it would be to
support CHOICE's website.
Associate Professor Frank Zumbo's view was that the argument advanced by
the major supermarkets on cost burdens is overstated:
The reality is that that information changes in real time on
the company’s computer system. The fact that you have a checkout means that
that information has to be up to date at the checkout. That information is
available in real time at the checkout. That information at the checkout would
be uploaded to the head office. How often during the day? I cannot tell you.
That is probably commercial-in-confidence information. But I can tell you that
it is uploaded and it is probably uploaded very regularly because it helps with
stock management. You know what is being scanned out, so that helps you manage
your stock purchases. You know what you are selling. So you manage your stock
by carefully following the information flows. When the stock comes in, it is
loaded in. When the price is put on to the system, when the product is scanned
out—all that information is very powerful for the supermarket chains. They will
drill down into that information on a regular basis to work out the
profitability of individual products. So the information is there. It is
uploaded. It is just a matter of providing a public interface between the
information that is stored on the supermarket computer systems and the public.
However, he did acknowledge that smaller operators were not equipped
with the same sophisticated IT systems as the bigger supermarkets and would not
be in the same position to supply information easily.
In its advice to the Minister on possible options for a GROCERYchoice website
model, the ACCC had also noted that it was likely there would be a significant
burden of data provision for smaller supermarkets, but that 'Coles and
Woolworths would likely be able to comply readily with such a data request'.
Coles stated at a public hearing that it had 'partial price data
centrally on a computer' that was monitored regularly but that it did not
monitor real-time price data across all stores.
In January 2000, Synovate Aztec, a scan data service
provider, won the contract to act on behalf of Woolworths supermarkets in the
sale of their (raw) scan data. Aztec claims that:
The services developed as a result of this relationship have
revolutionised the use of grocery scan data by retailers and suppliers alike.
According to Synovate Aztec's website, access to every single
transaction that occurs within all Woolworths supermarkets is available through
their BasketView service. Customers are able to purchase: state and store level raw
data via the web; regional data or store clusters; and control/test store-level
BasketView is available to subscribers 'in the shortest possible time
frame after the transaction occurs'. Reports derived from the data include:
- penetration/average weight of purchase
- promotional analysis
promotional analysis by day
- common basket items
time of day, day of week
- cross promotional impact analysis.
The wealth of data quickly accessible through Aztec point of sale data
seems to contradict the claim put forward by supermarkets that they were unable
to provide accurate and timely product pricing information to CHOICE for the
GROCERYchoice website. CHOICE claimed it had requested the use of Aztec point
of sale data from Coles and Woolworths but the request was declined.
The committee asked the supermarkets why they wouldn't be able to
provide the same pricing data that is available at the point of sale. Their
The only data that Aztec receives is dollars received and
units of goods sold. From that data, an average price can be calculated, but
this average price will not be the actual shelf price paid by a customer. The
average price would be an amalgamation of all the prices that may have applied
in a day or a week, including outliers such as clearance prices, scanning
We also note that third party information providers such as
Aztec and Nielsen charge for access to their data and reports on the basis that
they have invested in the collection and aggregation of the data.
The data provided to third party contractors under legally
binding commercial agreements is partial data that is not suitable for on-shelf
price comparisons because of local pricing differences.
The submission from Associate Professor Peter Earl of the School of
Economics at the University of Queensland suggested that the lack of uniform
pricing across chains was a reason why supermarkets would see provision of
real-time price data as onerous. He argued that:
Such price differences are essentially ploys by the stores to
maximise returns by price discrimination and the result quite often can be that
those who are poor, either in terms of access to transport or time to shop, end
up paying more than those who are better endowed with resources.
He believed that there was a 'strong case' for introducing regulations
that require stores to have uniform prices within each urban area, noting that
'if ALDI can do it, their major rivals can, too'.
(The Senate Economics Legislation Committee's current inquiry into the Trade
Practices Amendment (Guaranteed Lowest Prices— Blacktown Amendment) Bill 2009
is relevant here).
NARGA disputed CHOICE's claim that the large supermarket chains put
pressure on the Government to shut down the website, citing the widespread
concern across the grocery retail sector about the feasibility of CHOICE's
proposal and its potential cost burdens:
With the possible exception of ALDI, every supermarket chain
and the independent sector were united in the view that the task set could not
be achieved without significant cost to the industry and would have no
identifiable benefit to customers.
... In the case of the independent grocery sector, a very large
burden would have fallen upon independent family businesses.
... The average independent grocery
business handles about 3000 price changes a week and notification of prices
changes on a weekly basis would represent a significant additional workload and
cost across 4500 independent stores as a group. These stores are not networked
and would have to report price changes store by store. And in any case, the
computerised price files used in the independent sector could not isolate shelf
prices from other commercial-in-confidence data. The data are not available in
the form CHOICE requested and would not be likely to become available in that
According to the Western Australian Independent Grocers Association:
There was not one retailer who held the information in a form
that would be able to be transferred to CHOICE and not one who was willing to
do it if the information was to be made available at a cost to the individual
As was pointed out to CHOICE earlier, all independent stores
in WA run their own point of sale system that primarily complies with the
collection of GST and as such has costs and sells in the file for the
calculation of GST and the running of weekly specials which are the life blood of
the grocery retail industry. All of this information is of course highly
confidential and no business owner would want to share this with competitors or
for that matter consumers. Also none of the systems are connected to the
internet for data transfer as each system picks up required data on a once a
week basis by traditional dial up modem.
Each system uses different product
numbers to identify items, and in some cases different descriptions, so there
is not even a common thread to the information available in each system.
Simply the data requested by CHOICE
was not available from independents in WA who make up in excess of 30% of the
market. So to proceed with such a website and think that it would contribute
anything was in our opinion not realistic.
Tasmanian Independent Retailers said that it would have been burdensome
for independent retailers to have provided CHOICE with the information that had
been requested, and explained the flexible pricing policy at independent
... ultimately it is up to the independent retailer to
determine at what price point they want to sell a product. In general terms the
majority of independent retailers would operate off our host price file. It is
generally very competitive in reference to Woolworths and Coles because they
are the only ones we have for comparison in Tasmania.
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