Chapter 7
Methods for comparison of grocery prices
7.1
There are a number of grocery price comparison websites already in
operation. In Australia, a website called BestPriceDirectory.com.au describes
itself as:
... a grocery stores and supermarket comparison site that has
been monitoring grocery prices for over four years. We find and compare grocery
prices from grocery stores and supermarkets in Australia and from these grocery
prices a Product Value Index or 'PVI' is calculated based on the individual product
price history, as well as a price comparison with similar grocery products, to
reveal which product brands are not only cheap, but the best value for money.[1]
7.2
Groceryguide.com.au compares the weekly catalogue specials of Coles and
Woolworths (only for the Sydney area), enabling users to create their own
customised shopping lists.[2]
Lasoo.com.au also allows users to browse the specials catalogues of
participating retailers, including grocery stores, acting as a 'pre-shop'
search engine.[3]
7.3
The UK grocery comparison website, mysupermarket.co.uk, has been in
operation since October 2006. Privately funded and owned by a group of venture
capital investors, it allows consumers to select items that are available from
four of the UK's leading supermarket chains: Tesco, Asda, Sainsbury's and
Ocado. The website compares the entire price of the chosen 'trolley' of items
between the four supermarkets, and includes a 'swap and save' option, where
cheaper alternatives are presented. The completed shopping list can then be
sent to the retailer’s own website to place an online order, if desired. The
site claims that it can save users up to
20 per cent on their shopping bills.[4]
7.4
During the course of the inquiry, the committee was cautioned against
comparing the Australian GROCERYchoice initiative to the UK website:
Across the world, there is no example we know of that
succeeds in delivering the stated outcomes of GROCERYchoice—and certainly not
mysupermarket.co.uk ... This site is a comparison site of online shopping offered
by the four major supermarkets in the UK—note: not all the supermarket chains.
Also, the prices displayed are not the prices displayed in local shops, and
currently less than three per cent of UK shoppers have visited the site.
Indeed, it just scraped into the top 1,000 most visited sites in the UK. The
site carries, at most, 40 per cent of the product range of a normal supermarket
and it is visited predominantly by those aged between 35 and 45, who have a
graduate level of education and are unlikely to have children. The site seems
to appeal to full-time professionals rather than working-class families—not at
all what GROCERYchoice was about.[5]
7.5
The Italian Government has set up a short message service (SMS) text
system, with the help of consumer associations, whereby shoppers can check the
average price of different foods in northern, central and southern Italy.
Consumers type the name of the food product they want to price check into their
mobile phones and send a free message to a dedicated number. The
consumer will then receive an SMS stating the prices for that food item in
different areas of the country.[6]
7.6
Ireland's National Consumer Agency (NCA) also announced in July 2009
that it intends to set up a grocery price comparison website, where real-time
information is provided by retailers to help consumers make accurate
comparisons on a basket of goods. The agency has called on all grocery
retailers to cooperate. The Irish Times reported that the NCA:
... had examined the situation elsewhere, including the UK and
Italy, where grocery prices are available on a real-time basis, and believed
the provision of more frequent information than NCA has provided to date
[six-monthly surveys] would be of value to consumers. It said if retailers and
the agency worked together to provide clear information to consumers, this
would send a very positive message.[7]
Participatory price sensing
7.7
'Participatory sensing' is a recent technological phenomenon, which uses
mobile phone and web-based technologies to enable the collection and sharing of
local knowledge for applications in areas such as public health, urban
planning, and natural resource management.[8]
7.8
Professor Chun Tung Chou and Dr Salil Kanhere of the School of Computer
Science and Engineering at the University of New South Wales are working on
participatory mobile camera-phone sensing systems to track prices in the petrol
and grocery markets. They argue:
There are compelling reasons for creating such a
clearinghouse of
up-to-date product pricing information, even for offline markets of brick and
mortar stores. It could create arbitrage opportunities, wherein an enterprising
person can leverage the price difference for profit. The availability of
real-time price dispersion information can empower consumers to more
effectively negotiate prices.
... Numerous consumer communities are already tracking price
dispersion manually. A group of Hong Kong housewives divide themselves into
teams to manually copy prices of selected staple grocery items in major
supermarkets and local grocery stores, and upload the prices to a website,
prompting a major Chinese newspaper to advertise weekly grocery prices across
different stores on its website.[9]
7.9
Giving evidence to the inquiry, Professor Chou explained:
For online markets there are a number of price comparison
websites. For offline markets we know there is an application called ShopSavvy
that has won the Google application challenge. This application enables you to
scan a barcode with a mobile phone. Based on this barcode, it will tell you how
much the item costs in the online market, and it may also make a few
suggestions and tell you how much the item will cost in a number of local
stores. There are a number of teams of people developing applications in order
for people to get a better deal by using their mobile phone to search for
better deals.[10]
7.10
Professor Chou and Dr Kanhere have developed the MobiShop system
which implements Optical Character Recognition on a mobile phone to extract
pricing information from an image of a grocery receipt. Professor Chou said:
We want to make the data collection process both automatic
and transparent so that there is as little human involvement as possible. This
means that people can go about their own daily routines and still be able to voluntarily
collect and share information. Ultimately we want to turn participatory sensing
to low-cost and less labour-intensive methods to collect information for the
public.[11]
7.11
He also pointed out that participatory price sensing technology was
still in its early stages and noted some of the ongoing challenges and risks,
such as malicious users infiltrating the system with false data, and the
difficulties of comparing fresh produce accurately.
7.12
Treasury and the Australian Competition and Consumer Commission (ACCC)
advised they had not undertaken any detailed analysis of participatory price
sensing and emerging technologies.[12]
However, the ACCC commented on consumer demand for price transparency in the
grocery sector:
... as a general proposition: we think that transparency is
important, because consumers can best exercise their right of choice if they
are aware of what is on offer.
... When you look at the retail grocery sector on a spectrum,
it is probably towards the end of the spectrum – where there is a lot of
information made available to the general public through the press, through
mailbox drops and the like. So it is one where there is already a good deal of
information available.[13]
7.13
Regarding future trends in online pricing information, Woolworths
commented that:
...companies like Tesco, and Sobeys and Loblaw in Canada [are]
creating quite innovative websites that really allow you to dig down and
understand where they sit on that value spectrum ... I think what you will see in
the Australian marketplace is more retailers pushing online. It will create a
second market of aggregators that will go in, pull that information down and
tell you what I think the government was trying to do in the first place with
the GROCERYchoice website.[14]
7.14
Woolworths' current online shopping website does not charge the same
prices as its bricks-and-mortar stores:
It operates as a separate entity and has a complete and
separate cost structure and retail price structure. The internet 'shop'
requires a Woolworths staff member to pick desired products from a Woolworths
store and then deliver them to the customer. There is no relationship between
prices charged for delivered goods ordered over the internet and those in the
closest store to the customer.[15]
7.15
Associate Professor Peter Earl suggested that more online grocery
pricing information could lead to new opportunities and competitive
developments:
By using two web-browser windows, it is perfectly possible to
compare the current costs of shopping [online] at Coles and Woolworths and work
out which item to buy from which store. The problem, of course, is that, as
yet, one cannot extend the comparison to rival chains such as ALDI and IGA in
one's area, who might actually be offering the products for less but do not
offer online shopping. Neither can one be sure that online prices are the same
as prices in the stores – and this is significant since economists would expect
differences between online and in-store prices as part of such firms' price
discrimination strategies.
If online grocery shopping becomes so common that all
supermarket chains offer this service, it will become possible to compare like
with like and, if this encourages greater entry by new chains (since access to
prime mall sites will not be such a concern ...), the competitive situation that
consumers will face will change drastically. Although such an environment will
make it easier for consumers to shop rationally than they can right now even if
there is no comparison website for groceries, such a website would be more
likely to emerge if the number of players in the market increased greatly.[16]
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