Prices are high, competition is tricky - and what's Bin Inn got to do with anything?

We’re paying higher prices, specials are confusing and loyalty schemes aren’t delivering overly significant rewards.

Those aren’t just the musings of a frustrated supermarket shopper - but are some of the findings in the Commerce Commission’s first annual grocery report, issued on Wednesday.

Rewards schemes were only giving a return of between 0.71 percent for Flybuys and 0.75 percent for Everyday Rewards.

Between 2007 and 2019, the average weekly spend on grocery food increased 7.3 percent every three years but the latest data showed a leap of 28.9 percent.

The commission’s report said supermarkets would point to their own rising costs as the reason for price rises.

But it said margins had continued to grow - all of the major supermarkets had experienced an increase in price-cost margins, which meant that retail prices were increasing faster than the cost of the goods.

The report said supermarkets “continue to achieve higher levels of profitability than we would expect in a workably competitive market”.

It was not likely that Costco would be able to expand to the point where it could become a serious third supermarket contender, it said.

The report said the Warehouse could be an option - its network of shops meant it was in a good position to encourage shoppers to split their shopping in many cases - but it had said it had no intention of raising the capital needed to compete.

The “five things” don’t work that well as a list, but they are:

  • High prices aren’t in your head
  • Competition is not bringing down margins, or prices
  • Other competitors aren’t finding it easy
  • Innovation, but is it what we want?
  • Would fines make a difference?
  • DaveOPMA
    2·
    10 days ago

    We’ve been here & done this before. Spark & Chorus exist because the government split Telecom. So i’d guess you split the production / distribution arms off both Woolworths & Foodstuff then require them to sell to anybody at the same terms.

    Ah sorry, I was mixing things up. Requiring production, distribution, and retail to be separate sounds like a good starting point.

    All extremely hypothetical of course, and to a degree given the importance of supermarkets providing essential food services to humans I would expect any government moves to be fairly cautious and err on the status quo.

    I think you’re right, the government would step carefully, but I’d guess the only reason for this is because the supermarkets will try to sway public opinion. Move too slowly, and you’ll have a change of government that may reverse it all.

    Of course, given how critical supermarkets are to the smooth functioning of our modern societies, maybe we shouldn’t leave them to the benefit of private capital and be run with a profiteering motive at all.

    That definitely sounds like a mature society but I don’t think we are mature enough to head that way, considering the slide back towards companies running prisons and education.

    • TagMeInSkipIGotThis
      3·
      9 days ago

      Ah sorry, I was mixing things up. Requiring production, distribution, and retail to be separate sounds like a good starting point.

      Yeah its the integration of all of that which is really allowing the cartel to dominate both the buying and selling side of things which in effect has made them a monopsony. (I learnt about the term a year or so ago reading Cory Doctorow, the technical definition would be a single buyer, but given how in concert the two Supermarket chains act (like Petrol retailers!) it seems to fit: https://www.investopedia.com/terms/m/monopsony.asp)

      I think you’re right, the government would step carefully, but I’d guess the only reason for this is because the supermarkets will try to sway public opinion. Move too slowly, and you’ll have a change of government that may reverse it all.

      I think this is what frustrates me most about the last Labour government, they effectively ceded power to the lobbies that back their opposition by not acting decisively enough to quickly embed their good ideas. There’s a reason NActional Fist have rammed through as much change as possible in their first year and its to get as much of the pain done well before the next election and to make it hard to reverse. Labour had a real mandate, and chose not to use it, this lot claim a mandate that barely exists and use it to its fullest.

      That definitely sounds like a mature society but I don’t think we are mature enough to head that way, considering the slide back towards companies running prisons and education.

      Western Liberal Democracies are always in a pendulum of pseudo-revolution then reaction, but because the revolution side never goes far enough here (and you can see the same in the UK, USA etc) slowly we slide further and further to the right, particularly economically. Then eventually there’s less bulwark against populism and the risk of something far-right socially/culturally emerges too.