The Supermarkets Skinning Shoppers

News in the “supermarkets skinning shoppers scandal” I’ve been mentioning (This most recent post has links to many earlier ones) it’s not a huge scoop The TEdASPHERE Globe’s presenting here. Just that more and more industry organisations are coming forward with complaints and claims against the duopoly that Australia are calling “Colesworth,” but these days with progressively less humour and more and more loathing. They’re creating a recession in the national economy in the process.

This New Daily article is just the latest one revealing how low this cartel have gone. BTW your reporter has stopped using the term “duopoly” and started to print the word “cartel” because it has become obvious that these two have pretty much openly begun to signal each other and conspire to fix prices between them.

“Grocery prices at Coles and Woolworths are very closely matched, with only 75 cents separating the prices of our basket of 14 items without specials. Coles was the most expensive at $69.33, while the basket at Woolworths came in at $68.58,” says de Silva.

— CHOICE Magazine

If you’re going to argue that no signalling has taken place then explain why the standard shopping basket CHOICE Magazine used differed by only 75c between those two supermarket companies and ALDI came in at 25% less expensive.

Meanwhile, as far as I can ascertain, the claims made by the AFF (and Queensland Fruit & Vegetable Growers) seem to be directed at Coles and Woolworths, not ALDI. So let’s ask ourselves how in the same situation of suppliers and customers, ALDI can apparently maintain prices for its growers that are consistent and equitable, while selling the produce for only three-quarters of what ColesWorth charges?

I’m sure you can guess where the difference lies. One group of companies pisses off their suppliers, pays them a pittance, sells the produce at extortionate prices, makes a large profit. The other pays their suppliers almost as little – but it’s predictable. It then sells the produce at lower prices, makes a more modest profit, and THAT makes me more inclined to shop there.

And ColesWorth are quite happy to bald-faced lie to us: “The prices of fruit and vegetables in Australia are primarily driven by supply and demand,” Woolworths said. In the face of the matters raised by the AFF and QF&VG we can see that this is a lie. In terms of demand, we can also see that this is a lie – there have been several reports of shoppers abandoning their usual brands and products and buying lower-priced generics and brands. That doesn’t sound like “demand” to me, sorry.

It sounds like “if only I could find a supermarket that doesn’t charge ten buck for a half kilo block of cheese, and $27 a kilo for gravy beef” (by the way I know the price of the cheese is pretty close – if you stick to their house brands and not a brand cheese, but I have no idea if I’m in the ballpark with the meat because I can’t remember the last time I bought meat there when I can be sure of my prices at ALDI and also pretty sure that it’ll be 15% – 20& cheaper than ColesWorth.)

ALDI figured out that people buy a lot of soda and mineral water, and that to restock shelves was a pain for shop shelf fillers – so they just leave a bay for a whole stack of trays of drinks to be wheeled in on a pallet. They (back then) charged 75c compared to Coelsworth’s almost $2 per bottle. Within a few years, Coles was leaving the pallet-sized gap in their shelving and selling soda and mineral water off pallets. At 95c…

ALDI has the “Special Buys” down the middle of their shops where they sell seasonal foods and goods, a range of clothing, white goods and electronics, tools, kitchen utensils and appliances, decorative items – the range is constantly in turnover, and is one of the places ALDI was able to make a reasonable profit.

That’s while maintaining better prices for the Specials than the conventional stores. I’ve bought tools here at half the price of Bunnings whose -10% price match looks pretty lame in the face of this – why would I take a photo of something in ALDI, negotiate pretty hard with the Bunnings Tools Section staff, and then get a grudging few dollars off (not the whole 10%, I’ve never heard of that happening) and get a tool with a different badge on the identical tool?

To cut a long story short, Coles introduced “Best Buys” into their stores but a) it’s a half-assed effort, b) there’s a seeming tone-deafness to what people consider a “Best Buy’ and lastly c) none of the things are really truly a bargain. (Unless you wait for them to despair of ever selling a $30 item and marking it down to $15 -yes I have done this just to kick them to the kerb a bit, call me vengeful, I probably am…)

I can’t tell you what Woolworths have done in their stores to try and match things that ALDI has proved to work well, because our local Woolworths struck me as a very under-cleaned store the first time I set foot in it, it looked (and still does to a large extent) filthy on floors, shelving bays, cold displays, deli counters – it felt like they repurposed a cow shed.

Not true of course, but certainly once COVID ran, I avoided the place even more, the only thing that kept me going there was that they have liver and heart and I sometimes made up special meat packs for the cats from these. Now they can’t be bothered to stock those items because there’s little demand for it and anyone that liked lamb’s fry in the past are just SOL.

(I admit that I’m happy to make a meal of “offal” and often I’d buy extra so I could make myself something – I’m a sucker for it because it confers so many health benefit and also I have many “chef’s secret” recipes that turn them into “TEdTACULAR Spektacklars” that almost everyone that’s taken the plunge and tried have come back for seconds of.)

But that brings me to the one thing that ALDI should give a try – a deli counter. I mean – their deli coolers are already a huge drawcard for me because I’ve scarcely ever found anything in their large range that I wasn’t immediately a fan of – but sometimes being able to have your smallgoods sliced and packed is a perk of shopping I love.

One of the few things that differentiate ColesWorth from ALDI is their deli counters. And a few years ago they mooted no longer having a deli counter and instead just having prepacks of everything. I haven’t heard anything more about this and I wonder if they realise that it’s one of the only things that differentiates them now.

(I’ll make the effort to go to Woolworths and record my impressions of it. It’ll be the first time in almost three years, which was the last time I found lamb liver or calf heart there. They may have introduced a “Great Buys” section or something, and maybe mopped the floors and washed down some cold displays and aisle shelves.)

Your humble reporter also has taken issue with Woolworths for almost twenty years now since coming across some of the indiscretions of theirs way back then, and some of those indiscretions seem to have culminated in the current situation. For a time, despite it costing much more for my shopping basket, I shunned both of the Big Two and shopped only at markets, specialty grocers, F&V, and IGA, believing IGA really was a “community-oriented” supermarket chain.

Since moving to Victoria I lost touch with farmer’s markets (and they stopped those during COVID and because COVID is still very much extant Kerry and I still won’t go to them) and more permanent markets and F&V, Continental, Asian, and European stores are now our only alternatives. As they’re a bit of a drive away and we also dislike adding food miles to our emissions, we get there only rarely.

And That Was The Summary

This situation developed relatively quickly. One minute there were two supermarket chains competing for our dollars between themselves and a whole string of other supermarket chains, next minute most of the other chains either went under or became insignificant by comparison, and ColesWorth became emboldened. But they still competed between themselves. It was too difficult to spy on your competitor’s store prices and specials, get the news back, and adjust your offering to match.

There were still “subtle signals” in that newspaper adverts allowed the competition to outmatch you on the following day (or the same day if you got the paper early enough and paid staff to come in at crowfart to adjust prices and specials) but there was still a semblance of competition, But you know how the Internet sped things up. It’s allowed many commercial fields with many competitors to homogenise their price structures while avoiding the bad publicity associated with being known as cartels. (Cartels are formed by suppliers of similar products creating agreement between them as to prices, quantities, and so forth.

De Beers diamonds was one monopoly that drove the price of diamonds up despite their being what turns out to be a quite common gemstone. That’s the power of monopoly, you can charge what you want. However, if several corporations (say, mining and selling diamonds) got together and agreed not to compete with one another overly much so as to take that monopoly down, they’d be forming a cartel.

They’d combine forces to stay just under De Beers’ prices, and once De Beers was no longer the most influential player in that field, they had free rein. but customers would still be paying whatever the cartel wanted to charge because a cartel is in effect one single selling body.

And when a bunch of sellers make an unwritten but still quite firm price and competition agreement between them that’s a cohesive oligopoly, and it still isn’t in the customer’s favour.

All of these should be made illegal, and not just in a slap-on-the-wrist way. In the case of De Beers, for a long time they were the only company really dealing in the business of diamonds, and while the company should have been broken apart, that didn’t happen because capitalism is all for the free market and the belief is that it will “sort itself out.”

In the case of Coles and Woolworths, it happens that over a decade ago they both struck a blow for bigger profits when they introduced self-checkouts and reduced staff numbers. (Despite them vowing that self-checkout would allow them to use existing staff more effectively for a better service overall.)

But that quickly became a millstone around their necks, and because people aren’t totally stupid, they gamed the checkouts and that meant that ColesWorth suddenly needed staff to watch the customers, and because they liked the lower staff levels after they’d inevitably cut staff number once checkouts were removed, they spread their remaining staff even thinner by requiring some to police the self-checkouts.

In fact at one stage they demanded the State Police forces to assign police to stay in the store and control the thieves. Our prices at the self-checkout didn’t go down, so in effect we were being robbed of personalised service, and then they wanted to use the Police – that OUR taxes pay for – to also atone for their poor judgement of how well self-checkout would work for them.

And during COVID, they cited difficulty in obtaining things to drive up prices, the cost to themselves of staff during the lockdowns, and so forth. None of those prices went down after the lockdowns of course. and I guess that emboldened them. They could read one another’s prices online and adjust theirs, they knew that people pretty much have to pay their prices, and suddenly it’s De Beers and your steak is diamonds.

The Situation

Is that supermarkets have become our gardens, fields, and hunting and foraging grounds. How many of you reading this have a vegetable garden? Chickens? Or any other source of food you know the actual origin of? And now that they’ve isolated us almost entirely from the origins of our food, they can charge extortionate fees, and that’s exactly what they’re doing. We’re in a bit of a pickle, to tell the truth. (Oh and how many of us know how to actually MAKE our own pickles nowadays?)

The Answer

Is to get activated. Get out there and talk to your friends about it. Email your local government Consumer Protection about it, the relevant Ombudsman. Email Ministers for Finance, the Prime Minister, Deputy PM, anyone you can think of that needs to know that we’re pissed off and anyone not helping fix the problem WILL BE the problem come next election.

When the complainants are groups like the National Farmers Federation, the Queensland Fruit & Vegetable Growers, the Australian Competition and Consumer Commission’s supermarkets inquiry, and even the Australian Council of Trade Unions (ACTU), then you can trust that there’s something going on and it’s in our best interests to get involved and activated and start raising voices.

The days of burning brands and pitchforks may be long bygone, but our willingness to fix greed and corruption before it starves us should not be. As I’ve said before, your local supermarket(s) have managers, those managers have names and addresses and email addresses, their managers up the line have names and addresses and email addresses all the way up. So do your Ministers and the heads of various departments in government.

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