Coles attracted lots of attention this week by announcing that it would standardise prices for most goods in its supermarkets. Cheaper shopping is always welcome, but is it really realistic to expect nationally consistent prices?
Picture by mythoto
Shopping for food is something we all have to do, so any time pricing policies change at the major supermarkets, it's the subject of national discussion. So it's no surprise that when Coles (one of the two dominant supermarket chains in Australia along with Woolworths) announced that it would be standardising prices across all of its stores, the announcement got lots of attention. Common reactions included "I didn't realise their prices varied that much", "It's about time" and the more cynical "I bet that means prices will go up on some products rather than down".
If you pause to think about it, it's not necessarily logical to assume that prices would be the same at any given store. It's going to be more expensive to transport goods to remote locations, and while Coles doesn't operate in tiny communities, if something gets delivered in bulk to (say) Brisbane, it's going to cost more to transport it to Perth than to Sydney.
The company's own announcement in fact makes this point in a subtle way, highlighting two issues in the process. Here's what managing director Ian McLeod said:
From 1 February, Coles will apply its lowest prices to more than 8,000 grocery products including meat, seafood, dairy, deli and bakery products across the country and the remaining grocery products will be matched to our lowest prices in each State.
The first thing to note is that fresh fruit and vegetables (which have much more variable pricing on a week-to-week basis) are not included in the national pricing policy; those prices will vary on a statewide basis. I know from my own travels that pricing in that sector can vary in the same chain depending on whether you're in a capital city or elsewhere, so that still represents something of an improvement.
The second thing to note is that the national price consistency guarantee only applies to 8,000 products, and we're not told whether these are "core" products or relatively obscure lines. Yes, we're still told these prices won't vary within a given state, but there's no promise they won't be hugely different between states.
University of New South Wales professor Frank Zumbo argues that this is the biggest potential problem with the deal. "With these types of announcements the devil is always in the detail and the onus is on Coles to tell consumers which products will be affected and by how much retail prices will change on the affected items," he said in an analysis of the deal.
Major supermarket chains have to be cautious with their pricing policies, as some activities attract the attention of the ACCC. While both Coles and Woolworths were allowed to proceed with major fuel discounts for big-spending customers last year, any activities deemed anti-competitive would be pounced on quickly.
Come February 1, will you be carefully checking the prices at Coles, or are your budgets more influenced by other factors? Share your thoughts in the comments.
Coles statement [PDF link]
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