Sunday, 28 June 2009

Grocery price retreat !

It was one of the big election promises - but it looks like the Federal government has run up the white flag !

The " name and shame " plan to compare the grocery asking price between stores has been abandoned and put back into " the too hard basket ", despite several million dollars already having been spent - and the Choice people being just days away from launching a revamped scheme.

The problem seems to be defiance from Coles and Woolworths, who control about eighty percent of all grocery sales in the country. They are unwilling to submit their prices to a watchdog organization - and deem the plan " unworkable ! "

Come into the real world ! Each Coles and Woolworths supermarket charges prices determined by many factors. How rich is the suburb where it is located ? Is there an Aldi store anywhere in the vicinity ? What other mix of competitors - butchers - greengrocers - variety stores - will give customers price comparisons.

As a result, it will be impossible to present a national price comparison that will have meaning. The mix between each individual store will be ever changing.

The most likely outcome of a workable plan would involve a random survey of stores in individual city suburbs or country towns - and that is exactly what the big two fear most.

Such a plan would simply highlight the price difference between Coles and Woolworths on the one hand - and arch enemy Aldi on the other.

It is almost certain that such a plan would serve to cement in shopper's minds the fact that Aldi is miles cheaper than the big two - and it would certainly encourage Aldi to go into expansion mode.

So - Australian shoppers have been thrown to the wolves. There will be no pressure to try and induce Coles and Woolworths to moderate grocery prices - and no regular comparison with Aldi to persuade shoppers to change their buying habits.

Just think what you might have been paying for groceries - if a German based company had not entered the market and introduced that magic word - " Competition " ?

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