Aldi provides the ginger in grocery prices
SOME shoppers who bought pantry staples from a Coles supermarket last year paid 5 per cent more than others who shopped at a Coles on the other side of town.
SOME shoppers who bought pantry staples from a Coles supermarket last year paid 5 per cent more than others who shopped at a Coles on the other side of town.The difference between them was that the store with the cheaper goods had an Aldi store nearby.The finding, from a survey conducted as part of the competition watchdog's report into grocery prices, is one of the reasons why Aldi has come up smelling like roses from the six-month inquiry into the $70 billion grocery industry released last week.The survey also found that having an Aldi within a kilometre also triggered lower prices of basic items at Woolworths - although the difference was only 1.7 per cent.The lower prices at the checkout were mostly found when buying Woolies or Coles private-label products - such as Home Brand or Smart Buy - which are seen to compete head-on with Aldi's limited range of mostly private-label products.Other rivals to Woolies and Coles, such as IGA and Franklins, did not have much of an impact on how the big players set their prices.Curiously, the ACCC did not reveal which products were on the shopping list used to compare prices, only referring to it as "Aldi price check items", but broadly they were everyday staples which could be easily compared between rival stores.The finding that Aldi is prodding its larger rivals into lowering prices was the impetus for the Australian Competition and Consumer Commission's decision to assist Aldi's expansion beyond 170 stores by recommending an easing of laws on restrictive covenants, foreign investment and zoning restrictions.While the 642-page report fails to deliver any great insights beyond what the average retail analyst can tell you about how the industry works, it does contain a few curious facts.ACCC chairman Graeme Samuel, who admits to carrying a pocket calculator to the supermarket, said he was most interested to learn that the wheat in a loaf of bread makes up just 5 per cent to 10 per cent of its total cost, with most of the rest being transport, packaging and marketing.Or that the ingredients in a packet of biscuits account for about 15 to 25 per cent of the retail price, and that suppliers to the big two supermarket chains are hit with a levy if their goods are high on shoplifters' wish lists, such as razor blades and pricey facial moisturising creams.They must pay a levy to compensate supermarkets for losses, or risk losing sales when their products are quarantined behind shop counters.Hidden within the detail of the report are also claims that Coles and Woolies have been pressing suppliers to extend their trading terms, with smaller suppliers claiming they risk losing their contracts unless they agree to the extended terms, or pay additional "rebates" to the supermarket.The ACCC also found that until recently Coles and Woolworths had not passed on "improved buying terms" negotiated with suppliers to customers through lower prices, although this had changed in 2007 and 2008.Confidential evidence presented to the inquiry also suggested suppliers who had been willing to pay "promotional payments" to put their goods on special had been knocked back, with Coles and Woolworths keen "to protect sales of private labels".
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