ARA questions value of GROCERYchoice website

Posted by Daniel Palmer on 1st October 2008

Peak retail body the Australian Retailers Association (ARA) today criticised the Rudd Government’s GROCERYchoice website as a “brand promotion” tool for Australian supermarkets after the October grocery survey data released today labelled a major supermarket brand as the ‘cheapest’.

ARA’s Executive Director Richard Evans believes the ‘highlights’ section of the GROCERYchoice website shows dangerous signs of government brand promotion. “Since its introduction in July the GROCERYchoice website has done nothing to reduce costs for working families,” he claimed. “But now the Rudd Government is taking a dangerous turn and promoting particular big supermarket brands by naming them the ‘cheapest’ in Australia.”

The third release of the GROCERYchoice comparison data found Woolworths were cheaper in 59 out of 61 regions for a total grocery basket, compared to their figure of just 21 last month. Aldi, which is not included in the total grocery basket category, again led the way in terms of a basic staples basket in all 40 regions in which they operate.

Consumer Affairs Minister Chris Bowen argues that the change from last survey proves the site is a success. “All the evidence indicates that GROCERYchoice is having the added benefit for consumers of creating a new competitive tension between supermarkets,” he said, according to the Sydney Morning Herald. “None of the major supermarket chains want to come last month after month.”

The basket prices represent the average price for a retailer within a specified region, not the price for a specific individual supermarket outlet, with prices calculated for the following grocery baskets: meat and seafood; fruit and vegetables; dairy; breads and cereals; drinks and other snacks; general groceries; household and personal care.

The price of a basic staples basket is also calculated. This includes a range of staple products from the other baskets.

According to the Sydney Morning Herald, Retail Facts – a division of The Bailey Group, was awarded a contract worth $5 million over two years to conduct the survey on behalf of the Government.

Critics of the site claim that it does not provide enough timely information for consumers and allay concerns that too much focus is on Coles and Woolworths. The grouping of all independents together has also been questioned.

“Australian grocery retailing is highly competitive to the benefit of the consumer. Our major retailers are excellent. The market doesn’t need government intervention, like GROCERYchoice, which discriminates against small independent grocers,” Mr Evans contended. “If the Government really wants to reduce grocery prices they should be taking some action on the recommendations to the retail leasing inquiry released in August. While the ACCC’s inquiry into grocery prices has confirmed the cost of production and domestic weather conditions are affecting the cost of goods going to market, retailers are still struggling with escalating occupancy costs.”

The ACCC advised last month that the site is merely meant to be a guide, with other factors such as location, service quality, product quality and range needing to be taken into account by consumers.