Unit pricing to come into effect by December, small retailers exempt

Posted by Daniel Palmer on 8th January 2009

Chris Bowen, the Minister for Competition Policy and Consumer Affairs, has today announced the details of the Federal Government’s plans for the roll-out of a mandatory unit pricing regime. They include, as anticipated, an exemption for grocers that operate stores no greater than 1000m2, with the law set to be established by July 1, 2009. A transition period of six months will be granted to all retailers impacted by the legislation change.

Woman Supermarket Shopping

Unit pricing, the display of the price of goods per unit measure – for example per 100 grams or per 100 millilitres, has already been implemented by a number of Australian retailers.

The Government made a commitment to unit pricing following the ACCC Grocery inquiry – held in the first half of 2008.

“Unit pricing will help consumers save time and money,” Mr Bowen claimed. “The unit pricing regime will apply to all packaged grocery items so that consumers will be able to use the information to find the best value and help make real savings on their weekly grocery bills.”

Mr Bowen believes that the scheme “gets the balance right” by helping consumers without putting undue stress on retailers.

“When Australian consumers are doing the weekly grocery shopping, identifying the best value from a large range of different products or package sizes can be difficult and time consuming,” Mr Bowen added. “Unit pricing will help consumers compare packaged grocery items of different sizes easily and quickly.”

Unit pricing is already seen in the European Union and the United States of America. It has proven to be a popular and useful tool that enhances price transparency for consumers when making their purchasing decisions in supermarkets, Mr Bowen suggested.

“Independent studies have found that there are substantial savings to be made through the use of unit pricing information by consumers when they shop for groceries,” Mr Bowen concluded.

Further consultation will be held with industry before finalising a code to be prescribed under the Trade Practices Act 1974. Details of the current proposal can be found below.

The Australian National Retailers Association, which represents many of Australia’s leading retailers, has welcomed the release of the scheme. “ANRA is pleased the Government has delivered a scheme that is nationally consistent and flexible, which will deliver the information consumers want at minimal cost,” ANRA CEO Margy Osmond said.

“We have always supported a cost-effective national scheme and the Government’s model reflects this,” she added. “Many of our members already offer unit pricing on thousands of grocery items and all plan to complete a full roll-out this year.”

“We look forward to consulting with the Government further on the final version of the code.”

Australian Retailers Association Executive Director Richard Evans also welcomed the exemption of smaller stores but outlined the industry body’s belief that legislation remained unnecessary. “The Rudd Government scheme will only impact larger retailers, reflecting the limited consumer demand for unit pricing across the broader retail sector,” Mr Evans claimed. “This is a win for small business and larger retailers would be happy with the standardised national scheme as opposed to a state based approach. However, restricting retailers with the burden of compliance reduces market response flexibility.”

“Some larger retailers are already providing this convenience to consumers and that is the way it should be – let the market meet the demand. We don’t need Government’s regulating the way Australians shop,” Mr Evans said.

Minister Bowen also advised that other recommendations from the Grocery Inquiry Report were progressing, with further announcements and updates due by mid-2009. The other recommendations are listed below:

  • Lower barriers to entry and expansion in both retailing and wholesaling sectors
  • A number of changes to the Horticulture Code
  • Introduction of a creeping acquisitions law
  • All appropriate levels of government to examine zoning and planning laws to discover ways to ensure competition is not limited by restrictive leases. Particular regard to be given to whether proposals will facilitate the entry of a competitor not currently trading in the area

Key Features of the Unit Pricing Scheme

The national unit pricing regime will:
* be established by regulation as a mandatory code of conduct under Part IVB of the Trade Practices Act 1974 by 1 July 2009, to apply from 1 December 2009

* apply to all store‑based retailers with floor space for the display of groceries greater than 1000m2 and that supply at least a prescribed range of food‑based grocery items

* apply to all online retailers that supply at least a prescribed range of food-based grocery items

* apply to any other retailer that chooses to display unit prices for grocery items with a transition period of six months

* require retailers covered to provide a unit price for all items they sell for which a selling price is displayed, unless the item is part of a prescribed category of exempt items

* not apply to goods sold at a reduced price due to damage or their perishable nature; offered for sale as a bundle of different types of items for a single price; or that are part of a prescribed category of exempt goods for which unit prices are not practical

* apply to all in‑store representations of price unless specifically excluded

* apply to all online store price lists unless specifically excluded

* apply to other non‑store print advertising such as catalogues, newspaper advertisements or front‑page website advertisements

* not apply to non‑print advertising such as radio and television

* require the unit price to be prominent, unambiguous, legible and in close proximity to the selling price

* use standard units of measure being per 100ml/100g/metre/m2/1 unit (where sold by count) with other measures for prescribed categories of goods

* operate only to the extent that it is not inconsistent with any other Commonwealth legislation.

The Australian Competition and Consumer Commission (ACCC) will provide industry and consumers with educative measures and be the agency responsible for the enforcement of the code.