How the Grocery Choice website could dramatically change the retail sector: Kohler

Poking around the ACCC’s new Grocery Choice website that was launched yesterday, one thing becomes instantly clear; it is not a stunt, as Opposition Leader Brendan Nelson says.

Poking around the ACCC’s new Grocery Choice website that was launched yesterday, one thing becomes instantly clear; it is not a stunt, as Opposition Leader Brendan Nelson says.

In fact it is potentially revolutionary for the grocery retailers and for the media – although that aspect could go either way. Either the big retailers won’t need to buy all that space in tabloid newspapers any more to advertise their prices, or they will have to take out more ads to counter the truth.

And the truth, collected by ACCC contractors with notebooks going around supermarkets all over Australia once a month, is both enlightening and very powerful – as the truth can be sometimes.

The site compares baskets, not individual items, but comparative grocery shopping is all about baskets. Customers won’t shop around for single things – heading to Coles for butter, Woolies for vegemite and to an IGA for the bread to spread them on.

There are seven baskets – meat and seafood, fruit and vegies, dairy, bread and cereals, drinks and snacks, general groceries, household and personal care. They are collected into a total, and there is also a “basic staples” basket of 60 items which appears to be designed to give discount retailer Aldi a place, since its range is not big enough for it compete on the other seven baskets.

In my area (Melbourne’s inner east) Coles and Safeway/Woolworths are virtually identical on the total of the individual baskets: $157.19 for Coles versus $157.02 for Safeway. The independents, which would include IGA and my beloved Leo’s, is $163.46 – about 4% more.

Unfortunately we don’t have an Aldi near us, but if I look at where my parents live in Wheelers Hill, Aldi’s basic staples basket is $59.88 compared with $80.20 for Coles and $75.47 for Safeway – 25% and 19% cheaper respectively. Note that Safeway is 6% cheaper than Coles over there.

My parents would be crazy if they didn’t head for Aldi for the milk, bread, jam and cat food.

And another interesting thing is that Coles and Safeway/Woolworths prices are just about the same in Alice Springs as Wheelers Hill, but the independents are about 20% dearer.

The site will be updated on the first business day of every month and over time consumers will be able to keep an eye on how the supermarkets are competing.

If, say, Coles is consistently cheaper that Woolworths in a particular area, then Woolies will have to do something about it. And if the website leads to more business and more store openings for Aldi, then they will both have to respond.

So on the whole Mr Nelson – you’re wrong. It’s not a stunt. It’s very serious.

This article first appeared on Business Spectator.

Related articles:

• Grocery report recommends unit pricing and new website to keep prices in check
• Shoppers back the independents in grocery price battle

Read more on grocery issues