Ryan Bridge: Are supermarket sales really sales?

The Commerce Commission reckons we need fewer items 'on sale' at the supermarket. 

That would mean less yoghurt on special at $4.99, fewer $1.99 chocolate bars at the checkout, and just less price yo-yo-ing in general.

This is counterintuitive. The job of Commerce Commission, through the Grocery Commissioner, is meant to score us cheaper prices and boost competition, right?

So, what the hell is going on here?

This morning, they announced they want to change the rules around what the supermarkets can charge suppliers.

Foodstuffs and Woolworths purchase $15 billion of goods from suppliers each year and control 82% of the retail market. 

When they do this, suppliers will discount prices by about $5 billion a year through rebates, discounts, and promotional payments. This ensures their stock is on sale. If they need to move a boat load of it, they can do on special and quickly, because we all love a bargain.

The Supermarket tsar says if you’re a new, smaller supermarket chain opening up, you can’t compete with that cause you don’t have the buying power and economies of scale.

Now this is where I think the tsar takes one of many leaps of faith. They reckon we consumers are overall worse off because of these specials and discounts. 

The tsar says: "Consumers lose out because prices jump around more. This can mean the average price is more expensive and it’s harder for consumers to assess the value of products.”

They don't offer any evidence this is actually happening, and that a change would make things cheaper.

Leap of faith #2 is that this saving will be passed on to the consumer via the supermarket.

Is there not a floor in this logic?

Does essentially banning discounts actually make prices cheaper?

If so, by how much? $5 billion? Remember the industry’s revenue is $25 billion a year. 

If all of the discounts were handed down the chain of command to us shoppers, we’re expected to believe general prices would fall a whopping 20%?

Remember when the Grocery Commission was set up under Labour, we were told the supermarkets were making excess profits of $365m a year. 

There's a bunch of other changes, too. 

Some of this stuff is just proposed. Suggestions. Voluntary. 

Some stuff needs consultation. Then further review. Others need 12 months. Others form part of a new report aiming for 2026.

By the time this is finished I will have not only lost the will to shop, but also to live.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
The Commerce Commission reckons, we need fewer items on sale
at the supermarket. Yes, that means less yoga on special
for four ninety nine or year one dollar ninety nine
chocolate bar at the checkout. Basically, they want less price
yo yoeing. In general, this is counterintuitive. The job of

(00:20):
the Commerce Commission, through the Grocery Commissioner, is meant to
score us cheaper prices and boost competition. Right, So what
the lord's good name is going on here? This morning
they've announced they want to change the rules around what
the supermarkets can charge the suppliers, so your food stuff's
in your woolworst. They purchase about fifteen billion dollars worth

(00:42):
of goods from suppliers every year, and when they do this,
the suppliers will discount prices buy about five billion dollars
a year through rebates, discounts and promotional payments. This ensures
that their stock is on sale so that we buy
it because everyone loves a bargain. The supermarket Zar says,

(01:03):
if you're a new, smaller supermarket chain opening up, you
can't compete with that because you don't have the buying
power in the economies of scale, So your prices would
be higher, you wouldn't be able to compete. Now, this
is where I think the Czar takes one of many
leaps of faith. They reckon that we consumers are overall
worse off because of these specials and discounts. They say,

(01:25):
consumers lose out because prices jump around more. This can
mean the average price is more expensive and it's harder
for consumers to assess the value of products. Well, can't
we read the label? They don't offer any evidence this
is actually happening, nor do they offer any evidence that
a change would make things cheaper. Leap of faith number

(01:45):
two is that this saving will be passed on to
the consumer via the supermarket. Is there not a flaw
in this logic? Does essentially banning discounts really make prices cheaper?
If so, by how much much? Five billion dollars? Remember
the industry's revenue is twenty five billion dollars a year.

(02:06):
If all of the discounts were handed down their chain
of command to US shoppers, we're expected to believe general
prices would fall by what twenty percent? Remember when they
set up the Grocery Commission under Labor, we were told
the supermarkets were making excess profits of three hundred and
sixty five million dollars a year. So we're well, well
and above that now, aren't we. There's a bunch of

(02:28):
other changes they've announced as well. Some of the stuff
is just proposed, its suggestions, it's voluntary. Some stuff needs
consultation and then reviews and twelve months and blah blah
blah more reports. By the time this is finished, I
will not only have lost the will to shop, but
potentially lost the will to live. For more from early

(02:50):
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