Lack of price information costing consumers a packet
GROCERY PRICES:Don't expect to see an effective grocery price comparison website in this country anytime soon
WOULDN’T IT be great if there was a place you could go to find out which supermarket offered the best value for money for your weekly shop? Or how about a website which would allow you to fill your virtual shopping basket before automatically routing you to the cheapest supermarket site so the order could be processed?
While many countries have such consumer-friendly services available to shoppers, there is nothing remotely comparable in this country and its absence is costing us a packet.
It’s not for the want of trying that it doesn’t exist. Recognising the need for detailed price comparisons on groceries, the National Consumer Agency (NCA) quietly wrote to all the major grocery retailers in the State last summer asking for their help in establishing a database containing real-time price information.
Tesco practically fell over in its haste to publicly welcome the move. It issued a statement saying it was provisionally backing the project and expressed the hope that it could “sustainably overcome” consumer scepticism about retailers’ price claims.
The retailing giant’s response was, industry sources say, a little disingenuous and had a lot more to do with PR spin than a genuine desire to co-operate with any price database. Tesco was well aware that the proposals were never going to fly because only it and Superquinn have an online shopping facility from which prices could be culled by the NCA and it knew that the chances of Dunnes Stores or Super Valu backing any such proposals were virtually zero.
Without the backing of all the supermarkets, or at least without access to their prices, third-party price comparison sites have always struggled to provide relevant information to consumers. This is not least because they need to be 100 per cent right, 100 per cent of the time. If they get a single price wrong, the retailers come down on them very hard and threats of legal action are not uncommon.
It’s a different world in the UK largely thanks to the immensely popular mysupermarket.co.uk site. Retailers there have had little option but to support the site, with varying degrees of enthusiasm. John Ruddy of the retailing magazine Checkoutdoes not believe we will see a comparably effective price comparison site in Ireland in the short or medium term. “Is it in the retailers’ interest to put their prices online for people to compare? Well, it is certainly in the cheapest retailer’s interest,” he says, suggesting that those likely to fare less well will strongly resist any moves which will highlight their higher prices.
“For a third party to do it effectively they would have to have very deep pockets and be so thorough to ensure no mistakes were made. It is such a difficult thing to do and get right that I am sceptical anyone would be able to take the ball and run with it,” he continues.
The NCA has also found its other price comparison initiative floundering in recent months. One of its most headline-grabbing and arguably successful projects since it was set up in 2007 has been its biannual grocery survey. It was a simple enough exercise – the agency would send its people into the main supermarkets, fill a basket with around 60 commonly bought items, tot up the cost and release the results to help consumers judge which shop offered the best value for money.
The supermarket chains hated it. Well, most of them did. Almost as soon as any of its surveys were published, the rebuttals would come flying in. Retailer criticism almost always focused on own-brand price comparisons. Supermarkets which were cast in a negative competitive light were always quick to claim that the NCA was not comparing like with like.
Comparing branded products is simple – the Gillette razor blades selling in Dunnes are exactly the same as the ones selling in Tesco. It is, however, more tricky when it comes to own-brand products. Comparing a Tesco Value yoghurt with a yoghurt from one of the German discounters using price alone gave too many hostages to fortune. One retailer even threatened to go to the High Court over what it insisted was an unfavourable interpretation of the NCA data.
Around 20 per cent of the stock on Irish supermarket shelves is own-brand compared with closer to 40 per cent in the UK. Inevitably we will see more own-brands on our shelves in the coming years, further muddying the price comparison waters.
“The NCA was willing to preach about the benefits of shopping around but they could not stand over their own price comparisons,” Ruddy says. “It is nearly impossible to compare own-brand products unless you are prepared to make qualitative assessments.” He says the agency “did not do themselves any favours” by not ensuring its price comparisons were on solid ground before publication. “When it can be argued that it is not comparing like for like, then it is very difficult to have confidence in the end result.”
While question marks hung over the surveys – including anecdotal evidence that some retailers held back on upping the prices of goods they suspected would be included in the surveys until after publication and focused price increases on products not normally included – they did drive down prices across the board.
Speaking at a recent media briefing to promote the amalgamation of the Financial Regulator’s information and education functions within the NCA, the agency’s chief executive Ann Fitzgerald confirmed that the general surveys had been knocked on the head. She expressed disappointment that they were being abandoned but said that obstacles being put in the way of the agency by retailers had made them next to impossible to carry out.
She also said that, to a degree at any rate, its work in the area was complete. “We are satisfied that there is competition in the overall sector, so we are going to start focusing on individual sectors within groceries,” a move she said would allow it to run more frequent surveys of prices covering baby products, detergents or chilled food.
The absence of a comprehensive price comparison website for Irish consumers is a pity and it raises questions about the transparency of Irish retailers’ pricing structures but we are not unique. Australia is in a similar situation at present and the major grocery retailers there have been accused of deliberately making price comparisons difficult, if not impossible, for consumers.
Before Australia’s 2007 election, the then leader of the opposition and now prime minister Kevin Rudd promised to create a “grocery choice” website to help consumers make online price comparisons of their shopping.
After Rudd won the election, a website – run by the Australian Competition and Consumer Commission – was launched but it failed miserably to provide any kind of meaningful price data to consumers. Plans were then put in place to give vocal non-profit consumer group Choice control of the website. That project was cancelled days before it was due to be launched because, in an echo of the Irish situation, the two biggest retailers, Woolworths and Coles, said they could not provide the data Choice wanted.
“What’s so secret?” Choice spokesman Christopher Zinn has asked. “It seems a lot of their commercial advantage happens with small changes of small amounts over a lot of prices . . . lack of transparency can be profitable.”