Does Retail Consolidation Reduce Our Choices?

[roland]

Right now, I can't seem to buy white onions. Who cares - right?
Well, I like white onions. At Coles,Woolies and Franklins, we have plenty of brown and red onions, but no white onions. Asking the guy that looks after stacking the vegie trays in these places reveals that he doesn't know why, just get a blank stare and a comment that they haven't had them for ages.

Finding an independant fruit and vegie supplier reveals that the price of white onions has reached $18 a kilo, so they won't take the risk of buying them in for fear of not being able to sell them at the price they need to make a profit.

OK, so Coles, Woolworths and Franklins have decided that the onions are too expensive, so now we have lost access to them at any price.

If 90% of grocery items where not controlled by these 3 companies, then maybe I could just go "next door" and get my white onions.....

I think I must be a little strange, if only I could accept progress. What ever happened to that good old hamburger with the lot that used to dribble juices down your wrists - now replaced with with a massed produced Maccas's Big Mac or Quarter Pounder.

Finding a good pizza these days is getting harder, the SAO biscuit Pizza Hut or dull and boring Dominoes replacing the 1AM pizza on the way home from "Joe" or "Luigi" or what ever his name was is quite sad.

Hardware stores - Bunnings or it no longer exists!

Slowly but surely, fewer and fewer companies are taking control of everything we buy and for me, it's quite annoying.

I could go on for hours with my growing disappointment with Retail Consolidation, but would much prefer to hear from others with their views on whether this is good or bad..

How long before we have just one company or corporation that decides what is available for our consumption?

 

[So_Cynical]

There's no way im paying 18 bucks a kilo for onions....proper pizzas and burgers do exist, ya just have to know where to get them and be prepared to pay a little extra...where i now live in Sydney its 7Km's to the nearest real pizza.

 

[springhill]

Roland, i am actually a primary producer. I have no idea what state you live in, or the positioning of your household to producers, but here's some advice. Why not try showing up to a producers property? I can speak for local producers in saying private sales are always welcome, whether it be first grade or second grade. You will always find the freshest quality and generally a down to earth, hospitable land owner always willing to accomodate your requests, if they are worth their salt. For the record you should pay 50% of retail prices as that is what the mark up is on fruit purchased by retailers at the markets. So your $18 white onions will go for $9 dollars at the gate. Don't feel intimated by showing up to a primary production orchard/farm. We are always willing to have a quick chat about the industry as we want the public to understand the process from harvest to retailer and the issues faced by our industry.
I realiser your post is a much larger issue than onions, but that is the area i feel qualified to comment on.
Best of luck!

 

[Smurf1976]

Hardware stores - Bunnings or it no longer exists!

Hardware is a classic case in point for what you describe.

If you want something that "will do" then odds are high that you'll find it on the shelves at Bunnings.

But if you want the best product for the job then that's a very different story. You'll either have to go to a specialist dealer or order it from the manufacturer / distributor yourself.

High quality wouldn't sell huge in the same volume as lower quality, hence the big chains won't stock it, hence it hardly gets used at all. A somewhat nasty spiral to the bottom.

But on the positive side, it's simply cheaper and far more convenient to shop at Coles, Woolworths etc. They actually have most items in stock, their shelves aren't bare, and they are cheaper than small shops. It's not hard to see why they dominate the market.

 

[Julia]

Roland, i am actually a primary producer.

What do you produce, springhill? (if you feel like saying, of course.)
Is it a satisfying existence or are you forced to sell at unreasonable prices to the big companies?

Roland, I agree with your concerns in general, though vaguely remember seeing white onions in my local fruit market recently for around $3 kg.
Conversely, I find Coles and Woolies now to have a good range and it's rare that I can't find what I want.

The supermarket I hate is Aldi. Fergawdsake, they don't even have a phone no so you can check if something is in stock before you go trundling up there.
The quality of most of the fresh produce is poor, the local store always has a dirty floor, and they have no express checkout, usually just one operator, so buying a single item means standing in line after about 20 people with full trolleys. The staff are unhelpful. All up, I don't know how they stay in business.

 

[Romano]

Retail shopping is controlled by the 3 W's.

Woolworths, Wesfarmers and Westfield.

Shop there or shop where?

Once they have squeezed out all the small operators, with their predatory pricing, they put their prices up enormously.

Just look at fuel. Between Coles and Woolworths they now control over 60% of the retail fuel market, and the price of fuel has never been higher. Those independants that survived the fuel war, are now making margins that they have never made before.

IGA are making some inroads in their market share, now having 20% of the grocery market. They have purchased Mitre 10 to champion the independant hardware stores, and I hope that goes well.

As consumers we get left with less and less choice, the more WE let the big ones dominate the retail market. Support you independant retailers, or you will no longer have any retail choice.

 

[johenmo]

The big problem that seems to escape the majority is that your favourite brands are disappearing. The supermarkets are working to have several levels of private label (their own) with one, maybe two private labels. You may have noticed McCormick is hard to find re spices.

You won't have real choice. I work in the food industry.

 

[nioka]

The supermarket I hate is Aldi. Fergawdsake, they don't even have a phone no so you can check if something is in stock before you go trundling up there.
The quality of most of the fresh produce is poor, the local store always has a dirty floor, and they have no express checkout, usually just one operator, so buying a single item means standing in line after about 20 people with full trolleys. The staff are unhelpful. All up, I don't know how they stay in business.

Aldi are just down the road from where I live now. They do not resemble the store you describe. While their range is limited, the service is good. The store is tidy. The quality of meat is great. ( I'm a fussy meat eater) The fruit and veg seems to be OK too. Their prices are a lot better than the other chains. At least they offer some competition.

The thing I object to is the lack of information as to the origin of supplies. Home brands make it hard for local producers to survive. Businesses like Woolies play one supplier off against the other and as most fall by the wayside they can dictate price to those remaining. I detest reading " made from local and imported ingredients" The local part may only be the salt or the water.

I like to buy branded items with the place of orign a must.

 

[johenmo]

The thing I object to is the lack of information as to the origin of supplies. Home brands make it hard for local producers to survive. Businesses like Woolies play one supplier off against the other and as most fall by the wayside they can dictate price to those remaining. I detest reading " made from local and imported ingredients" The local part may only be the salt or the water.

I like to buy branded items with the place of orign a must.

The food regs aren't IMHO strict enough to denote local vs imported. Personally if I import and pack and sell it to manufacturer then it needs to show imported. A min of 50% of local origin should be needed to say local + imported. Anything less can say packed in Oz. Product of Oz needs to be 90% plus.

 

[nioka]

A min of 50% of local origin should be needed to say local + imported. Anything less can say packed in Oz. Product of Oz needs to be 90% plus.

Does that mean that reconstituted juice can have Australian water and imported concentrate?

 

[Mofra]

People still buy veggies at supermarkets?
That makes you part of the problem, not the solution. Try greengrocers or markets - cheaper, better quality, and people selling the produce know the produce as well.

 

[Julia]

People still buy veggies at supermarkets?
That makes you part of the problem, not the solution. Try greengrocers or markets - cheaper, better quality, and people selling the produce know the produce as well.

I'm sure that's true if you live in Melbourne. Not necessarily so in the regions.

 

[Mofra]

I'm sure that's true if you live in Melbourne. Not necessarily so in the regions.

Fair point - although I have spent quite alot of time in regional centres (either living or on extended visits) and found basic fresh produce was still available in greengrocers and local butchers,a nd I found them all to be far more helpful than your average 16 year old part timer stacking fruit at the major supermarkets.

Granted I'm spoiled for choice now working in Melb CBD with Vic market available during lunchbreaks.

 

[johenmo]

Does that mean that reconstituted juice can have Australian water and imported concentrate?

Funny you say that - used to work one a site which made apple juice from imported concentrate/ After a bad batch (too dark) went to fresh squeeze. Much better.

Technically yes it could - BUT - regs are never simple so one can always say include water as an ingredient on the ingredient list but not include in the % of ingredients (and there are far more confusing things like that already).

Back to the orig question - it's not good for Aust industry or consumers.

 

[nioka]

Back to the orig question - it's not good for Aust industry or consumers.

NO.NO.NO.

And here is one example. One of my tennants, a small retailer, had trouble with Coco Cola.They were charging him twice the price for Coca Cola that he could buy it for at the local supermarkets. I took it up with Coca Cola on his behalf and the answer I got was "They buy it by the truck load". So when the rep called I was there and ordered a "truck load of Coke". They wouldnt supply it any cheaper than the normal carton price. In addition the small stores are cash with order, the biggies are payment in 60 days.

It is not a regular level playing field. The biggies use their power to bluff the suppliers.

So it is NOT good for consumers generally. It means that if you duck round to the corner store it may not be there any more and if it is you are paying a price that subsidises the big stores. You know what people here think of subsidies.

 

[johenmo]

NO.NO.NO.

And here is one example. One of my tennants, a small retailer, had trouble with Coco Cola.They were charging him twice the price for Coca Cola that he could buy it for at the local supermarkets. I took it up with Coca Cola on his behalf and the answer I got was "They buy it by the truck load". So when the rep called I was there and ordered a "truck load of Coke". They wouldnt supply it any cheaper than the normal carton price. In addition the small stores are cash with order, the biggies are payment in 60 days.

It is not a regular level playing field. The biggies use their power to bluff the suppliers.

So it is NOT good for consumers generally. It means that if you duck round to the corner store it may not be there any more and if it is you are paying a price that subsidises the big stores. You know what people here think of subsidies.

It's overall volume you buy that gives you a discount. That's what fleet discount is for cars. And suppliers like big customers in some ways as it's less hassle re getting orders, paperwork etc & often guaranteed sales. That's why small retailers don't get as good a deal. My rels had a corner store and bought a lot of stuff from the supermarket on sale because it was cheaper than direct from the wholesaler. Same as yr tenant.

The two big retailers (WOW and Coles) have made it clear to suppliers they want one, maybe 2 non-private label brands eventually. So choice will drop. Less SKUs (stock keeping units) make it easier to manage a store. What annoys me is not only do they want good margins (40%) but there are also costs for where you sit on the shelf or the freezer. Trade Spend is something that is used to get business and it's millions every year.

Other horrors include having a range of products (say 3 or 4 flavoured milks - I'm not in dairy so it might not work for milk but the concept applies), If one of them is selling badly and we want to delist it we get told we'll have to remove all of them, even if they are good sellers.

The public is getting ripped off by them. Nioka, overall I agree with what you are saying.

 

[boofhead]

Ultimately consumers are short sighted and buy by cost alone. Some will make noise but the actions of the masses has driven the outcome.

Smaller retailers buy according to conditions placed on them by suppliers.

Coles + Woolworths place conditions on suppliers. They can pressure suppliers + manufacturers to supply goods at discounts to support the specials they advertise.

I know a number of Woolworths stores are controlled by Sydney management. Sydney does the purchasing for many Tasmanian stores not understanding local markets. Products sometimes don't sell so well so price is dropped.

Major supermarkets must be loving the growth of white label goods. They can play the manufacturers off against each other. Kills some brand loyalty. Difficult to drive competition when Woolworths and Westfarmers have so many different retail markets.

Is it too late to do much about it?

Time for governments to push far better labelling laws. Ignore the costs. Woolworths + Coles only complain about the cost to drive public opinion. Secretly price rises benefit the them because it inflates prices and thus margins.