Two major players dominate the market – Countdown and Foods, New World Owner and Bax ‘Save brands. Our supermarket sector is one of the most focused in the world. Consumers have to pay more than they should because of the concentration in any market.
Our latest survey shows that the majority of Kiwis think they pay more for groceries. Many question whether the supermarket specials are the real deal.
Guide to the tables Our data came from the National Representative Survey of 1030 New Zealanders aged 1830 and over conducted online in February 2021. The survey used a rating scale from 0 (strongly disagree / very dissatisfied) to 10 (strongly agree / very dissatisfied). Figures can be added at +/- 100% due to hovering.
Most of us do our grocery stores in the supermarket. Nine out of 10 consumers go to the supermarket at least once a week. Forty-two percent make the trip two or three times a week.
For the majority, they consider store selection primarily which supermarket is the closest (31 percent) or the cheapest (27 percent).
Customer service, and stores’ most popular loyalty programs are not compatible factors for most people. Two percent determined where customer service was done to their regular grocery store.
- 1 How often do you go to the supermarket?
- 2 Which of the following best describes how you decide where to go to the store?
- 3 Supermarket prices are very high in New Zealand
- 4 Supermarkets charge reasonable fees for homes
- 5 Supermarkets have the best interests of the customers
- 6 If a product is special I am more likely to buy it
- 7 Specialty has become so common that I don’t know if storage is real
- 8 Price labels for specials can be confusing – it’s hard to understand how much you save
- 9 In the last two years, have you experienced the following
How often do you go to the supermarket?
Which of the following best describes how you decide where to go to the store?
Food is the second largest category of household expenses after housing. Over the past two years, food prices have risen faster than normal inflation.
Consumers are watching the rise. Eighty-one percent think supermarket prices are too high in New Zealand. Half (52 percent) firmly agreed that this was the case. Just 10 percent do not agree.
Consumer confidence that supermarkets are charging homes is not high.
Just 17 percent of supermarkets agreed that prices were reasonable. Only 18 percent strongly agree that stores have the best interests of customers.
Supermarket prices are very high in New Zealand
Supermarkets charge reasonable fees for homes
Supermarkets have the best interests of the customers
Signs confirming “special” offers are regularly displayed in supermarket aisles. Shoppers know that they are more likely to buy if they think retailers are getting a discount.
Six out of 10 consumers agree that the chances of buying an item are high if it is special, and that it will provide the best value for money.
However, many have questioned whether all of these discounts are automatic.
Seventy-four percent agreed that the events had become so common or strongly agreed that they were not sure if the savings were real.
Price labels for specials were also an issue. Sixty-three percent agreed or strongly agreed that these labels could be confusing, making it difficult to make real savings.
If a product is special I am more likely to buy it
Specialty has become so common that I don’t know if storage is real
Price labels for specials can be confusing – it’s hard to understand how much you save
Many consumers encountered other problems with supermarket specialties.
The primary complaint is the discovery of advertised specialties. Sixty-six percent have experienced this problem at least once in the last two years.
There was also the problem of being charged more on renewal than the price shown on the shelf label: 46 per cent said it had happened to them.
Forty-five percent noticed an error in their receipt, meaning they would be overcharged. 14 percent found the fee to be charged.
In the last two years, have you experienced the following
A product advertised as “special” is out of stock
Renewal is charged higher than the price shown on the shelf label
I found an error in my receipt, which means I was overcharged
I found an error in my receipt, which means I was charged
Supermarkets do a great thing about their loyalty plans. You must belong to these programs if you want to get selected specials. This means being a member of the “OneCard” cardholder at Countdown. In the new world, you need a “club card”.
However, loyalty plans do not overestimate with customers when deciding where to shop.
When we asked about consumer valuation factors in a supermarket, loyalty plans were at the bottom of the list.
Just 42 percent rated loyalty programs as the most important, long distance behind competitive prices (77 percent), product quality (75 percent) and product range (71 percent). Plans determined where only four percent did their regular grocery shopping.
Our survey has found that loyalty programs can affect a significant proportion of shoppers. Thirty-one percent said they could not get the advertised special price because they did not have a supermarket loyalty card. If you do not have a card, you will be charged more.
There are good reasons for consumers to choose not to enroll in these programs. An important factor is that they do not want to share their personal information with stores.
Terms and Conditions of Loyalty Plans allow supermarkets to collect a variety of information about shoppers and their purchasing options. These information stores are gold but the benefits to consumers are questionable.
Like all loyalty programs, supermarket programs cost money to manage. These costs are ultimately paid to their customers, whether they belong to the plans or not.
In November 2020, the Trade Commission’s inquiry into the grocery industry began.
The Commission released its preliminary publication in December. What we have submitted in this study highlights the need for an in-depth look at the investigation:
- Supermarkets’ pricing and advertising strategies and whether consumers are being misled about what they are paying for.
- Emerging product types of private label brands in supermarkets will reduce product selection.
- Evidence suggests that the fruit and vegetable supply chain is too open to be abused by dominant retailers.
The Commission is expected to release a draft report on its findings in July.