Fix GroceryCHOICE or close it down

The Federal Government’s GroceryChoice website needs to be urgently fixed or shut down. With consumers having abandoned GroceryChoice the website has become a white elephant and a waste of taxpayers’ money.

GroceryChoice fails to excite consumers. With the visits to the website down to a bare minimum it is clear that consumers see GroceryChoice as a waste of their time and have not returned to the website. Consumers are quite savvy. They won’t return to a website that fails to give them meaningful information they can readily use. Consumers want something new and original from GroceryChoice. To consumers, GroceryChoice only provides a general impression about “general” grocery prices across very large regions of Australia. Consumers already have a “general” (typically negative) feeling about grocery prices. What consumers want is specific pricing information that they can use to identify the cheapest products in the cheapest individual supermarket in their local area.

GroceryChoice fails to tell consumers which is the cheapest individual supermarket in their local area in a timely and regular manner. Instead, GroceryChoice only gives generalised, out of date monthly pricing information covering large regions of Australia. Consumers want to know on a regular (preferably weekly) basis which is the cheapest individual supermarket in their local area.

GroceryChoice fails to survey all major supermarket stores. GroceryChoice only surveys 600 supermarkets Australia wide to cover 61 regions. This is an average of just 10 individual supermarkets in each region. With all of the regions covering large areas of Australia, GroceryChoice’s sample is far too small to generate any meaningful pricing information. As the sample of individual supermarkets used is very small, the pricing information will be distorted even further if, for example, the particular Coles and Woolworths supermarkets used in the sample for GroceryChoice are not representative of the pricing structure used at other Coles and Woolworths supermarkets in the region. As Coles and Woolworths vary their pricing structures across their stores, the small sample size used in GroceryChoice is a fundamental flaw in its design.

GroceryChoice fails to tell consumers that Coles and Woolworths charge different prices for the same products at their different stores. This is called geographic price discrimination and means that the major supermarket chains charge higher prices on products where there is lack of independent competition in the local area and charge lower prices where they are forced to by independents. So when GroceryChoice says, for example, that Coles is the cheapest “overall” in a region that does not mean that all of the individual Coles supermarkets are the cheapest in that region. In fact, the particular Coles supermarket nearest the consumer may not be the cheapest in the region. Consumers are being misled by GroceryChoice as the information does not name individual supermarkets. As a result, consumers may not be shopping in the cheapest individual supermarket in their region.

GroceryChoice fails to separately identify the role of particular independent supermarkets in keeping grocery prices down. GroceryChoice gives the false impression that independents are more expensive, but this may not be true of the independent supermarket in the consumer’s particular area. GroceryChoice is misleading consumers as they don’t know the prices charged at individual independent supermarkets. GroceryChoice is also misleading as it generally lumps all independents together despite independent supermarkets being of different sizes and having different pricing structures.

GroceryChoice fails to give consumers any opportunity to compare prices from month to month. As products included in each month’s GroceryChoice survey are rotated, consumers have no ability whatsoever to compare prices month to month. Not only are numbers found on GroceryChoice so generalised and meaningless in the first place, but there is not even the ability for consumers to compare prices month to month as each month’s basket is different from the previous month’s basket. As a result, the GroceryChoice methodology is random and unscientific.

Unless GroceryChoice is urgently fixed to provide consumers with regular, timely and specific pricing information about the cheapest individual supermarket in their local area, GroceryChoice should be shut down so as to stop wasting taxpayers’ money.

Associate Professor Frank Zumbo is with the Australian School of Business at the University of New South Wales.

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