People living in rural regions could often only access supermarket discounts if they were willing to travel long distances to do so, Consumer NZ says. Photo: RNZ / Michelle Tiang
Shoppers in regional New Zealand are missing out on the best supermarket prices, Consumer NZ says.
It has released new research looking at how shoppers in smaller towns are served.
Its earlier research showed that 56 percent of people who said they had changed the way they shopped in the last 12 months were shopping around to get better value.
But Consumer NZ said for people living in the regions, that was not always an option. They could often only access cheaper prices if they were willing to carry the expense of travelling longer distances to do so.
Chief executive Jon Duffy said Hokitika, Waimate and Wairoa, for example, only had a New World.
"Our recent research into the price of groceries in regional New Zealand has found that while New World shoppers aren't being charged more in the regions, compared with other New World stores, they have no other option but to pay New World prices. This is another example of the postcard lottery.
"The [Commerce] Commission heard from rural communities throughout its consultation on its 2022 market study but made no targeted recommendations. Over the ditch, the ACCC acknowledged it's difficult to operate a grocery business in remote and rural areas of Australia, and that rural consumers face challenges too."
Consumer's research pointed to Wairoa, which has one New World.
"On average, over the six weeks we surveyed, our basket of goods from this supermarket was $120.04 for Clubcard members and $126.04 for non-members. That's less than $1 more than the Hastings New World basket, so we were pleased these prices were comparable.
"But when it comes to cheaper prices in general, Wairoa residents aren't getting a good deal. The same basket of goods at Pak'nSave Napier was on average $109.30, nearly $11 a week cheaper than New World Clubcard members would have paid in Wairoa. That adds up to more than $550 a year."
It said Waimate was another area with one New World, and people were paying more than they would at Woolworths in Timaru.
"We also compared prices between Hokitika and Greymouth. Although Greymouth doesn't have a Pak'nSave, the basket of goods from Woolworths was cheaper than Hokitika New World member and non-member prices."
Rob Hamlin, a senior lecturer in the University of Otago marketing department, said the major issue for the supermarket sector was that there was little competition even within shops.
The supermarket would determine the pricing and where products would be displayed.
"What you see in a supermarket category is actually a methadone programme for real competition between products - all suppliers are under the control of the supermarket and act with the supermarket and each other to maximise profitability in each category. Presence, margin and thus price to the consumer are all determined by the supermarket. Clearly if there is no actual price competition within supermarkets, there can be no meaningful price competition between them either," he said.
"The only way to increase competition is to eliminate the supermarkets' capacity to control price and disguise margins via an ongoing margin-driven 'price kaleidoscope'. This includes control via regulation of long-term pricing via margin variation, and elimination of short-term discounts such as 'Super-Saver' and discriminatory discounts such as 'Club Deal'. The latter two are merely a chimera that is built into long-term supermarket margin calculations and thus deliver no long-term benefit to the community."
Woolworths New Zealand's interim managing director Pieter de Wet said the supermarket chain was aware shoppers were facing cost-of-living pressures.
"Delivering value continues to be our priority. We've deliberately invested in keeping prices on key products as low as possible for as long as possible for our customers. The decline in average prices this quarter is also a good sign that food inflation is easing which is very welcome news."
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