Be Careful What You Wish For.

I actually enjoy grocery shopping.  I realise for many people, it can be tedious and time consuming and sometimes stressful, but I quite like it.  I look forward to challenging myself to come in on budget, and to buy as many products as possible which are locally produced — and if not West Australian, then at least Australian.

Here’s the thing you should know about grocery shopping in Australia: there are two major supermarket chains, Coles and Woolworths.  They basically have a duopoly in the supermarket business; there are a few others, but none of them has the overwhelming distribution that these two have.  And as with most supermarkets, each has its own ‘home’ brand, which is sold at a very competitive price.  That’s not news.  What is interesting, is that in recent years, both Coles and Woolworths have been expanding their home brands, and — perhaps more importantly — improving their quality.

It used to be the case that you’d buy the home brand butter or toilet paper or baked beans because you really wanted to save money, but given the choice, you’d buy another more expensive brand, because frankly, the home brand stuff was kaka.

That’s no longer the case.  Not only have they improved their basic lines, they’ve also added other ‘brands’, so that they’re now offering a cheap brand, a mid-range, and a more expensive, higher quality label.  In addition, they’re branching out into organic produce, plus they’re also offering insurance and credit cards.

Now, despite the pleasure I get from grocery shopping, I’ll admit that it is sometimes difficult to fit it in around all the other household- and child-related jobs I need to accomplish.  So it’s certainly very convenient that I can get almost all the things I need at one place, not to mention at low prices.  That’s part of the appeal, isn’t it?  It’s a one-stop-shop, and it’s marketed as that.

And there would be nothing wrong with that, only I’ve noticed something a little disturbing about the way the supermarkets’ own brands are merchandised.  I guess it’s been creeping up on me without my noticing, because it only became apparent when I recently went to get milk.  I was specifically there just for milk, which is unusual, so perhaps that’s why I was so observant that day.  I spent some time comparing prices and checking use-by dates, as I often do.  And then I realised that the supermarket brand milk took up around forty percent of the refrigerated cabinet.  That’s forty percent of the cabinet which houses the fresh, fermented and flavoured milk.  So that means the other fresh milk brands are sharing just over half the cabinet with other milk products.

Two thoughts sprang to mind in response to this.  The first was about bulk merchandising.  Back in the day when I was in retail, one of the ways in which we drew attention to products was through bulk merchandising.  A classic example of this is Coca Cola.  Think of the last time you were in a supermarket in the soft drinks aisle.  Coke takes up a huge amount of shelf space. The red and white labels on against the dark liquid in the bottles makes for a striking contrast which catches your eye.  It is something you notice even when you’re not looking for soft drink.

Bulk merchandising the store-brand milk has perhaps an even greater impact than the Coke.  This is because it’s something most of us buy everyday, and while some customers have undying brand loyalty, many will buy what’s on special or what’s cheapest.  If you notice one brand over the rest, and it’s cheap, chances are, you’re going to buy it.

The other issue is purely of space, which is why I noticed it.  If there is less space for the other brands of milk, then fewer bottles are ordered.  This means that if you normally buy a branded milk, and that one is sold out, then you must choose another brand.

Guess which brand never sells out?

After this, I began to look a little closer at some of the other departments in the supermarkets.  The bakery section is overwhelmingly store-brand products.  The cheapest fresh bread is the store brand one.  The tinned pie apple, of all things, is no longer available in large tins, except for the store-brand.  And it makes no financial sense to buy the smaller tin from the competitor, because the store brand tin is almost the same price for double the amount of apple.

This isn’t so sinister, in itself.  Every business wants to make profits; every business wants to have as much of the market share as possible.  Coles and Woolworths are just doing what any other business wants to do.

The trouble is, their methods are, quite possibly, a little underhand.  Recently an investigation into how they negotiate contracts with suppliers has raised questions of blackmail and bullying.  A 10-year milk contract between Coles and a milk-processing co-operative has been promoted as a way of giving suppliers certainty, but a cynic might view this as piecemeal, given the way in which these supermarkets can essentially dictate the success or failure of individual suppliers.  There are also some concerns about how the volatility of the market will affect such a long-running contract.

It makes me ache a little to realise just how much we have allowed large companies to take control of what we buy.  We no longer need to go to several different shops to get what we need, and that’s very convenient, but at what price is this happening?  When there is a supermarket brand product in every category, is that really choice?  Or does it mean that they can start pushing out other brands until we don’t have a choice but to buy theirs?  And what happens, if we are then unhappy with that brand?  Where is the choice, then?

This kind of business model is certainly not unique to us here in Australia, and that fact both saddens and delights me.  It’s upsetting to think that we have allowed big business to get this far, and that we accept a kind of  ‘market will prevail’ philosophy.  The market in this case is not fair, in the same way that a match between a bantamweight and a heavyweight would not be fair.  I’m sad to think that we allow this to happen without thinking of the long term consequences.

But I’m also confident that consumers can turn this around.  Farmers’ markets, boutique stores, a focus on customer service and niche goods — all of these are ways in which small businesses can push back against a powerful supermarket chain.  And they are pushing back.  It’s up to us as consumers to decide where we stand.  Will we stick with the store-brand goods, or will we choose to pay a little extra to support a different business?  Granted, economic situations sometimes limit our choices, but while we’re still spending money, we’re still making choices.

It’s up to us, to choose wisely, because if we don’t, we may find ourselves with very little choice at all.


12 thoughts on “Be Careful What You Wish For.

  1. You should catchup watching The Checkout on iView if you haven’t been watching it. They had a segment on some of these issues, and in particular the milk. I think they also talked about store brand labelling looking misleading, like brand names, either in the same or a different episode.

    • I’ve seen it there but haven’t checked it out yet — thanks for the recommendation 🙂 Milk is a big thing especially in WA. There are so few dairy farmers left now, and with the amount they earn, it’s no wonder.

      • The thing the show pointed out about the milk these supermarkets sell is that, it doesn’t really matter what brand it is, they all come from the same place. Which means it’s all the same inside the bottle. Not only that but the farmers get paid the same amount no matter which brand is bottling it. Which basically means Woolies & Coles actually earn more money on the brand name milk. They’re not into selling their cheap store brand milk for the money, they’re in it to drive in customers who’ll spend more money on their other products.

  2. It’s interesting to read about this in Australia, we have two big name supermarkets with their own cheap brands in the US and I will check if it’s the same strategy here because I suspect it is.

    • I know that it’s often the case that companies do a basic range and a more upmarket range… I guess that kind of thing has been around for ages. It’s just interesting that the supermarkets seem to really be branching out into so many different areas.

  3. It is the same here in the US. I worked as a grocery store cashier for 8.5 yrs. The only real difference in, say, Pepsi and the store-brand generic cola is that the generic stuff isn’t as fizzy to start with, and thus loses its fizz much faster. There are very few generics which are such lesser quality than the store brand that, as hubby says, you should “shut up, nod, smile and pay the money”. I’d rather just not drink cola than pay twice as much for the Pepsi, or pay half as much for a product that’s gonna go flat twice as fast.

    • Oops…sorta got my sentences tangled. What I meant to say is that there are very few generics that are so much worse than the national brand that you should willingly “shut up, nod, smile and pay the money” for the national brand instead of the generic.

    • It’s very true that the name brands are often just the same as the generic ones — and the generic ones also seem to have improved in recent years. I think there is some kind of social stigma to buying the generic brands which keeps people from doing so. Saying that, there are still a few things I like to buy as name brands (chips, for example, and breakfast cereal. For some reason, the branded ones always seem to taste better!)

  4. Pingback: Paying to play | Marketing Manna

    • Sorry, I don’t know why I didn’t see this comment and approve it earlier! It seems like this is something which is spread over much of the world. Unfortunately 😦

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