This might seem odd coming from a website that has a tagline ‘total and utter supermarket geekery’ but in this post I’m going to advise against doing ALL your shopping at the big two supermarkets.
I love grocery shopping and I love supermarkets, always have. I remember how exciting it was when the first large supermarkets appeared in our area as a child (yes, I know that makes me sound old). At university I took a course called Retail Geography that included a study of the psychology behind the layout, colours, music used by supermarkets; I was fascinated. So I’m not going to start hating on the big supermarkets on this blog.
However, the reality is that here in Australia, we are faced with almost a duopoly, with Woolworths and Coles commanding a 78% market share of the grocery sector. Compare that to a 48% market share for the top two supermarkets in the UK and alarm bells should start ringing at the Australian Competition and Consumer Commission (ACCC), it certainly rings alarm bells with me. The third strongest player is Aldi with just a 10% market share.
The size of the two main players creates economies of scale and greater bargaining power with their suppliers, allowing them to offer lower prices and attract more customers. Without decent competition their stronghold on the market could continue to increase and the worry is that if this were to happen, in the long run we could end up with even fewer store options and brands than we have now. It’s the job of the ACCC to step in and make sure that that stronghold is not preventing fair competition.
If a supplier refuses the deal offered by one of the big two, they are turning down access to 40% of the Australian market, so they are caught between a rock and a hard place and are put under enormous pressure to cut their costs and lower their prices. If you wanted to help the situation and don’t want to wait for the ACCC to act, you could buy direct from farmers and market stalls and shop at your local butcher, delis and grocers. Of course that could get really expensive so you could also support the smaller players such as Aldi and IGA so that their market share increases and they become a viable option for the supermarket suppliers. Aldi’s market share is growing and other European budget chains like Lidl are eyeing up Australia so I imagine that soon those types of discount supermarkets will become available to everyone.
Now for the bright side! We the consumer do have an opportunity to cash in on promotions and lower prices as the two compete with each other and try to outdo smaller players like IGA and young upstarts like Aldi. So for now, I focus on collecting all the very best of the discounts that Coles and Woolies want to offer me and try to play them off against each other.
I don’t buy fruit and vegetables at the big two supermarkets so that I know that it is fresh and seasonal, to lend some support to organic veggie farmers and the local business that organises my weekly organic box delivery, and to help to protect the natural environment from agricultural chemicals. It doesn’t matter to me that I could get non-organic and cheaper produce at the supermarket, it’s just not what I want to buy. Plus the organic veg at supermarkets is heavily packaged to distinguish it from the regular produce, which is also not appealing!
Instead, I try to limit what I buy at the big two supermarkets to anything processed, frozen, canned or baked since I’ve assumed that the suppliers of those products are themselves medium to large sized businesses and can stand up for themselves during those hard nosed pricing negotiations. And that way I still get to maximise my rewards, make some great savings and spend quality time with the supermarkets I love!
But I have no loyalties, this is free market economics as far as I’m concerned! If a cheaper option of the same quality is available outside of the big supermarkets, I’ll happily take it. I do shop at Aldi occasionally but I’ve had an issue with the quality of some of their products when I compare to what I’d buy elsewhere, primarily the sugar and salt content of things like breakfast cereal or tomato paste and things like the percentage of tomato content in a simple can of chopped tomatoes. I think there is a whole blog post to be written to work out what products are cheaper in Aldi AND of equal quality to my usual brand in Coles or Woolies. Feel free to offer any suggestions!
I also buy meat at the big supermarkets because it is vastly cheaper that all the local butchers in our area and that position I can’t really defend, except to say I mainly purchase the markdown food that might otherwise end up in the garbage. This interesting article on aquaponics caught my eye though – maybe growing our own fish could be an option in the future!
Happy grocery hacking!