No I am not going to post on the nonsense economics of Kevin Rudd.
One of the household magazines I subscribe to is Choice. It’s a consumer magazine that gives you product information and helps you, well, choose. This month it discusses shopping for groceries and does a nationwide test by buying a fairly standard basket of 33 grocery items across 23 cities. In all 111 stores are sampled.
One obvious conclusion – almost suppressed in the Choice write-up – is that Coles stores are, on the basis of this survey, a lot cheaper than Woolworths. It is true in every one of the cities examined without exception. Why is Choice being so coy about this?
The report stresses that Aldi is the cheapest of the lot – true but Aldi has a very limited range of products. The Aldi basket cost just over half the average of all other baskets. But the real comparison for most of us lies between Coles and Woolworths and Coles stores were 7.7% cheaper – over a year a household spending $200 weekly on groceries would save $770. This is a lot – particularly given that margins in this type of retailing would not be expected to be that great. Choice suppresses the finding stating that the Coles items included many ‘specials’ and that, with specials removed, the difference is only 2.6%.
It is difficult to see the point here if the basket chosen was representative given that so many stores were sampled. If it wasn’t representative the Choice survey can be criticized. If it was representative why should a higher incidence of specials be seen as anything other than something positive?
Indeed, to the contrary, the report states ‘There is no runaway winner in terms of the cheapest major supermarket’. On the basis of the data presented by Choice that is not true. Moreover, it is difficult to see the point of a cover story titled ‘Which supermarket costs less?’ if the cheapest major supermarket is not clearly cited.
I wonder what drove Choice to compile this type of report. Markets need good price information for efficiency and this does not help. The online summary of the Choice conclusions is admittedly clearer than the magazine version.
Is our fearless consumer affairs advocate Choice frightened of making clear its findings to major market players? Is it concerned that the representativeness of its survey might be challenged? I’d like a snoopy newsletter, like Crikey.com, to do a bit of probing and – in the meantime - welcome suggestions from readers.
Coles has had a hard time over recent years and ownership looks like it will be transferred to Bunnings. I wonder if the better deals offered at Coles were a symptom or a cause of its lower profitability.