Greater price transparency needed at supermarkets

08 May 14 10:05AM EST
Post by Ian Jarrat and Matt Levey
The forecasts of a tough Budget, rising unemployment, and higher interest rates, mean that more and more Australians are going to find it harder to make ends meet.

But there is one thing we can all do that can make a big difference every week if not every day - try to get better value for the many dollars spent at the supermarket.

Unfortunately, this is not as easy to do as it sounds. Among the over 20,000 products in the typical supermarket, branding and advertising often aims to shift our attention away from price and value for money. This is of course on top of the myriad differences in package sizes and types, ingredients, country of origin, and proliferating claims about health benefits, animal welfare and other consumer ‘values’.

This is why in 2009 Australia decided to help shoppers compare values by requiring large supermarkets to provide the unit price of most items - that is, the price per unit of measure, such as breakfast cereals per 100g.

This happened nearly 50 years after some US states introduced it and only after a long, hard campaign by Australian consumer organisations that retailers strongly opposed.

But, what has been achieved since 2009?

Although research in 2011 from CHOICE and the Queensland Consumers Association (QCA) showed that most Australians said they use unit pricing, they also said it would be more helpful if unit prices were easier to notice and read.

This has been supported by recent exploratory research by QCA on how to make unit prices more prominent and legible. The research looked at ankle-level shelf labels because these are usually the hardest to read.

The research findings will not surprise anyone who has struggled to read unit prices on labels on the bottom shelf. Large print is far superior for consumers than small print. Unit prices are better located immediately below the selling price, rather than with other information elsewhere on the label. And, angling shelf labels outwards, rather than having them vertical, greatly increases prominence and readability.

These requirements are not difficult for supermarkets to meet, but we know of no chain with ankle-level shelves that achieves them all. As a result, this hard-won victory for transparent consumer information risks seriously under-delivering on its potential just when more and more Australians need the benefits it can bring.

And because effective unit pricing also promotes competition between manufacturers and between retailers, economy-wide benefits are also being missed.

QCA’s research undertaken in four states shows there are also plenty of other problems with the way unit pricing is being implemented by supermarkets, including poor legibility and a lack of prominence. In other cases, the unit price is not provided on every product in a range, it goes missing from special offers, or it’s in the wrong unit of measurement, for example cheese per 100g when the code requires per kg.

The UK has similar problems with its compulsory unit pricing system but most of its supermarket chains are making voluntary improvements, and the need for legislative change is being considered. This has happened only because of a consumer campaign and government pressure.

We should follow the UK’s example and give high priority to substantially improving the quality of supermarket unit pricing, and to providing more consumer education, including how to use unit prices to compare more than just the value of different package sizes within and between brands.

More than four years after the start of compulsory unit pricing, the existence of minium standards for retailers, the ACCC’s 2010 national compliance audit, and the opportunity to learn from other countries, now is the time for action.

We need a “fair go” for consumers wanting to get much better value for the over $80 billion spent each year in supermarkets.

Ian Jarratt is a member of the Queensland Consumers Association and Matt Levey is Director of Campaigns and Communications at CHOICE.

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