Making hay while the sun shines
Trevor Spring of Brisbane has witnessed Dan Murphy’s and 1st Choice outlets growing rapidly and under-cutting the smaller chains and independents. He thinks that as the big two cut prices to build upon and dominate their market share, consumers benefit, but there’s a tipping point after which their dominance is so great that smaller retailers have little impact on competition.
“As a consumer, I’m making hay while the sun shines,” says Trevor. “I prefer Dan Murphy’s over 1st Choice, even though its nearest outlet is a little further away, as I think they have a slight edge on prices. I tend to make bulk purchases to benefit from half dozen or dozen discounts and do so about once a month, but more frequently in summer when social contact tends to be higher, especially around the Christmas/New Year period.”
Trevor thinks there’s still a place for smaller shops despite intense competition. “Convenience often favours smaller outlets. If consumers wish to buy only a bottle of wine, then the shop’s proximity will impact on their purchasing decisions.”
Specials not in every outlet
Kings Cross resident Garry Richards told us about his experience with his local Coles. “We are told that Coles and Woolworths are creating a one grocery price policy across their stores to reduce postcode disadvantage,” Garry says. “The Coles store in Kings Cross, almost under the famous Coca Cola sign, is the familiar combination of Liquorland outside the Coles store. When we enter the supermarket we are greeted with the booklet of specials, with the last two inside pages devoted to Liquorland specials. However in fine print at the bottom the booklet says 'Specials not available through coles.com.au, Liquorland Direct or Liquorland Express World Square, George Street and Kings Cross Stores.' Kings Cross has a wide socio-economic cross section of people, including the very poor, many in public housing, with a very high number of residents being renters in the average range of income. The pricing policy disadvantages many ordinary people who rent in the area.”
Garry says that even the Coles check-out staff didn’t know that the specials do not apply to the Liquorland immediately next to the last check-out. “I find it annoying because my shopping is significantly influenced by specials. The liquor specials that catch my attention are not available to me and I am inconvenienced by having to do that shopping elsewhere.”
They said it
"Big box liquor stores aren't new. We'll leave the predictions to others, but we find that wherever we enter a market, competition increases and consumers benefit from low prices." Jim Cooper, Coles.
“We can get $20 of value into an $8-$11 bottle at Dan Murphy’s. That’s a 50% price reduction.” Steve Greentree, Woolworths.
“It’s not uncommon for businesses to raise concerns over the retail price offered by larger competitors compared to the wholesale price available to those smaller businesses. Sometimes this may reveal different supply terms arising from factors such as volume or promotional arrangements. At other times it may just reveal strong competition.” ACCC spokesperson.
“We know Dan Murphy’s is owned by Woolies, but you can’t beat the prices! Bella Yellowglen champagne can cost up to $22 at some liquor outlets, but you can regularly get it for as little as $9.50 a bottle in a carton of six at Dan Murphy’s. I hate the giants, but you have to admit they have their advantages.” CHOICE member Michelle Turner.
“We can get good bargains at Vintage Cellars, but some smaller brands and types of wines can be lost. I also buy through Wine Selectors – a delivered mixed dozen – for delivery, value and variety.” CHOICE member Asher Doyle.
“Consumers have been in a happy hunting ground for wine prices for well over a decade. But they’d take a different view of cheap wine prices if they knew the impact on wine grape growers. It’s common for wine grape growers to go out of business in the current environment. There’s a short term gain for the consumer but in the long -term we’re undermining the Australian wine industry. It’s killing the golden goose.” Mark McKenzie, Executive Director, Wine Grape Growers’ Australia.