From Maple Street Coop News, August/September 2005 issue
Published by Maple Street Co-op, 37 Maple Street, Maleny Qld 4552
Tel 5494 2088, email email@example.com
The Supermarket Giants: Not Fair Dinkum
by Lori Sturtz
When I wrote about imported produce and the superpowers of the supermarkets in our last newsletter, Tasmanian farmers had not yet begun their landmark protest. They are now driving their tractors 2,100 kilometres from Tasmania through Victoria, NSW and the ACT, holding public rallies along the way and aiming to arrive at Parliament House, Canberra, on 11 August. They started with eight tractors and a grudge against McDonald's for opting for New Zealand over Tasmanian potatoes, and are hoping to be 500-strong by the time they arrive in Canberra.
They've called their protest the “Fair Dinkum Food Campaign” and are attracting national attention to weak laws on country-of-origin labelling, the dominance of the supermarket duopolies Woolworths and Coles and major food industry players like McDonald's, and the increasing amount of imported compared with local produce that these giants are buying.
Tasmanian vegetable grower Richard Bovill, who is leading this campaign, told ABC TV's Landline on 24 July that “profit, if it's just done without the purpose, can actually ultimately strip the community away”. And of the “home brand” imports, he asks: “Whose home's that?”
The giant supermarket chains have swallowed entire retail sectors as they strive for even greater market share. Customers and shareholders may be benefiting now, but just talk to the growers and suppliers. Overseas product is coming here at a fraction of what it costs growers to deliver it to city markets. Cauliflower from China is landed at the docks while Tassie farmers plough theirs under. It's been mooted that Woolies has been selling bananas from The Philippines as Australian, despite their full-page ads to the contrary.
The Tasmanian vegetable and potato farmers who started this campaign have supporters across the nation who are concerned about loss of domestic markets and adverse impacts from international free trade agreements. They also want to change the way big business operates and force corporations to become more socially and morally responsible.
Since the farmers began their Fair Dinkum Food Campaign, they have noticed an increase in people buying local produce. Here at Maple Street Co-op we have also seen a rise in our organic fruit and veggie sales since media coverage of the campaign began.
Food regulator FSANZ is continuing its review of labels for food imports and is about to go into a third round of public consultation, with plans for new rules to be in place by the end of the year.
In early August, Federal Opposition Leader Kim Beazley affirmed his support for the farmers and for country-of-origin labelling to assist consumers in choosing Australian-sourced products.
Slotting fees and home brands
Market dominance by the duopolies is a major concern to farmers as well as people operating small businesses, whether in towns or cities. This sort of market control is unprecedented in other parts of the world. More than 30 cents in every dollar spent in Australian shops is spent in one of the two big supermarkets, Woolworths or Coles.
While consumers may think they're paying less by shopping with the big two, they are often paying more for, say, fresh fruit and vegetables. And when the giants come to town, they out-compete local businesses and then raise their prices once they've wiped out the competition.
This has happened time after time in towns and suburbs right across Australia - and Maleny may be no exception once Woolworths starts trading here. Local producers who may want to supply to a Maleny Woolworths will have to comply with a burdensome and costly consignment system, without any guarantee that their products will find their way back to Maleny. Small suppliers get much better treatment at Maple Street Co-op and even at the IGA.
But if consumers think that these supermarket giants make all their money from selling products, they are mistaken, for much of it comes from charges they put on their suppliers for use of shelf and floor space. This so-called “slotting fee” is a closely guarded secret of the industry. Andrew Cavanagh, Program Director of Retail Studies at Monash University, says the supermarkets could not make a profit without these fees.
Under their “trading terms”, the major supermarkets demand lower and lower prices from their suppliers in exchange for position, position, position, and they've invented many ways to enhance these terms. For example, a 2% discount for putting a product in all stores (“national ranging”) is just one way they make money from suppliers. By the year 2000, Woolworths was charging $100,000 for one week's use of an aisle end in its NSW supermarkets, and trading terms were so complicated that suppliers were confused and discouraged.
And so the big two came up with “rolled-up” terms that replaced all fees with a single fee which was different for every supplier. The way that suppliers get the best spots is by offering larger discounts to the supermarkets.
As the number of “home” or “house” brand products increases on the shelves, many manufacturers will disappear and fewer suppliers will be providing the range of goods on supermarket shelves in the future. The way supermarkets do business will undergo the biggest change since the advent of position fees. Smaller producers cannot afford the fees that large food corporations can. The more suppliers, the more complex the system and the greater the overheads, so there is a push by these supermarket giants to rationalise the number of suppliers they deal with - which is not good news for the smaller producers and ultimately not good for consumers wanting more choice on the shelves.
Big Brother on your shopping trolley
Just unveiled by Fujitsu Australia are the high-tech “U-Scan Shopper” trolleys that allow supermarket customers to scan their own purchases and keep a running tally while they shop. Linked in to loyalty cards, these scanners will also have access to customers' shopping histories and can remind people to buy things they've bought previously and recommend new items. It's like having Big Brother on your shopping trolley.
According to Fujitsu retail director Marcus May, “U-Scan Shopper is designed to address consumer's frustrations with checkout lines, price labelling, item location and other complaints”.
At the checkout, customers can audit their purchases on the screen as they're bagged, or they can go to a so-called “self-checkout” which automatically processes items that have to be weighed.
But these trolleys may end up producing the opposite effect to what the supermarkets want. Critics point out that customers able to see a running tally may end up buying fewer goods.
The scanning device is attached to the centre of the trolley handle, but it's unclear whether the manufacturer has tested the device for radiation emissions. We certainly wouldn't recommend the trolley to pregnant women.
Also set to change supermarkets is electronic shelf-labelling and pricing technology, from Fujitsu Australia and Melbourne company Ilid. It will allow prices and on-the-spot discounts to be “beamed down” from the store's fluorescent lights. It may be a boon to retailers, for whom shelf-pricing is time- and labour-intensive, but it won't improve the ambience of these cold, stark, shopping environments.
If the supermarket giants take up “U-Scan” trolleys, “self-checkouts” and “beam-me-down” electronic labelling, their promises of more jobs for locals in every community they enter will be put to the test.
- Fair Dinkum Food Campaign and food labelling: AusVeg, www.ausveg.com.au
- “Stuck in a stew”, by Simon Canning, The Australian, 1 August 2005
- “Clearer labelling needed for food”, Sunshine Coast Sunday, 7 August 2005
- Slotting fees and national ranging: “Shelf Importance”, by Mark Dapin, Sydney Morning Herald Good Weekend, 9 July 2005
- U-Scan trolleys: ABC Radio, The World Today, 20 July, www.abc.net.au
- “Smart shopper trolleys to scan purchases”, Sunshine Coast Daily, 21 July 2005
From Maple Street Co-op News,
August/September 2005 issue
Published by Maple Street Co-op,
37 Maple Street, Maleny, Qld 4552,
tel 07 5494 2088, email firstname.lastname@example.org
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