Posts Tagged ‘ Supermarkets ’

Where supermarkets get a bargain

It’s now pretty clear that the major shareholders of The Warehouse just want out, and they reckon the most profitable way to achieve this is by selling out to either Progressive or Foodstuffs.

I’m not personally convinced the grocery section of The Warehouse wasn’t making any money, and there’s no way we will ever know whether they have or not. It was always going to take a while and it simply hasn’t been there long enough to have had any chance to succeed.

There is no doubt that Progressive wanted The Warehouse to ensure a possible competitor didn’t appear because as they are struggling against Foodstuffs a third player was more likely to damage Progressives sales that Foodstuffs.

The whole thing looks like a huge setup and of course there is nothing the Commerce Commission can, or will be able to do about it.

This is a bad day for consumers and we can only home that a third player will eventually appear in the market. The Warehouse presented the best hope and that is not going to happen now.

Countdown Supermarkets being transformed into Woolworths Australia?

I’m not sure whether many people know this, but Foodtown, Woolworths and Countdown are owned by Progressive, which is owned by Woolworths Australia.

I’m guessing the mishmash of brands is due to the three chains being picked up at different times, and I think Woolworths NZ is distantly related to Woolworths UK as is the Aussie version.

It now looks like Progressive is cleaning up these brands.

Woolworths and Foodtown have traditionally been their upmarket brands (i.e. charge more) and Countdown the cheap and cheerful brand, competing directly with Pak’n’Save part of the locally owned co-op Foodstuffs. I’m a bit hazy about this, so I might be corrected but I think Progressive kept the brands separate because of Commerce Commission concerns about the lack of competition when they picked up Foodtown. How keeping the brands separate was going to achieve competition I can’t work out, it may have been more of a cosmetic difference, but it looks like Progessive now think the time is right for a clean up, possibly because they are lining themselves up to buy The Warehouse.

The first step has been the gradual disappearance over the last month of some Foodtowns, which are being replaced with Countdowns. This may seem a bit odd because, for example, the Greenlane Foodtown which serviced a relatively upmarket area, made sense and replacing it with a budget brand doesn’t. That’s until you go inside. The new fit-outs that accompany the rebranding are a carbon copy of the Aussie Woolworths stores – wider aisles, new deli sections etc – quite unlike the Countdowns, or the Foodtowns.

The produce sections have introduced the same layout and Aussie style black crate system unique to Woolworths Australia, which may seem unremarkable to the consumer, but is a major shift for the NZ market which already has a ‘universal’ returnable crate system.

The most interesting thing about the changes (if indeed this is interesting, because I’m sure some of you have already slipped into a coma) is the actual logo changes. I can’t find any examples of the new logo for Countdown online, but it is striking in that it looks like the same colour scheme as Woolworth Australia.

There’s also been an increase in Australian Woolworths goods instore with their branding – a pleasant step up from the rubbish looking house brands they use in NZ which shouts ‘CHEAP & NASTY’ at you from the shelves. I suspect that in NZ the supermarkets have a team of five-year-old’s with crayons doing the house branding because almost without exception they seemed to have entirely missed the point of branding. People might like to buy cheap goods, but it doesn’t mean they have to look cheap!

I’m wondering if this is part of a stealth campaign to eventually rebrand all Progressives NZ stores as Woolworths (Australian) stores. You might ask why they would not just do it, or why they haven’t done it already? after-all there would be some very sensible synergies and cost savings long term from doing this. I suspect the (possible) stealth comes from the sensitivity around the lack of competition in the supermarket business in NZ, it’s an effective duopoly, and all the cute legal arguments in the world about different supermarket brands don’t change that. For any supermarket to stick their heads up is going to draw fire from the Commerce Commission, Consumers Institute etc and lead to a whole lot of publicity they don’t want as anything that reminds people about the limited competition is not good.

I might be entirely wrong, but the similarities are striking, and it will be interesting to see how it shapes up over the next twelve to eighteen months.

The Warehouse – common sense prevails

The decision of the High Court to overturn the decision allowing either Foodstuffs or Progressive to buy a controlling stake in The Warehouse is a sensible one.

The original decision was largely based on the evidence of the three main parties, The Warehouse who wanted to cash up their shares and didn’t give a stuff who bought them as long as they got top dollar (no problem with that), Foodstuff and Progressive who both wanted to ensure that the potential competitor was shut down as soon as possible.

The grocery side of The Warehouse has not done all that badly and it was odd to see the company claim it wasn’t doing well, when the evidence was that in fact although it had got off to a slow start it was starting to show some success, and this is precisely why Foodstuffs and Progressive were desperate to shut it down.

There is no doubt that if it is successful this new grocery entrant will provide some welcome competition to the duopoly that operates between the two supermarket chains. We need to have some competition because while there is no evidence of any collusion between the two main players, evidence overseas shows that it is difficult for big players to resist the urge to have the odd off the record meeting on key ‘commdity’ pricing to their mutual advantage.

I’m not suggesting that this will see prices drop across the board, but it will see the possibility of a genuine third party enter the supermarket business (assuming The Warehouse now sell to someone else) and this can only be good for both consumers and suppliers long term.

It will be interesting to see whether this is appealed, Foodstuffs and Progressive are deadly serious about ensuring their market position remains unchallenged so if there is a slightest chance it is likely they will take it.

The Commerce Commission says a decision by the Court of Appeal overturning the High Court decision on ownership of The Warehouse Group Ltd is a victory for supermarket consumers and competition in markets.

http://www.comcom.govt.nz//MediaCentre/MediaReleases/200809/warehousedecisionavictoryforconsum.aspx

http://stuff.co.nz/4638140a13.html

Budgeting

The rise in petrol and food prices have provided the media with plenty of filler coverage, all they need to do is find someone with a tale of struggle and tough times and they have filled another 10 seconds of so called ‘news’.

It’s all a load of bollocks really, people being all sanctimonious about buying seasonal produce and making “healthy stews” rather than stuffing themselves with imported “un healthy food”. If New Zealanders did this a bit more they wouldn’t find themselves in so much debt as we are all still living beyond our means with record credit card debt and mortgages that people will be handing down to their kids still unpaid.

The way everyone is going on you’d think they were stuck in WW2 Britain with rationing in place. Maybe it’s about time people actually took a hard look at their food bills and what they are consuming because all those pre made foods are costing a fortune, what’s wrong with drinking tap water vs coke? I don’t care about the health benefits, it should be a financial choice. NZ is not a rich country by any means and the sense of first world entitlement runs strong here, hence beneficiaries demanding things like TV’s, a completely non essential item!

It’s actually a good thing food prices are up and hopefully some of this will be flowing back into the pockets of the producers rather than into the supermarket’s coffers. Producers have been struggling for a while as the duopoly that operates here with supermarkets has slowly screwed them into the ground expecting more and more in compliance costs and offering reducing returns as a rewards – all the risk but none of the returns.

Inputs for produce are rapidly increasing – petroleum based products from plastic, fuel and fertilizer are all major inputs and there is no way growers can keep absorbing these costs so the supermarkets can maintain their high margins on fresh produce.

So just think about this next time you buy some local seasonal produce, not only are you doing a bit of timely budgeting but you are also helping the horticultural industry survive!

King of Shaves

Shaving is an unpleasant daily chore, I guess I could just not shave but full facial beards aren’t in fashion and the trimmed pubic arrangements that some men adorn their faces with look naff and you still need to shave.

Some days it feels like I rubbed the stubble off with a belt sander. I’ve tried everything going, eagerly trying every new blade on the market and every new gel, cream, oil etc. In the end I stuck with the older style Sensor Gillette blades as the newer ones with multiple blades seemed to be worse, and the vibrating types added nothing (except giving Gillette’s parent company more battery sales).

Then I discovered King of Shaves products. I picked some up in the UK and they were great, the shaving oil is very good, but the gel products seem to be even better. The pre and after shave range was very good and these seem to make the most difference. Fortunately I got a bit of a supply, topping up in Australia earlier in the year, but now it’s all run out and you can’t get the full range here.

This is because of the supermarket policy about how much shelf space they will devote to shaving products. The two major supermarket chains in NZ have allocated limited space to shaving products (and without regular supermarket business no dry goods importer can survive long) and most of this space is given over to products from Proctor & Gamble (who own Gillette). This leaves King of Shaves with about three product spaces – enough for a couple of the base level oils and a shave gel.

This isn’t good enough. The problem with the duopoly that we have with supermarkets is that they are more focused on their ‘rebates’ than with product variety, and I’m guessing that P&G offer the most lucrative rebates.

King of Shaves (in my opinion) make much better shaving products (gels, oils and creams) than Gillette. The range covers a variety of different skin types and personal preferences. The products are not cheap, so I would have thought that they offered supermarkets a chance to up sell. If the supermarkets can devote a huge space to a myriad of different blades, why not other shaving products?

If you can get your hands on them (the top end supermarkets offer a sligthly better range) I highly recommend the ‘Kinexium ST Shaving Oil’ over the ‘AlphaOil Shaving Oil’, or try the ‘AlphaGlide ALS Shaving Gel’ or ‘MagnaGel MME Shaving Gel’.

You’ll have to wait for the ‘XCD Primer Pre Shave Face Wash’, and ‘K-BLM Soothing Balm’ both of which are excellent, because so far no retailer thinks it’s important to carry them.

Bizarrely I’ve found a bigger range in Christchurch than in Auckland!

I’ve talked to the local agent and until they can get the supermarkets to give them more space they can’t economically import them.

Next time you’re overseas check out the range, or even better, start asking your supermarket manager to stock them – this does work, a few people asking for a product will get results.