Dita De Boni: Time for some Aussie stick in the aisles

Supermarket prices are escalating. Photo / Richard Robinson

Government should introduce an Australia-style code of conduct or pave the way for discount chains.

Stunned and staggering, I picked up my two bags of groceries from the supermarket checkout. They'd cost me $125, probably what a family of several on a benefit has to make do on for a week, regularly.

I'm lucky that this won't break the bank for me, but I can't help feeling that for so many people, our supermarket prices can, and do. Consider that I had no alcohol, meat or tobacco in my bags. I was struggling to compute, in my head, why a tube of honey would cost $7. Why a box of pasta, which must cost about 20c to produce, could be over $3.

I know, I know. I can shop around, buy cheaper. But for many reasons I think I should be able to go to my local supermarket and pay reasonable prices for rather ordinary fare. I would feel even happier if, not just families, but also suppliers, weren't at the mercy of a pair of supermarket chains in this country that make around $500 million in profits each year between them.

And why, when any kind of authority tries to regulate them, they start complaining about how they are being bullied, by mean old politicians, or unfair media, or other imaginary foes.

The latest missive from the managing director of Progressive Enterprises (Countdown supermarkets) was, I reckon, a perfect example - delivered just in time for Kiwis to pay their usual eye-watering prices to fill their Christmas baskets with his wares. A nice touch.

In it, he described how the Commerce Commission had investigated Progressive after allegations in the House that it was bullying its suppliers - after not one, nor two, but 90 complaints were made.

According to the letter, the commission "confirmed they've found no evidence to support false allegations made against us in Parliament earlier this year, or in any of the other matters they investigated".

It followed a long complaint in another media outlet about how New Zealand politicians were "misusing parliamentary privilege" in bringing complaints about supermarket behaviour - as if our pollies have no business trying to protect the interests of ordinary New Zealanders.

The upshot of what the commission decided was that Progressive's actions towards its suppliers were "not likely to be unlawful". But considering how weak our laws covering supermarket behaviour are, it's not a ringing endorsement.

Businesses small and large are having to run leaner and leaner operations to fulfil the requirements of supermarket chains - and some, in a possibly related development - are having to lay people off.

Heinz Watties said in October it would lay off 100. Huttons, Cerebos Greggs, Fonterra and Goodman Fielder announced substantial cuts earlier in the year. Decide for yourself if it sounds right. Our supermarkets currently make an estimated 25 per cent margin on what they sell (precise figures are a closely guarded secret). Yet they demand discounts from these already-squeezed suppliers routinely - discounts for warehousing goods; for product to run a special promotion, for the same product to stock the shelves after the promotion is done.

They demand a discount from suppliers for good placement, end of aisle placement, marketing, flyers, and any and all other staging.

It's ultimately an issue for government, however. We could look across the Tasman for clues about how to go about it. Australia forced a code of conduct on supermarkets when a group of them, including Progressive's parent company Woolworths, placed such onerous demands on suppliers after wanting to recoup financial losses that the Government was forced into action. Further, stronger legislation is now also in the works.

In New Zealand, our supermarkets won't even sign up to a code, let alone agree to legislation being debated. It's time for the Government to step in and force the issue.

If supermarkets continue to refuse proper oversight, the Government should work hard to ensure a discount chain like Aldi, which makes about a 15 per cent margin on a much smaller range of essential grocery items, finds a welcome here.

Our suppliers would be better off, as they don't have to pay for all the add-ons in the Aldi system, and reports have found them much more transparent to deal with.

Consumers could win too. How would you feel about paying around $1.50 for a loaf of bread, $2.30 for a box of muesli, or $4 for a packet of coffee? A distant dream now, perhaps, but it really shouldn't be.

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