Shelley Bridgeman: How to profit from the poor

Some organisations are profiting from financially challenged people. Photo / Thinkstock

If you need cheap groceries then you should head south. It was recently reported that: "Shoppers in South Auckland are paying up to 50 per cent less for many everyday groceries at independent retailers and some supermarket chains."

The prices of items were compared between Papatoetoe and Otahuhu with those in the vicinity of (more upmarket) Grey Lynn and Westmere. "Eggs, meat, fruit and bread bought from butchers, fruit shops and superettes in central Auckland cost about $150. Just 20 minutes down the motorway, the same items cost just over $87."

That's the best piece of news I've read about low-income areas for a long time. Too many businesses are cynically focused on people who live in areas typically comprised of households with modest incomes. From high densities of liquor stores to pubs lined with pokie machines, economically disadvantaged communities are targeted by companies intent on helping the poor get poorer (and possibly even less healthy).

Having presumably ascertained demand is likely to be low for Monster Breakfast Sandwiches and Loaded Breakfast Burritos in well-heeled suburbs such as Parnell and Herne Bay, US burger chain Carl's Jr has opened stores in Avondale, Henderson, Mangere and Takanini. The brand's global CEO was recently quoted as saying New Zealanders' uptake of the burgers has outpaced the rest of the world. I'm not certain that's cause for celebration.

Other organisations intent on profiting from financially challenged people include:

Quick loan companies

If you're not eligible for a bank loan, shops offering fast, easy, same day loans are a seductive prospect for desperate people with bills to pay. Yet often there's a terrible price to be paid in the form of astronomical interest rates - such as the 547 per cent per annum a company called Save My Bacon was reportedly charging. Instant Finance, which charges 29.95 per cent interest annually, has branches in the usual places: Glenfield, Henderson, Manukau, Otahuhu, Panmure and Takanini. Before Christmas, a company called Cashburst, was lending money at an interest rate of 522 per cent per annum. Of course, the irony is that it's usually people of especially modest means who are paying these eye-watering interest rates while the not-so-cash-strapped among us are enjoying far lower rates through mainstream banks.

Chrisco hampers

The full story of these exorbitantly priced grocery hampers targeted to those on a tight budget can be found at Not a fan of Chrisco hampers. The short story goes like this: Chrisco has created an extremely profitable business by somehow persuading people to pay ahead of time for the privilege of receiving over-priced groceries prior to Christmas. Yes, I can see the flaws in this system but many thousands of people clearly cannot. Again, there's an irony that while people of mainly modest means were drip-feeding small sums through to Chrisco the proprietor was building a $30-million mansion in Coatesville.

Dodgy salespeople

It seems that some door-to-door salespeople targeting poorer areas are using scare tactics to hawk their wares. Sellers used fear tactics, court told recounts the story of water filter salesmen telling customers that "tap water could cause leukaemia, cancer and birth defects". A former employee said that "he and other salesmen did internet 'research' on tap water before going to poorer Auckland suburbs, because Smart [the company director] said people there were 'less intelligent'." Charming.

Mobile shops

When opportunity knocks reports that "[m]obile shops, operating from trucks, sell household appliances, electrical goods, clothing and sometimes food, door to door on credit for high prices". A budgeting expert described it as a "poverty trap for consumers". Evidently some foods can be triple the PAK'nSAVE price for the same item. Once again the neighbourhoods of south Auckland are favoured catchments for such enterprises.

In short, it's easy to see how the poor remain poor (and even why poverty can be such a vicious intergenerational cycle) when this demographic is systematically preyed upon in this manner. Thanks to a variety of reasons - perhaps low levels of education or English being a second language or unwillingness to question perceived authority or a belief in the inherent goodness of others or simply desperate circumstances - some people unfortunately are easy targets.

What do you think of businesses that profit from low income households? Is it okay or is it unconscionable? What other examples have you encountered? What can be done to discourage such unscrupulous behaviour?