Has The Warehouse created competition when it comes to food prices?
Friday, 24 March 2023
Those who live near both a Pak ‘n Save and Warehouse store could be enjoying better grocery prices, a mini-survey by Consumer NZ suggests.
Following the introduction of fresh produce to some Warehouse stores, the consumer watchdog began tracking the price of products at The Warehouse, Pak ‘n Save, New World and Countdown to see if the expansion by the retailer led to more price competition.
It did an online shop for 10 products from supermarkets in the immediate vicinity of The Warehouse stores now selling fresh produce.
It selected branded products to allow for price comparisons across stores, and did not take promotions or loyalty discounts into account.
While prices at New World and Countdown didn’t move much, Consumer noticed a drop in prices at Pak‘n Save on some products during its survey period.
**READ MORE:
* Supermarket competition is slowly increasing, but where are the best prices?
* Is it cheaper to buy your groceries at The Warehouse or the supermarket?
* Foodstuffs shoppers overcharged on their groceries after technical glitch
**
Where the Warehouse offered cheaper prices on a product in the South Island, Pak ‘n Save prices fell from February to March.
A 3-pack of Watties baked beans started at $6.05 and dropped to $5.39 at three South Island Pak ‘n Save stores, the Consumer study found.
Moccona Classic Freeze-Dried Coffee fell from $13.29 to $11.99 at Pak ‘n Save South Island stores, while 4kg of Persil Laundry Powder fell in price by 26% – more than $8 – in the space of a few days.
But the price of some products had also risen at some Pak ‘n Saves, when the price of the same product at The Warehouse was more.
In February a pack of Squiggles at Pak ‘n Save Kilbirnie and Westgate was $2.99 while at The Warehouse it was $4.69.
However, a week later the price had increased to $3.89 in Westgate and $4.49 in Kilbirnie.
A Consumer spokesperson acknowledged that, “our study is too small to be conclusive on whether The Warehouse has driven these shifts, but it does offer hope that increased competition can drive down prices”.
“The arrival of fresh produce at The Warehouse, in addition to its existing grocery offer, could represent a step in the right direction as far as competition for one-stop shopping is concerned.”
Foodstuffs spokesperson Emma Wooster said the grocery co-operative welcomed competition and agreed Consumer NZ’s sample of just 10 products was “too small and unscientific” to draw any robust conclusions from.
“Prices on specific products may fluctuate for many reasons, including if the product is on or off special, or the supplier may have changed their price.”
Economist Puneet Vatsa said although the data was insufficient to provide an accurate analysis of whether, and to what extent, The Warehouse was influencing grocery prices, it was not surprising it could be having some affect.
“Food prices in New Zealand are not immune to competition. It is common for grocery retailers to compete for market share by reducing prices,” he said.
Discount stores can be instrumental in lowering food prices–Walmart had shown this in the US, he said.
“Pak 'n Save claims to have New Zealand's lowest food prices. It attracts many thrifty customers who may be spending relatively large portions of their incomes on groceries and essential items; they tend to be more sensitive to changes in prices,” Vatsa said.
“New World and Countdown, on the other hand, cater to a slightly different demographic, one that may be less motivated to search for the lowest prices.”
Last month Stuff compared the prices of 14 essential food items offered at both The Warehouse and supermarkets.
It found in Auckland, Pak ‘n Save Mt Roskill was the cheapest place to fill your trolley at $68.58, while The Warehouse was $71.70.