Here is my weekly conundrum. There is only one supermarket in my town of 2,000 people. We really need that supermarket and it happens to be an IGA. But the prices can be cheaper in bigger towns at least 45 minutes away.
What does the conscientious local citizen do in a cost-of-living crisis?
The most recent Choice survey, part of a government-backed quarterly comparison, found that a basket of groceries at Aldi ($50.79) was cheaper than Coles ($66.22), Woolworths (68.37) and IGA ($78.95). Choice also noted the IGA basket reflects the large price variations between different-sized stores surveyed.
For me, a round trip to the nearest Aldi or Woolies requires 100km worth of fuel, currently worth about $12 in a reasonably fuel-efficient car. I can combine the trip and save on the household budget if I have life admin tasks or need to pick up parts for machinery. (It is harvest time, after all.)
The fuel cost is less relevant to those regional residents who can get home delivery from one of the big supermarkets, though you still need to pay a delivery fee. When I plugged in my address to see if Woolies would deliver to me, I got the shock of my life. They do, though I have yet to test it.
In any case, small-town residents are left with the clear and present danger that their independent grocer cannot compete with big supermarkets.
Australia has a love-hate relationship with our twin supermarket behemoths. Coles and Woolworths have a two-thirds share of the Australian grocery market. A Guardian Australia analysis has found that profit margins at the major supermarkets are now significantly higher than pre-pandemic levels, despite pressure from the Australian Competition and Consumer Commission, which is examining pricing and competition in the supermarket sector at the behest of the federal government.
Last week, Grant Ramage, an executive at IGA and Foodland brand owner Metcash, accused the duopoly of a “decapitation” strategy, designed to pick off large independent stores. This week, we will hear from Woolworths and Coles. But we got a taste for their feelings when Coles chair James Graham described attacks on the supermarket as “politicised”.
There are many, including me, who rely on the local independent supermarket for their food week to week. Even if you just buy the staples, or slip into town for a random ingredient before people come for Sunday lunch, you still need to keep that supermarket in business.
There were some interesting insights in the supermarket survey that are relevant to the rural resident. Shoppers find very little price difference at the bigger chains – Aldi, Coles and Woolworths – between branches in the country or the city.
But for IGA shoppers, the basket on average was cheaper by $2.05 in regional stores than city stores. Prices do vary though across stores in the regions, and based on the size of a store. Choice found the same basket of goods at a smaller IGA will cost a lot more than in a larger IGA – $105.18 in the Northern Territory compared with $74.76 over the border in Queensland.
Specials also make all the difference to whether the basket price rises or falls on the affordability scale – as long as they are real. Remember the ACCC is suing Coles and Woolworths over “illusory” discounts – sometimes referred to as was/is pricing – where prices are raised only to be discounted to a price still higher than the original amount.
An item on special in the Choice survey basket can effectively drop one supermarket below another on the price rankings. I have noticed many locals come into our store, clutching the specials flyer, to ask the manager if a particular item is still available. Last week’s $5.95/kg chicken breasts sold like hotcakes.
Shopping around is clearly the lesson. But it may be a false economy for the dedicated country shopper to drive large distances for particular specials, unless they can make it pay. It needs to be squeezed in between other logistical requirements, such as a full-time job, kids’ sport, doctors and dentist appointments, car services, and caring obligations.
Still, I know people who do a regular major shop at Costco in Canberra, 120km away, bypassing IGAs, Woolworths and a few Coles stores along the way. That is still a damn sight closer than many other regional shoppers have to drive.
We also know that what supermarkets give with one hand, they can take with another. The $1 per litre milk war was a classic of the loss leader genre, where Coles and Woolies discounted their milk prices in 2011 to attract shoppers who would buy other items with bigger margins that delivered better profits.
Cost of living remains the big issue in 2024, a fact that has incumbent governments quaking in their boots. In Australia, wage growth has slowed to just ahead of inflation in the latest ABS data and the gap between city and country median incomes is well documented.
Already, the ACCC’s interim report into supermarket pricing published in September this year underlined the significant increases in grocery prices since 2019.
It’s the staples, such as bread and milk, that have led the price charge. In the June 2024 quarter, compared with March 2019, dairy products increased most significantly (32%), followed by bread and cereal products (28%), other food products (26%), non-alcoholic beverages (26%), meat and seafood products (20%) and fruit and vegetables (19%).
So it’s no wonder we are all considering our options, if we have them. I have never had great expectations of my local supermarket but can always get the basics. I have long given up having everything in the recipe list. You have to learn to make do.
When I first moved west in the 1990s, my father sent a box of Asian cooking ingredients to reproduce dishes we were raised on. It included decent curry pastes, bak kuh teh spices and Chinese dried mushrooms and it took a month to arrive. I found it abandoned and open on the edge of our paddock opposite the school bus stop. It was nowhere near the letter box.
I can now get most of those ingredients at a duopoly branch. For all their faults, big supermarkets have brought range and reach to the country shopper. But I will keep shopping at my smaller local supermarket – just don’t be surprised if you see me occasionally browsing in the curry paste aisle of the duopoly we love to hate. We all need to get our fix.
