Major supermarket chains regularly churn out and advertise a dazzling array of promotional packages and price discounts.
But are consumers really benefitting from this seemingly perpetual price competition between the two biggest supermarket chains - ParknShop and Wellcome - in the market?
The truth is that, in some cases, they are not what they appear to be but mere promotional sale tactics to lure customers into buying - and buying more.
The revelation was borne out in an analysis of the Consumer Council based on its daily surveillance of online prices of the two supermarket chains on 288 items over a 5-month period between October 2008 and February 2009.
(Prices of these 288 items were available and monitored throughout the entire study period).
The analysis cited, as an example, the case of the price movement of a popular brand of canned beer 330ml in a promotion.
On November 14, both supermarket chains raised the unit price of the item from $5.9 to $6.1, and again on November 15, to $6.5 bringing the increase to a total of $0.6 or 10.2% within a brief span of two days.
Having raised the price in rapid succession, later on the same day (November 15), one of the chains offered a promotional package priced at $12.3 for 2. This was matched by the other chain the following day.
It transpired that, however, the promotional unit price of $6.15 (at $12.3 for 2) was actually $0.25 ($6.15 - $5.9) or 4.2% higher than the individual selling price prior to the price escalation immediately before the promotion.
Consumers lured to the promotion had not only purchased more of the item but also paid a higher cost.
In this case, the consumers would have been better off had they made the purchase before the promotion. Or, indeed, as observed in the study, after the promotion.
Using the same example of the canned beer, it was shown that, on 19 December, both supermarket chains simultaneously adjusted the price to $6.1 each, down from the promotional package price of $12.3 for 2 ($6.15 each), thus a reduction of $0.05 after the promotion.
This similar pattern of pricing tactic was observed in some other commodities of the 288 items under study - by first raising the unit price, then offering purportedly promotional packages such as "the more you buy the more you get for free", "buy one get one free", "$1 more to get one item more" etc.
The study found a total of 79 occasions, for the 288 items in the 21 weeks covered by the study period, in which consumers could be lured into buying more and paying more - for 38 occasions compared to prices before the promotion and 41 occasions after the promotion.
It is not unusual that in order to capture their market share, businesses would take reference of the prices of their competitors in marking their own.
This would inevitably lead to the same products at different shops being priced at almost the same levels.
The analysis also examined the prevalence of this practice of "price copy" - identical price marking - for 375 items simultaneously sold by the two supermarket chains over the study period.
The study cited, as an example, the case of a 12-pack canned beer 330ml.
On October 11, both supermarket chains were observed to reduce in unison their online price of this item from $37 to $35.8. But on October 17, both raised the price to their pre-promotional level of $37. Very similar price movements between the two chains were observed for the item throughout the study period.
"Price copying" was found in a total of 55 items out of the 375 items in 10 product categories throughout the entire study period at the two chains.
It was most common (50%) in the bread/cake category - 5 out 10 items. The least common (0%) was in the household products/toilet rolls category, followed by the staple food category (6.7%) - 2 out of 30.
Overall, 14.7% of the items under study were observed to "price copy" each other. There still exist, therefore, plenty of products with price differences in the marketplace which consumers can take advantage of by price comparison to achieve savings.
Supermarkets regularly advertise large sale on Friday. Does that indicate supermarket goods are cheaper on Friday? Or vice versa?
According to the study, out of the 288 items analysed, 207 (71.9%) were, in fact, found to be most expensive on Friday (based on the average price of the same item every Friday for 21 weeks) in one major supermarket chain. The other chain, by comparison, had 158 items (54.9%).
Contrary to common belief, the study found the same 288 items had their lowest average prices mostly on Thursday - 151 items (52.4%) in one chain, and 137 items (47.6%) in the other chain.
Consumers shopping on Thursday may probably stand a better chance of price savings in these two supermarket chains.
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