Make way for GroceryChoice

The ACCC’s GroceryChoice website is up. Comparisons with FuelWatch will abound. But where FuelWatch provides price information for each and every petrol station, GroceryChoice doesn’t do that. You put in your postcode and it recognises your broad regional location (eg., Inner Melbourne East). Then it tells you for various baskets of grocery categories (e.g., meat & seafood, personal care, etc) what the ACCC’s selected sample of goods costs at Coles/Bi-Lo, Woolworths/Safeway and the rest. And the price is not today’s price but likely two weeks ago as the survey is only done monthly and published the next month. 

So what don’t you know. First, you don’t know whether the store you are shopping at is cheapest right now. Second, you don’t know whether the store you were shopping at was actually cheapest at the time of the survey as there may be many outlets of that particular chain in a region and for independents, so who can tell what is going on there. Aldi comes up only in basic staples so they do get the opportunity to distinguish themselves. And according to the ACCC’s own study, it is local competition that is important. Third, you don’t know whether the basket of commodities reflects what you actually purchase. Near as I can tell, none of the categories are ‘brand free’ and so there doesn’t seem to be anything that reflects a stock standard product.

Regular readers know that I am broadly in favour of the government coming in and providing more information to consumers. However, in this case, it is broadly useless. At best, it can help a chain build a reputation for low prices. Over the course of time as data builds up (and assuming the site collects the time series), it will be a good marketing tool for the two major chains (and Aldi) to use against the independents who, absent coordination, have muted incentives to lower price as a result of this (as their work is lumped in with others in their region and so pointing out they have a high price isn’t enough). So it will enhance their reputation at the expense of others and may provide some lower prices although as the ACCC has already found, competition is workably competitive anyway. There is a risk, therefore, that independents could find it tougher to compete as a result of this. At the very least, the government should consider breaking it down further to give each independent well, an independent voice in the market.

What is a shame about all this is that there was a simpler alternative. Each week the major chains and other stores put out catalogues of their products and prices. So all you had to do is take those, enter in a basket of the common products (that catalogues have hundreds) and put that information into the website. That would tell you which store was pricing at which level. It would decouple the independents and it would allow better price comparisons. Put simply, it would take existing information and put it in the hands of consumers in a easy to use way. GroceryChoice is mere cosmetics with respect to this.

What is more is that there is no mention of GroceryChoice in the whole ACCC Grocery Inquiry. So unlike FuelWatch there is no econometric analysis, international comparisons or whathaveyou. Now it was a Government election promise but even so, if you expected it to have a big competitive effect, surely it should be discussed as a significant market development. But it is conspicous by its absence. Given the 600 odd pages of that Inquiry, we have a right to know why it isn’t featured.

Finally, and following up on my comment yesterday, if you think you can make use of the data and package it in a more informative way than the ACCC, read the fine print:

You may not alter, reproduce, re-transmit, distribute, display or commercialise the material in any way without written permission from the Director ACCC Publishing.

And they caution that there may be fees. I wonder how easy it will be to get that permission.