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Supermarket capitalism

Written By: - Date published: 11:45 am, July 7th, 2010 - 71 comments
Categories: capitalism, farming, food - Tags: , , ,

No one really believes in pure capitalism, least of all capitalists, bankers and the like, who run screaming to the state to bail them out when things go wrong. “Privatise the profits, socialise the losses” – it was ever thus. Pure capitalism eats everything around it, and when nothing is left it eats itself. To work for people instead of against them, what is good about capitalism (and in my opinion there is a lot of good) needs to be harnessed and regulated.

We’ve seen a classic case of all of the above coming out in the media lately. The most recent article was just yesterday (my emphasis):

In theory, the power that this country’s two major supermarket chains wield over their suppliers should benefit shoppers. The low prices they pay for produce should be reflected at the check-out counter.

But, according to a Green Party survey of fruit and vegetable growers, that is not happening. The survey found supermarkets applied mark-ups of up to 500 per cent on fresh produce.

To compound matters, growers were often forced to sell the produce for less than it cost them to grow it. That has implications for the quality and range of produce on supermarket shelves.

It needs to be said that the Greens’ survey was of just 75 growers. That is hardly comprehensive. But its conclusions bear a close relation to the situation in Britain, which has bedevilled that country’s competition watchdogs for the past decade

Yes, in theory a completely free market should be a great system. In practice, not so much. Monopolies form. As in this case they can use their power to gouge both producers and consumers, and cream off huge profits. Laws to control monopolies are common, and just one of the forms of regulation that is needed to make capitalism work. In the mean time, support your local farmers’ market, and support the Green’s call for a supermarket code of conduct.

71 comments on “Supermarket capitalism”

  1. Richard 1

    Certainly supermarkets price gouging can be a problem, but there is a bit of lack of clarity in the recent media stories about what is being talked about.

    Sure, a supermarket might charge consumers a great deal more than the price that they buy produce from farmers. But the supermarket has to meet storage, transportation, and retail costs, so they might not be necessarily making a lot of profit.

    If the supermarkets are making significantly more profit per kg than the farmers, then that is a problem.

    But if the supermarkets are merely charging a lot more than farmers because of the other costs of the supermarket, then that just reflects the fact that having access to a distribution system that collects food from hundreds or even thousands of km away and supplies food to consumers out-of-season costs a lot of money. This second case is still possibly a problem, but it is the consumers who want a secure supply of a wide variety of non-seasonal food that is driving the second problem rather than the supermarkets.

    The recent stories are a bit unclear which of this situations are being discussed. In reality there is probably a mix of these two cases going on.

    • Draco T Bastard 1.1

      Well, according to the suppliers, they’re the ones that are covering the transport costs.

      • Richard 1.1.1

        Some suppliers might have their own transportation costs, say to the distribution center. But if the supermarket is shifting stuff around between supermarkets and distribution centers, it seems likely that the supermarket will be carrying that cost.

        Storage and retail costs are borne by the supermarket.

  2. tsmithfield 2

    Also there is the issue of wastage. Fruit and veges only stay fresh for so long, so there must be a reasonable amount of unsold product that is dumped. Supermarkets have to cover this within their margin. Whereas the growers would get paid for all they sell to the supermarkets.

  3. Draco T Bastard 3

    The gouging of the supermarket duopoly is another example of where the state needs to step in but through regulation. The supermarkets themselves need to become state owned. With them being state owned they can then operate at cost and so remove the deadweight loss of profit from that aspect, pass on the prices (minus cost) to the suppliers so that they are more adequately rewarded for their work while also being able to bring prices down.

    A privately held duopoly isn’t any better than a privately held monopoly but that is what we have. Supermarkets are, in the same way that the corner dairy is, a natural monopoly. It’s not that there can’t be competition within a specific geographic area but that it’s massively inefficient and expensive to do so. Any actual competition will result in either a price war which will result in the collapse of one of the supermarkets or, more likely, a cartel between them that will push prices up (partly due to the inefficiency that is systemic to competition and partly due to increased profits).

    • uke 3.1

      Partly the problem is so many people automatically rely on the supermarket option.

      Fruit-vege prices tend to be cheaper from the green grocer…
      And cheaper again from a farmers market…
      And cheaper again if you grow them yourself.

    • tsmithfield 3.2

      Draco, there is a fatal flaw in your argument that the state should own everything so it doesn’t have to return an evil profit. That is, that under a privately run system, even though the state doesn’t have to show a profit, the state can definitely incur a loss. Under a private system the state is shielded from that potential loss, that can be considerable.

      You also need to think in terms of gross profit and net profit. The state would still have to return a gross profit so that its running costs could be covered. It might not have to show a net profit. However, the actual net profit for a company is often very small (say 10-15%). This small extra amount in profit generated by private enterprise is more than offset by efficiency that arises due to competition.

      In the case of supermarkets for instance, a single state monopoly supermarket is likely to be a lot less efficient than a competitive market because there is no motivating drivers to improve efficiency in a monopolistic model. Hell thats why close attention is paid to mergers etc to ensure that competition is not adversely impacted. Plus there is the added advantage under a private model that the state is shielded from incurring losses as I pointed out above.

      • Lanthanide 3.2.1

        100% agree, ts.

        Draco likes to harp on about the state owning everything and “dead-weight profit” but unfortunately while his ideas sound nice in theory, they flat-out fail in the real world (hence why no countries actually have national supermarket chains).

      • Draco T Bastard 3.2.2

        1.) I didn’t say that everything should be state owned.
        2.) Competition is inherently more expensive. Which is cheaper -1 large building or 2? Competition brings about massive amounts of duplication.
        3.) State monopolies operate no less efficiently than competitive industry and, in this case, are more likely to be more efficient because it doesn’t have the deadweight loss of profit and doesn’t have the massive duplication of services. Competition doesn’t magically make things better as you seem to believe.
        4.) I specifically said that the costs would be covered by the prices so WTF are you going on about net profit and gross profit? It really sounds to me like you’re trying to make it sound like “profit” has two meanings rather than the 1 that it does have which essentially boils down to what’s left after expenses are taken out of the income.

        In the case of supermarkets for instance, a single state monopoly supermarket is likely to be a lot less efficient than a competitive market because there is no motivating drivers to improve efficiency in a monopolistic model.

        Of course there are – they’re called KPIs. In other words, well rewarding the people who work there for their effort rather than well rewarding people who aren’t there doing the work and really couldn’t care less – the people otherwise known as capitalists.

        • SHG 3.2.2.1

          Yeah, I don’t recall it being compulsory to buy fruit and veges from a supermarket.

        • tsmithfield 3.2.2.2

          “1.) I didn’t say that everything should be state owned”

          If you’re getting down to the level where even supermarkets are state owned that is pretty much what you’re saying.

          “2.) Competition is inherently more expensive. Which is cheaper -1 large building or 2? Competition brings about massive amounts of duplication.”

          So, I guess your one warehouse rather than many would mean that people would have to travel a lot further to do their shopping increasing their travel costs and greenhouse gas emissions to boot. Good for the organisation. Bad for the consumer and the environment. Duplication is not always such a bad idea. Plus all that “duplication” as you call it, means more jobs and more tax collected for the government.

          “3.) State monopolies operate no less efficiently than competitive industry and, in this case, are more likely to be more efficient because it doesn’t have the deadweight loss of profit and doesn’t have the massive duplication of services. Competition doesn’t magically make things better as you seem to believe.”

          Nah. You’re dead wrong on that one. Under your model, as you have said yourself, the state owned supermarket would simply set its price at what ever it needed to in order to cover its costs. There is no motive whatsoever to drive down costs. Under the private system organisations have to drive down their costs in order to sell at a profit. Look at Pak and Save as an example. They were able to drive down costs by allowing customers to do their own packing. This reduced both costs for Pak and Save and resulted in cheaper groceries for consumers.

          Also, theres the matter of choice. Under a competitive model consumers get a lot more choice about where and when they shop, and what they buy. Its not all just about price.

          Also, the government does quite well out of that evil profit you hate so much. They get approx 30% of it at no risk whatsoever. Also, they pick up PAYE on all the wages of the employees.

          Finally, as I said before, there is an inherent risk being involved in business. There is a considerable risk of losing money as well as making money. As it stands, the government makes 30% on other peoples profits without taking any risk whatsoever. That sounds like pretty good business to me.

          • Pascal's bookie 3.2.2.2.1

            Paknsave does lots of things to look cheap. Many of these things cost a lot of money. I know one instance where they bought a large well fitted out warehouse to set up shop in. They spent a huge amount of money making it look all natty, scuffing up and staining the nicely polished concrete floors, removing some of the interior wall cladding that looked too expensive and so on.

            They spend a huge amount of effort in making the experience as no frills as possible.

            • Lanthanide 3.2.2.2.1.1

              “They spend a huge amount of effort in making the experience as no frills as possible.”

              Probably because they also own New World, so they can channel customers that don’t like Pak’n’Sav into New World and get more $$ out of them. In the long run they’d earn more money this way.

              I shop at Countdown. Although Pak’n’Sav is cheaper (not by a whole lot, for what I buy), they also tend to have longer queues, considerably worse store layouts, rude customers and worse selection. Countdown also has “weekend windbacks” and onecard sales that last for 4 weeks (so you don’t have to worry about missing out if you go on the wrong day) that are often very good in terms of savings, although I have found that recently the savings from these sales hasn’t been quite as good.

            • tsmithfield 3.2.2.2.1.2

              LOL

          • Draco T Bastard 3.2.2.2.2

            Yeah, I don’t recall it being compulsory to buy fruit and veges from a supermarket.

            I didn’t say it was did I?

            If you’re getting down to the level where even supermarkets are state owned that is pretty much what you’re saying.

            Nope, only where having a monopoly is more efficient and less costly than having competition supermarkets being one of those areas. I certainly haven’t called for the removal of corner dairies or fruit and vege shops.

            So, I guess your one warehouse rather than many would mean that people would have to travel a lot further to do their shopping increasing their travel costs and greenhouse gas emissions to boot.

            As you really are that stupid I’ll clarify for you. It’s more efficient to have one large building per geographic/population centre. I’m certainly not calling to have one building that services all of NZ.

            Under the private system organisations have to drive down their costs in order to sell at a profit.

            Competition cannot drive down costs. This is the major delusion that neo-liberals have propagated for the last few decades. The only thing that competition can drive down is profits. Increased productivity can drive down costs but that’s not a natural result of competition in something that is probably about as productive as it’s going to get.

            Also, theres the matter of choice. Under a competitive model consumers get a lot more choice about where and when they shop, and what they buy. Its not all just about price.

            The products are the same, prices are comparable and they’re open 24/7. What choice?

            Also, the government does quite well out of that evil profit you hate so much. They get approx 30% of it at no risk whatsoever. Also, they pick up PAYE on all the wages of the employees.

            They would still get the 30% from GST, PAYE and what the producers pay in taxes at no risk whatsoever. Why wouldn’t they? The only difference would be that the parasite “investors” wouldn’t get any of it.

            Finally, as I said before, there is an inherent risk being involved in business.

            Supermarkets are a business that aren’t going anywhere simply because they are very efficient at what they do, ergo, no risk.

            • SHG 3.2.2.2.2.1

              I didn’t say it was did I?

              Um… no you didn’t. I was replying to uke, above. No idea why it got posted as a reply to you 🙂

            • tsmithfield 3.2.2.2.2.2

              “As you really are that stupid I’ll clarify for you. It’s more efficient to have one large building per geographic/population centre. I’m certainly not calling to have one building that services all of NZ.”

              Give me some credit. I never said one warehouse for all NZ. However, you have proved my point by what you have said above. Under what you propose there will be less supermarkets therefore a lot of people will have to travel further costing them more in travel costs- like I said.

              “Competition cannot drive down costs. This is the major delusion that neo-liberals have propagated for the last few decades. The only thing that competition can drive down is profits. Increased productivity can drive down costs but that’s not a natural result of competition in something that is probably about as productive as it’s going to get.”

              Well, that should make you happy. Competition getting rid of some of that evil profit you despise so much. Competition provides the motivation for firms to become more productive and thus drive down their costs. Without competition there is absolutely no point in becoming more productive. All that is required under your model is to charge a price high enough to cover costs, whatever they may be. Why try and drive down costs if you can simply charge whatever it costs now? This has got to be bad for consumers.

              Also, another point you have missed is that not all costs can be known in advance for setting prices. There are always unexpected costs that occur in a business. Therefore your state owned supermarket would have to charge something above cost as a contingency to cover those unexpected costs that might arise. But wait, thats starting to sound suspiciously like that evil profit word again.

              “The products are the same, prices are comparable and they’re open 24/7. What choice?”

              There are different levels of service. Some supermarkets might hold a larger range of products. Some people might prefer the atmosphere in one supermarket compared to another. Even in a humble supermarket there is lots of room for diversification.

              “They would still get the 30% from GST, PAYE and what the producers pay in taxes at no risk whatsoever. Why wouldn’t they? The only difference would be that the parasite “investors’ wouldn’t get any of it.”

              That would be the “parasites” who put up the money and take the risks, wouldn’t it?

  4. Bill 4

    Revealing that the call is to support the ‘local farmer’s market’ rather than, or as well as the local green grocer.

    I’d have thought the local green grocer was a far greener, if less trendy option.

    Also noticed that none of the coverage touches on the waste that has to be factored into fresh produce pricing, or questions the origins of our highly inefficient industrial farming, or how feasible it is (or isn’t) for growers to opt out of the mono-culture industrial ‘economy of scale’ model.

    And how many of the growers are hurting because their bigger competitors are happy to shift high volume on low turn over as a way of capturing the supply side of the market?

    • Carol 4.1

      I was thinking that the local greengrocer is the best option. A TV item I watched (Campbell Live I think) showed that the fruit and veg shop was mostly cheaper than the supermarkets for the same items. However, I wondered if the fruit and veg shops still suffered from the power of supermarkets in some way, so that the prices at the fruit and veg shops are also higher than they need to be?

      But, I get most of my fruit and veg from the fruit and veg shops. I will try to avoid buying any at all from supermarkets now. It seems to me that’s how consumers could help force a change.

      • Bill 4.1.1

        Fruit and veg and flowers used to be bought and traded by people who had built up good personal networks. They would go to the market in the early morning and use their contacts to secure genuinely good deals which they’d use to entice customers…customers who they knew by name.

        Then came the supermarkets….psst, you want heroin? I got some heroin you should try. It’s free to you today. Don’t worry about tomorrow, I’ll look after you….. and growers locked themselves into supplying them rather than the local market of buyers and sellers with their attendant networks.

        • uke 4.1.1.1

          “Fruit and veg and flowers used to be bought and traded by people who had built up good personal networks. They would go to the market in the early morning and use their contacts to secure genuinely good deals which they’d use to entice customers customers who they knew by name.”

          But why do people in small NZ towns go to the new Warehouse and let the local retail shops die?

          Maybe it’s a just way of life that doesn’t appeal to modern clever people. Maybe they prefer a standardised shopping experience because they’re all standardised people.

          • Richard 4.1.1.1.1

            Yes.

            We get the government that we vote for.

            And we get the “consumer experience” that we pay for.

          • Draco T Bastard 4.1.1.1.2

            Or maybe they just don’t have time any more to build up those personal networks any more.

            • Richard 4.1.1.1.2.1

              Time is money.

              If people don’t put time/money into building a local community and instead put their time/money into a big-box retailer, then they shouldn’t be surprised if the local community disappears and is supplanted by big box retailers.

              • felix

                Yep, it takes time and effort.

                Not much of either to spare though when you’re saving up for that new 3DTV and a set of monster tyres for the SUV and the kids need new high heels and fishnets and my phone is nearly a year old and as long as I’m paying this SKY bill I’d better watch the game and if I don’t get back to work I’ll never afford that boat to do the fishing that I never have time for anyway.

                y’know?

  5. Carol 5

    From the stuff I heard and saw on the issue, I got the impression that some of the reports had not accounted for all the costs in getting the produce from the producer to the supermarket shelves. However, there still seems to be a problem with over-pricing.

    One of the issues I picked up was the ways pricing is managed, with specials etc. So they lower prices on a product to get buyers’ interest. But it also means they lower the price on some product types, and keep it higher on others.

    Reading between the lines, it seems to me that prices are lowered on luxury or discretionary items (eg alcohol), while they are kept quite high on neccessities, like much of fresh fruit and veg. I can see a logic to this in terms of maximising profits. But, as with most of the initiatives to increase profits as much as possible, the poorer sections of society get the most negative affects.

  6. Lanthanide 6

    If this truly is a huge scam that no one has noticed until now, how come farmers markets and local grocers aren’t significantly cheaper than regular supermarkets? Surely if supermarkets were marking up by 500%, the other stores could mark up by only 200-300% and still make a killing.

    While these markets are cheaper, they’re not *heaps* cheaper, so like Richard above, I suspect that spurious conclusions are being drawn from the data.

    Also I’d add that, much like electricity and oil production (indeed, any commodity on a market) it is the marginal cost of goods that sets the market price. So while the markup might be 500% compared to what some growers are selling at, it might only be a 75% markup on the last few tonnes to meet the market requirements.

    • felix 6.1

      Around my way buying directly from producers is easily half the price of the supermarket for most veges.

      I suppose it depends on your location to an extent – the nearer you live to the growers, the lower the cost of getting it to you.

      • Lanthanide 6.1.1

        Yes, my experience is only with “Growers Direct” market in Upper Riccarton and also going to the Riccarton raceway market on Saturdays and Riccarton Bush market on a Sunday once. Generally the prices at the weekend markets were only slightly lower than those in the supermarket (so I didn’t actually buy much at all) and quality was the same or worse. The difference is that all of the $ goes straight to the producer, which is nice, but doesn’t really help me personally.

  7. wyndham 7

    It is no coincidence that the fresh produce section of all the supermarkets is always the first to be encountered by the customer.

    It’s contents carry the highest profit margins and are first in line for the customers spending.

    • Lanthanide 7.1

      Actually according to an interview on national radio a week or two ago, the fresh produce is one of the lowest profit areas because it requires huge amounts of labour to put the new stock out and keep things tidy and clean. Also I’d assume there’s a lot more hassle involved in the backend supply chain of things (refrigerated trucks etc).

      The high profit area is the cosmetics and general health and beauty products (shampoo, toothpaste, shaving foam etc), because they have high $ prices, the companies that sell them will pay the supermarkets for more prominent shelf space, the companies that sell them actively market them on television and radio and most of all they do not expire. None of that is true for fresh produce.

      • Carol 7.1.1

        Desn’t the fact the cosmetics, health and beauty products need so much spent on marketing and promotion, suggest that it’s not that easy to make a large profit from them?

        • Lanthanide 7.1.1.1

          The advertising is to create demand by convincing people they need to buy things that they really don’t actually need. Hair colouring is a perfect example.

          There was a nice blog about this on stuff recently, Jane Yee discovered that, shock horror, not everyone showers every day! The only reasons people shower every day is because it’s more convenient now than it ever has been in history, and there has been an expectation created in society that you need to shower every day to keep clean. Which is rubbish. This has been driven by the companies that want to sell you personal hygiene products, so the more you clean yourself the more you use.

          Also see GlaxoSmithKline, Proctor & Gamble and Unilever to see how “hard” it is to make a profit off this industry.

        • Richard 7.1.1.2

          No. It suggests that an enormous profit is being made from them.

    • Richard 7.2

      …[fresh produce] carry the highest profit margins and are first in line for the customers spending.

      I don’t think that can be true in general.

      There wouldn’t be an international food industry worth billions of dollars a year making all those processed foods if it was more profitable to sell fresh produce.

      A supermarket wouldn’t push things like, say, pineapple lumps if it was more profitable to be selling pineapples.

      We wouldn’t have (such) a problem with obesity if “healthy” options like fresh produce were the most profitable product for the supermarkets.

    • SHG 7.3

      @wyndham: It is no coincidence that the fresh produce section of all the supermarkets is always the first to be encountered by the customer.

      If it’s something that the supermarket knows you need, it will be as far away from the the front door as possible. This is to prevent customers from walking in, buying one thing, and walking out. Things like bread and milk are often placed right down the back, and things like toothpaste and soap are in the last aisle. It’s to make you walk past hundreds of metres of advertising (the other shelves) on the way to the thing you actually need.

      Produce is actually a low-margin item because it costs the supermarket a lot to maintain (refrigeration, replacement due to spoilage, labour) – the things that supermarkets make lots of money on are essentials in sealed easily-stacked boxes.

    • The Voice of Reason 7.4

      It’s also about the look and smell of produce. The layout and stocking of stores is very much a science aimed at influencing your spend. Bright, nice smelling stock just as you enter the store puts you in a good mood for buying. And buying ‘good’ food early in the process allows consumers to justify buying ‘bad’ food later. This explains why I have lots of bananas going brown in the fruit bowl and plenty of chocolate wrappers and empty beer cans in the rubbish bin.

      • felix 7.4.1

        Top Tip: Start at the checkout and follow the normal route backwards ending up at the fruit and veg, hence outsmarting all the cunning scientific placement of goods.

  8. kriswgtn 8

    i spent $30 last sat @ lower hutt market

    I was in NW supermarket today @ lunch and i would have spent easily double that amount and got less

    Its a shame and the thing is ..it is not just veges and fruit that suffer from this markup

    I am lucky enough to get home kill from one of my uncles $40-all cut up

    It would cost me $150+ if i bought the same amount in a supermarket

    Crooks nothing more nothing less

    • Lanthanide 8.1

      You just have to buy meat when it is on special and freeze it. 95% of my evening meals contain meat of some sort. I only ever buy it when it is $10/kg or less. I recently bought $30.50 worth of chicken breasts (with skin on, which I threw out/gave to the cat) that will make 10 meals for 2 people – $3 a meal.

  9. MikeE 9

    The very fact that you *can* support your local farmers market, if you so choose (and don’t value the convenience of being able to buy say, a electric frying pan, 6 pack of beer and extra absorbant tampons at the same time) that proves this isn’t really an issue at all.

    If you don’t want to pay 500% mark up, shop somewhere else. Simple really. No market failure here at all.

    Put your money where your mouth is and vote with your wallet, rather than expecting your MP’s to regulate the **** out of the local supermarket.

    • Lanthanide 9.1

      In my case, I generally do my shopping on the evenings in weekends and occasionally during the week. Farmers markets simply aren’t open at those times, so for me it is a matter of convenience. I also earn enough that paying an extra $5-10 (if that) per week for the convenience is worth it to me.

    • burt 9.2

      MikeE

      Too much to ask of these people I’m afraid. Hell next thing you know they will be calling for condom vending machines to be ripped out of bar toilets becasue the unit cost is 15x the cost you can get them from family planning. The mindset of these people astounds me.

    • felix 9.3

      MikeE, I tend to agree.

      It’s a bit like complaining about the Warehouse – no one’s forcing you to shop there, it’s just that convenience (in the case of veges at the supie) and price (in the case of all the crap at the warewhare) are huge factors in decision making, apparently outstripping quality a lot of the time for a lot of people.

      Still a good discussion to have though, if for no other reason than to encourage more conscious thought in our decision making processes rather than just blindly trundling around the same shop because we’re used to doing so.

    • Which part of duopoly don’t you get?

      • Lanthanide 9.4.1

        The part where you’re forced to shop at this duopoly? Yes most supermarkets are owned by one of two companies, but that doesn’t stop you from shopping at the butchers or farmers market or local dairy etc.

  10. burt 10

    Just don’t shop at the supermarkets….. It’s not compulsory and you do have other choices. You can grow your own veg, trade with other growers and shop at farmers markets.

    Oh I forgot, we all want the benefits of capitalism and choice but we want it to be run like a collective managed only in our best interests with zero waste and no profit for anyone involved….

    What babies… I want it all and I want it profit free cause it’s not fair someone makes money via providing convienance and choice.

    • Carol 10.1

      Ummm, Burt, some of us have been saying we don’t buy much fruit and veg from supermarkets. But we have also been asking about how much they dominate the pricing in other outlets.

      • burt 10.1.1

        Then the other outlets are the ones to bring that up with. If they are inflating their prices because they can then they are just as bad as the supermarket. IE: Don’t shop at these other places either – you are not forced to shop anywhere in particular. This isn’t like health and education where the standard is whatever they want it to be and you just need to pay for it and shut up and be grateful you have anything.

        • Carol 10.1.1.1

          So far I’ve just asked the question. But I have to buy my fruit and veg from somewhere. And driving out to a farmers market would probably defeat the purpose in costs.

          But, at the moment, many of us are asking questions. And it seems many produce growers are saying they are being squeezed unfairly by the supermarkets. So this sounds like something that needs investigation and discussion. Calling people names because they are asking questions and discussing it, really isn’t that helpful.

        • burt 10.1.1.2

          Carol

          Sure ask the questions, but face the reality – we can’t have a free market system and tout our country on the world stage as being one of the most free and easy places to set up a business and use communist Muldoon style price controls at the same time.

          Sure we can beat the supermarkets into submission using regulation, but if we do that don’t complain when they either shut up shop or reduce the stock levels to a point that you need to be in the first few hundred shoppers that day to get the stuff you want.

          Communist countries tried this retail regulation malarkey over and over again so if you want that sort of BS here then get ready to queue for toilet paper and bread. Sure it will be cheaper than you can buy it now but think about the waiting time and lost earnings as you bask in the joy of seeing your ideology enacted via regulation.

          • Lanthanide 10.1.1.2.1

            “and tout our country on the world stage as being one of the most free and easy places to set up a business”

            And yet right-ringers like to go on about the “miles of red-tape”, “regulations”, “bureaucrats” and “taxes” that just make it so bloody impossible to run a business here that we must slash them all in a big bonfire.

          • burt 10.1.1.2.2

            See we can’t have it both ways…..

        • Puddleglum 10.1.1.3

          Ever heard of the so-called law of supply and demand? It’s meant to be part of the explanation for why the price of a good or service increases. Well, that law is simply a process of a supplier “inflating their prices because they can”, which you quite rightly see as ‘bad’.

          More plainly, it’s an enactment of greed (sometimes euphemistically termed self-interest). Costs for the supplier haven’t increased, only the demand has. So, why does the price go up if costs haven’t?

          I know the usual answer, by the way – Smith’s magic of price signals, equilibrium processes, and all that, so that more people get more of what they want (allocating resources efficiently, blah, blah, blah). Leading question: do you think giving people more of what they want (and hence are willing to pay more for) is a ‘good’? If so, why?

  11. burt 11

    rOb

    I’ve taken the liberty of rewording slightly something you said;

    what is good about capitalism the free market system (and in my opinion there is a lot of good) needs to be harnessed and regulated.

    It’s not making much sense like that is it.

    • Carol 11.1

      Of course it doesn’t make much sense because there are different versions of capitalism, the free-market one being only one. There are regulated versions of capitalism, welfare capitalism, etc.

    • Draco T Bastard 11.2

      burt, capitalism != free market system
      In fact, capitalists, through the power of the state, do their best to restrict the market so as to prevent the majority of people becoming financially independent.

  12. tc 12

    Yet another poor decision from Rebstock’s commerce commission has created this duopoly with Foodstuffs and progressive gouging the punter…….still it was consistently bad like other decisions that allowed Sky to buy prime, Fletcher to further consolidate their building products presence etc etc.

    We may have had the likes of Alti or Sainsburys entering a competitive market but not a duopoly.

  13. randal 13

    whats worse is the fact that they uniformly put all vegetables in the cooler/chiller whether they need it or not.
    when this happens to spuds or carrots they go off in vey short order after they have been put on the shelf.
    is this done intentionally?

    • Richard 13.1

      …is this done intentionally?

      No.

      When supermarkets mishandle (any) products (which certainly does happen) it is due to ignorance and cock-ups, rather than deliberate mishandling. Mishandled products reduce profitability.

      You are certainly right that some food products tend to undergo senescence quicker when they are removed from a chilled environment, than if they hadn’t been chilled in the first place. I don’t know if that is true of carrots and spuds, but it might be. However, the products last longer in total from farm to table if you chill them. So, while a chilled product is sometimes not as good as a un-chilled product, the consumer is able to purchase the chilled product many months out-of-season. If that’s what the consumer wants to do, that’s the cost. It’s an unavoidable fact of the product’s physiology. It’s not a conspiracy by the supermarkets.

    • Lanthanide 13.2

      I’ve never seen that at any supermarkets I go to.

      • Richard 13.2.1

        I think randal means in the cool-stores out back and in the distribution centers.

        You wouldn’t see such chillers, as a consumer.

  14. Ron 14

    To my way of thinking the mark up wouldn’t be an issue if the supermarket chains weren’t screwing growers.

    Growers DO in fact pay the lion’s share of transport, crating etc.. They also bear all the costs of production, of course. The supermarkets use their power to screw farmers right down on price, driving many out of business. As well as this they are working with th likes of MG Marketing (who SHOULD be representing growers in this process but in fact mostly just take orders from the supermarkets) to get control of production as well. So MG are buying up producers (effectively putting themselves in competition with the growers they’re supposed to represent).

    Any grower will tell you stories such as supermarkets deciding they’re going to have a sale on a product just when the season is demanding the best prices for growers; making orders and at the last mninute changing their minds; shipping food all over the country to distribution centres only to ship it back to the area it was grown in.

    Couldn’t agree more – DO NOT BUY FRUIT AND VEG FROM SUPERMARKETS. Get it at the gate; buy from local small retailers; grow your own; only buy in season. Consumer power will break this hold only if consumers use their power.

  15. burt 15

    rOb

    What did you think of the wage and price freeze and maximum retail pricing that Muldoon implemented?

    • Burt, do you think a price freeze is completely analogous to a code of conduct?

    • burt 15.2

      No, but I want to know what rOb thinks about intervention in retail pricing and the merits of past attempts in the context of his apparent support for it today.

  16. big bruv 16

    Yeah..support the farmers market, watch supermarket income drop, moan about how the “gummint” is not doing anything as supermarket workers are laid off.

    Sometimes you lefties are really, really stupid.

    Or….perhaps you actually don’t care about the so called poor?

    • kaplan 16.1

      That comment really exposes the one dimensional nature of the right wing thought process.
      Well done that man.

  17. Ron 17

    Because, Burt, “the so called poor’s” only choice is to work or buy from supermarkets? The “poor” aren’t capable of walking to their corner fruit and veg shop instead of driving to the supermarket? The “poor” wouldn’t know how to use a spade?

    • burt 17.1

      Nanny will teach them… Oh no cancel that, Nanny would rather they voted for continued intervention and more welfare rather than teach them to be independent.

  18. burt 18

    Somebody needs to get in Jolly Jim’s ear. We need a peoples food store. Tax payer money could be used to establish a nationwide food retailer that competes with the big boys. We could have millions and millions poured into it every year and we could have lots of TV advertising telling us how lucky we are to own a supermarket chain.

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