Pricing tricks used by grocers
Supermarkets choose various ways to make their ‘household basket’ look the most competitive
Week after week, supermarket chains are competing to become the retailer with the most improved “household basket,” by employing tricks such as increasing private label products, replacing large packages with smaller and therefore cheaper ones, and with price reductions that in many cases are limited to just 1 cent.
Consequently, a closer examination of each chain’s data for its basket shows that the decrease in the total value of the basket is rarely thanks to a decrease in the price of the same codes; more often it is the result of replacing a branded product with a similar private-label product or changing a larger quantity code to a smaller quantity code: For example, while last week a chain had spaghetti in its basket in a one-kilo package, it has now replaced it with a half-kilo package.
This strategy, of course, is also connected to the fact that the suppliers of branded products are not very willing to participate in the basket and prefer instead to continue the offers through the agreements for promotional actions they have already arranged with organized food retail chains.
The example of the Mymarket chain is typical: While in the first two weeks was the one with the lowest percentage of private-label products in the basket (10 out of 52), it decided on Wednesday to double the number of private-label products, increasing them to 20 out of 52.
The Masoutis chain also increased the percentage of private-label products in its basket. Therefore, in the list announced on Wednesday, the relevant percentage was 39.80%.
According to what the Development Ministry announced, out of the total of 816 products in the household basket that are completely comparable, in 186 (22%) the price decreased, in 555 (69%) the price remained stable, and only in 75 (9%) the price increased slightly in most cases. It should be noted, however, that in several cases the price reductions were only a single cent. In one very large chain, this phenomenon was observed in five products.
