Lainie Anderson Is Right On The Money

For those of you who don't know her, Lainie Anderson is an Adelaide radio host and a newspaper columnist. In fact around a year ago she did a great article on my book. She writes for the Sunday Mail newspaper. On the 8/8/10 she wrote an article on Coles.

It was a great article and we believe she was 99% correct in what she had written. We have the article below for you to read in case you missed it. We have also highlighted a sentence. But we will talk more about this at the end.

I'm sure lots of prices truly are down...but sometimes I reckon these supermarket giants think we're stupid.

Call me curious. Call me cynical even. But when I read “Down, down, prices are down” at Coles, I had my doubts. Sure, I'd seen those huge full page ads in the paper, showing a stack of vitamins and minerals alongside a list of prices that have been slashed in the past 12 months. But we Andersons are an old fashioned lot. We tend to eat food mainly, not vitamin supplements.

So I rifled through the old invoices draw and found a shopping docket from August 2009. Then I randomly chose 20 items that were needed to restock the cupboards this month.

And then I went shopping.

Guess what? The prices aren't all down at Coles. Those 20 items cost me $66.74 last year. This year they cost over seven bucks more, at $74.02. At Woolworths, where 4400 shelf prices have apparently been reduced since January, prices for the same 20 items (or Woolies' equivalent) were only slightly better at $73.06.

Seven bucks is pretty small fry, I suppose, unless you consider that we'd all generally buy at least 40 items a week (including meat which is always on the rise). Based on the Anderson seven-bucks-more-for-20-items theory, that's an extra $14 a week or $728 over a year. And that's not to be sneezed at.

At Coles, only four items cost less than last year: bananas, strawberries, Pura milk and San Remo pasta. Apples: up. Carrots: up (nearly double). Sakata crackers, Coles bread, Heinz baked beans, Viva kitchen towels, Peter's ice-cream, mushrooms, avocados and Arnott's Tim Tams: all up, up, up.

I'm not saying Coles is lying to its customers. I'm sure lots of prices truly are down - fierce price competitiveness is apparently a major reason why it's been edging back market share from Woolies this year. But perhaps it's a bit like those ultra-cheap airfares we increasingly see advertised: you need to travel on a full moon in June after sacrificing a five-legged goat.

And don't get me wrong. Despite an eagerness to support local independent operators like the Bridgewater butcher, I'm actually a supermarket junkie. Because I have a mind like a sieve, I'm there all the time - some days I have more conversations with the nice Coles check-out ladies than my own husband. I love the new unit pricing and I'm a fierce devotee of that dishy Curtis Stone and his family meals for under $10. But sometimes I reckon these supermarket giants think we're stupid.

Woolworths Fresh Market Updates on TV do nothing other than explain why we're paying so much for damn navels this month. Some ad agency is earning a small fortune for that campaign, with shoppers ultimately footing the bill for commercials that treat us like simpletons.

I resent the two-for-one or even three-for-one deals that force you to buy heaps of the same products to receive a discount. Who's got room for 75 extra cans of tomato soup?

And as far as I've said before, both Woolies and Coles could do a lot more to promote SA-made products. (Half of Foodland-branded products, by the way, are SA manufactured and all are made in Australia. Last time I wrote about buying South Australian, a stack of readers reminded me about local markets too - a great source of fresh produce where you can avoid the middleman and put your cash straight into the hands of local producers).

The bottom line is choice. We need more of it in South Australia. But before you get all excited about the imminent arrival of German discount supermarket chain Aldi, I rang them and they wouldn't comment on a move to South Australia. At this stage, at least, they're focusing operations on the eastern states. Which means shoppers like me must try to be a little less focused on convenience, a lot less duped by constant claims of cheaper prices and more generous with my time and money in smaller independent stores.

If we all spent just a quarter of our weekly shopping budgets outside Coles and Woolies, maybe they would really bring their prices down, down.

Adam's Opinion: Now as you can see, it was a very good article. The reason why I do not agree 100% with this article is the one line "Seven bucks is pretty small fry". Yes your shopping only went up $7 dollars, but if we look at it in terms of percentages it went up 10.90%.

This is a HUGE percentage increase. In fact, Warren Buffet the world's 2nd richest person does nothing but invest in stocks. Since 1962 his investments have gone up 19% each year on average. So your shopping has gone up over half what the world's 2nd richest man has achieved on average each year since 1962.

Just to give you some quick figures...

* The average Australian wage rise per year is around 3 to 4 %

* At 10.90% your shopping bill will double every 6 and a half years.

If you had a yearly wage of $40,000 after tax in 2010, and you spent $5000 of your wage at the supermarket each year. You would spend a total of 12.5% of your total wage on groceries.

Each year your boss rewards you for your hard work with a 4% pay rise after tax. However, each year your supermarket costs go up 10.9%. In 30 years time you will be earning $124,746 after tax. However, your supermarket costs would be $111,406 after tax. This is now 89.33% of your total take home pay.

We need to get people to start thinking about things in terms of percentages rather than dollars. Because on the surface a $7 increase is tiny. However a 10.90% jump in prices is huge. And if you are stuck on a fixed income (e.g. only going up 3 or 4%) you have tough times ahead.

How can this information help you? Understand your costs. Everything from council rates, insurance, electricity and food. If prices each year are moving up faster than your wage, sooner or later you will have a problem.

However if you monitor these price rises then you can complain to these companies. Or you could switch suppliers. Let them know by changing where you do your business that their price increases are not welcome.