The new TikTok challenge waging war on the major supermarkets’ pricing

Independent Queensland grocer Skippys Fresh Frootz has garnered attention on social media for its videos highlighting its low prices at a time when Australia’s major supermarkets are facing scrutiny for their lack of transparency in their price-setting practices.Elijah Etri, Skippy’s Fresh Frootz manager at Victoria Point, Queensland, has started a new TikTok challenge, encouraging viewers to head into their local supermarket and check the prices of comparable produce and products.Etri emphasised that Skippy’s intention and business strategy is to move volume, so it passes on savings from suppliers and doesn’t use large markups to drive profit.Earlier this week, Etri told A Current Affair, “If you start shopping local at places like this that are offering prices that benefit the consumer, then you are going to see more businesses open that are doing the same thing.“You’re going to see that the big companies are going to have to fight against it and lower their prices,” he explained.In one of his videos, Etri pointed to bananas that Skippy’s was selling for 49 cents per kilo, while supermarkets at the time were charging between $2 and $4 per kilo. He added that avocados were priced at 49 cents each, and lemons and limes were just 5 cents each at Skippy’s, a far cry from comparable products at supermarkets, Etri alleged.The videos are taking off at the same time as the reputation of Australia’s major supermarkets, Coles and Woolworths, is suffering.Roy Morgan’s latest Most Trusted Brands list, saw both of Australia’s major supermarkets fall in the rankings. Coles fell two spots to number five, which allowed German supermarket giant Aldi to take third place as Woolworths was dethroned from the number one spot it had held since 2020. Bunnings is now back in first place.Food for thoughtWhether supermarkets or suppliers are to be blamed for higher food prices at the checkout depends on whom you ask.In a post on LinkedIn from Australian Growers, an agricultural body that advocates for a “fair go for fresh food producers in Australia,” growers in Orange, NSW, claimed that Coles and Woolworths were dictating prices.Farmers have argued that the major supermarkets’ market power enables them to keep prices low, creating unsustainable conditions.Regulatory reforms, such as divestiture powers and profit limitations, have been suggested to address market concentration. Independent MPs, led by Bob Katter, have pledged to introduce legislation to safeguard farmers’ interests and curb supermarket dominance.”According to Australian Growers, “information sharing” is key, and “regulating price mark-ups from paddock to retailers’ shelves is a crucial step towards providing the transparency we desperately need.”The post highlighted the need for transparency in the food supply chain and suggested the lack of transparency obscures the true cost of production.The post stressed that it is important to hold all stakeholders accountable, “ensuring that every participant adds value rather than merely clipping the ticket.”Suppliers to be scrutinised nextSupermarkets have the authority to price goods as they see fit, but coordinating this with one another is an issue, and one that the current inquiries are seeking to address.Brands that supply and are stocked in supermarkets are next to be analysed by the Senate. Last year, there were over 7000 price increases in grocery retail and as the focus of the inquiry into grocery pricing shifts down the supply chain, one way that brands can alleviate margin pressures is to develop a revenue growth management (RGM) strategy that extends beyond basic pricing mechanisms.Major brands stocked in supermarkets in most cases use a premiumisation strategy to differentiate from supermarkets’ private-label brands. Private-label brand sales account for 18.1 per cent overall of all FMCG retail sales.Whilst the pressure on the supermarkets may result in prices being driven down, it could mean that the supermarkets’ private labels are forced down and branded goods remain as they are, effectively widening the price gap to branded goods.Max Lawday, Acumen head of Asia Pacific, told Inside FMCG, “An intervention like this accelerates the need for a holistic revenue management strategy with a clear pricing strategy. When entering negotiations with retailers there will inevitably be concessions to support customers through this inquiry. You only give a discount once and so any concessions given, if not done in the context of a structured gross to net will result in loss of investment control over the next five to 10 years.”Officially inquiringCurrently, five inquiries are investigating the price of groceries. A sixth by the Australian Council of Trade Unions (ACTU), Inquiry into price gouging and unfair pricing practices, handed down its findings in February this year.The ACTU commissioned report, chaired by former Australian Competition and Consumer Commission (ACCC) chairman Allan Fels, found that inflation was not solely responsible for rising product prices, but greed, corporate gouging and “profit pushing,” from the retailers with the largest market share.Conducted by the Senate, a Select Committee on Supermarket Prices is where supermarket executives, including Coles, Woolworths, and suppliers, will be questioned on their prices and practices. The final reports have a deadline of May 7.The rise in the price of groceries was outlined as a large contributor to Australia’s cost-of-living crisis in the Senate’s Select Committee on Cost of Living interim report, which has a final due date of May 31.Findings are also due from the Treasury’s Australian Government Food and Grocery Code of Conduct Review 2023-24, on June 30 this year. Its Competition Review will conclude in August 2025 and is expected to reveal how the government could potentially improve pricing in a competitive industry such as supermarket retail.Similarly, despite a final report date yet to be set, the Standing Committee on Economics is conducting an inquiry into promoting economic dynamism, competition and business formation, and has a similar objective to the Competition Review,The Australian Competition and Consumer Commission’s Supermarket Inquiry interim report is due in August this year, with the finalised report due in February 2025.