Kiwis Likely Losing “Tens Of Millions Of Dollars A Year” From Supermarket Pricing Errors

The Grocery Commissioner is challenging the major supermarkets to improve and publicise their refund policies which the Commerce Commission believes are either inadequate or unknown to Kiwi consumers. Pierre van Heerden says this will create the commercial incentive for supermarkets to improve the accuracy of their pricing.

Mr van Heerden says accurate and clear pricing is a consumer right and expectation of a competitive market, but the Commission is “still hearing about too many examples of misleading or inaccurate pricing in New Zealand supermarkets”.

“Kiwi consumers expect and deserve better. The continuing level of pricing errors happening across the major supermarkets is simply unacceptable, and I don’t believe the major supermarkets are doing enough to fix these problems and get it right for the future.”

Mr van Heerden says the responsibility for fixing the issues sits squarely with the senior management of Foodstuffs and Woolworths NZ, and the Commission had sought a commitment from the Chief Executives of each of the three companies.

Mr van Heerden says he will be introducing a mandatory disclosure standard that wil require the major supermarkets to regularly disclose information about customer complaints, including around pricing and promotional issues. Making this information visible will help consumers be better informed and have more confidence their complaints will be dealt with.

“Consumers should be able to trust that the price advertised is what they will pay,” Mr van Heerden says. “The groceries sector is a $25 billion a year business, so even if errors only make up a very small percentage of sales, the total overcharge paid by Kiwis at the checkout would run to tens of millions of dollars every year and this is unacceptable.”

The Grocery Commissioner has also called out the major supermarkets’ processes for recording customer complaints – saying the lack of clarity and reporting means supermarkets can’t identify potential compliance issues within their businesses.

“Complaint data is a helpful source of information to identify trends and issues so they can be remedied.” Mr van Heerden says there is a general lack of clarity in how customer complaints are escalated and remedied.

Mr van Heerden says customers can play an important role in bringing pricing issues to the attention of supermarkets. However, current refund policies across the major supermarkets are either absent, inadequate in the benefits they offer, or not advertised clearly and prominently. “A generous and well-promoted refund policy will help empower and motivate customers,” he says.

The Commission has stated the following expectations of the major supermarkets:

• Review and amend refund policies to ensure they demonstrate a commitment by the supermarkets to pricing integrity and motivate customers to bring any pricing integrity issues to their attention. For instance, offering a full refund of the purchase price of mispriced goods.
• Prominently promote their refund policies – in-store, online and through direct mail communications
• Ensure there are comprehensive policies, systems and processes to record and categorise all complaints about pricing and promotional issues, and appropriately train staff in these policies, systems and processes.

Mr van Heerden says these expectations of supermarkets are forward-looking to contribute to mitigating potential compliance issues in the future. These are separate from the ongoing investigations underway under the Fair Trading Act.

The major supermarkets have responded positively to the Commission, but Mr van Heerden says “we’ll be watching to see if they follow up their words with action.”

Background

Disclosure standards would be enabled by s191 of the Grocery Industry Competition Act 2023 (GICA), and could require public disclosures on customer complaints about pricing and promotional issues.

Correspondence to and from the major supermarkets on this topic is published on our website.

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