The Games Supermarkets Play, By Mrs. Vera West
If the cost-of-living crisis was not bad enough, leading to, as I wrote in another article, pregnant Australian women facing food shortages, plunging us to Third World levels, the big supermarkets are allegedly playing psychological tricks, according to the Australian Competition and Consumer Commission (ACCC), by misleading discount price claims. It is alleged that the big guys raised product prices by around 15 per cent, then dropped them to below the peak but kept themabove the initial price. Thus, it looked like a discount to the shoppers, but it was really a price increase. People tend to trust the word "discount" when it is plastered on products, and do not have time to check the numbers and past data. And they do not have time for such mind games when shopping.
There really needs to be staggering fines for this; if the government through its misinformation Bill can contemplate fines of five percent of global revenue for social media firms who are supposed to harm the public, then how about double that for supermarkets doing similar things?
Oh, they won't have that will they?
"The psychology of supermarket shoppers is in focus as Coles and Woolworths stand accused of sneaky price practices.
The grocery giants are headed to court after the consumer watchdog launched legal action against them for allegedly breaking consumer law with misleading discount pricing claims.
The Australian Competition and Consumer Commission said the duopoly would briefly jack up product prices by about 15 per cent, before dropping them to below the peak but above the initial price.
That illusion of a discount played into a human bias to process information as quickly and easily as possible, according to Deakin University consumer behaviour expert Paul Harrison.
"There is really strong research that people do bypass detail when they see something is discounted … it serves as a shortcut and a way for a person to say, 'I don't need to process detailed information about it'," he said.
"You could say it's a form of manipulation … we trust these institutions to tell us the truth and if it says it's a discount, we assume it actually is."
Harrison said supermarkets and retailers would be aware of the psychological impact of words like discount in influencing people to skip extra detail.
Macquarie University marketing professor Jana Bowden agreed and said supermarkets actively "exploit" that psychology.
She said a shopper could shift from "rational and careful" to "emotionally-laden" when confronted with a discount.
"Consumers are confronted with a full FOMO effect – they feel a simmering sense of unease and guilt if they don't buy now, and buy on a deal," she said.
"Couple that with the fact many consumers are just looking to get in and get out when it comes to getting the groceries, then there isn't much time spent analysing … supermarkets know that and they exploit it."
Coles will defend the action while Woolworths has defended its 'Our Prices Dropped' program as giving shoppers "great everyday value".
In a statement, the ACCC said the revenue from the allegedly misleading discounts was significant given the retail giants sold tens of millions of the affected products.
The allegations relate to 266 products Woolworths sold across 20 months and 245 products at Coles across 15 months.
On Tuesday, Prime Minister Anthony Albanese warned the supermarkets would face more than a "slap on the wrist" if found to have ripped off their customers. He accused the retailers of "having a lend" of shoppers.
"It is just an outrage," Albanese told ABC Perth.
"People, when they go to the supermarket, expect that when there's a sales tag on it, that it actually is cheaper.
"I think the brand has been damaged by this because it confirms what many shoppers think and what they've been saying to me."
Pointing out the two companies controlled about 65 per cent of Australia's supermarket trade, RMIT senior lecturer in finance My Nguyen said the lack of competition could be easily exploited by the behemoths.
"The recent legal action by the ACCC … underscores how their market power can lead to practices that may not be possible in a more competitive environment," Nguyen said.
"They can influence prices more easily, potentially resulting in higher costs for consumers and higher profit margins for the supermarkets.
"The high barriers to entry, including economies of scale and established supply chains, make it difficult for new competitors to challenge their dominance."
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