...my assessment is that too many of us could not be bothered to hunt for better prices, and we keep shopping and buying from sources that we are accustomed to (or because they're Australian). But we have been taken for a big ride, by all these oligopolists and a small population like ours is often used as excuse for not widening competition including from foreign companies.
...despite Woolies and Coles enjoying the bulk of our domestic grocery market, which gives them scale (in buying power), they're still charging us prices that does not offer value. Why I know this? I can buy a pack of Arnotts Scotch Fingers cheaper in another country than here in Australia (after currency conversion). Foreign markets are priced more competitive or lower because if it is priced as here, they won't be able to afford it. But in Australia, we just pay without question and on top of that, we keep buying and just put to the credit card.
...this thread has brought up the subject of greedflation, now we know this is truly happening locally.
Drip pricing, excuse-flation and rockets and feathers: the strategies supermarkets and other businesses use to make you pay moreAn ACTU inquiry into price-gouging referenced several strategies to extract extra dollars from consumers. Here are some you might be hearing about
Jonathan Barrett@barrett_inkWed 7 Feb 2024 12.31 AEDT
A relentless period of price increases has left many Australians irritable, especially when they see the impressive profits recorded by some of the same companies that charge inflated prices.
The ACTU inquiry into price-gouging referenced several pricing practices major businesses use to extract extra dollars from consumers, using methods that would not work in more competitive markets.
Those practices, once the domain of marketers and strategists, have turned into phrases and idioms used by the wider community fed up with price increases for just about everything.
Here are the phrases on prices that you might be hearing more often.
Drip pricingThis occurs when a company only advertises part of a product’s price, with more charges revealed as you progress through the buying process. It’s common in airline and accommodation bookings. Slowly but surely, the competitive price that caught your attention turns out to be far less appealing – but you are so deep into the process you often buy it anyway.
Excuse-flationAs the Allan Fels-led inquiry put it, “excuse-flation” is the practice of using general inflation as a camouflage for bumping up prices. It is closely related to “greed-flation” and consumers put up with it because the cover story sounds legitimate, with blame usually attributed to the pandemic, Ukraine conflict, or the most opaque reason of all – supply chain disruptions.
Confusion pricingThis is the practice of using complex pricing structures and plans to completely perplex a consumer and make it difficult to compare pricing to a rival product. Remind me, how much data, text and call time do you get with your mobile plan, bundled into your home internet plan?
Rockets and feathers pricingWhen costs rise, they go up like a rocket, but when they fall, they drift slowly to the ground like a feather. The inquiry referenced this scenario when describing how the prices paid to farmers for produce fell quickly, while supermarket prices for the same products did not. It could also be applied to mortgage rates, which
rise quickly when the cash rate increases, but fall with less haste after rate cuts.
Loyalty taxesSome products and services set initial prices low, but then sharply increase as the years roll on when it is more difficult for consumers to detect the changes or renegotiate terms. The inquiry pointed towards banks, insurers and energy companies as some of the major culprits of using a customer’s loyalty against them.
Price discriminationThis practice allows companies to charge vastly different prices for near identical products and services, evident among medical specialists and in prices charged by banks that offer better rates to customers likely to leave. The inquiry noted there was a growing concern that digital platforms, drawing on detailed customer data, can maximise profits because they know how much someone is willing to pay for a particular item.
The price-gouging inquiry describes all of the practices as “exploitative” that rely on a platform of weak competition to succeed. They reflect an imbalance between consumers and business but are not unlawful.
“However, there is a case for governments exercising much closer scrutiny over these practices and for such scrutiny to be a regular part of the policy agenda,” the inquiry concluded.
Jana Bowden, a professor of marketing at Macquarie University, said the pricing strategies were now common across categories and accepted by consumers as normal patterns of purchasing behaviour.
“Should we be accepting of that? Not really, but they are hard to avoid,” Bowden said.
“They do require consumers to be much more hyper aware of their decision-making process and in many cases, being ready to back out of a purchase and being prepared to do more research.”
