Digging into GroceryCHOICE

Earlier this week, South Australian senator Nick Xenophon raised concerns that the Government’s FuelWatch scheme would lead to higher petrol prices and that small independent petrol retailers were likely to be disadvantaged by the scheme. So it looks likely that the FuelWatch legislation will fail to pass the senate and then fade into oblivion. I can’t say I’m too upset about this as I have been critical of the scheme. Furthermore, falling oil prices have led to a fall of around 20 cents/litre in petrol prices which takes much of the sting out of the issue.

So now I am free to turn my attention to another Australian Government initiative, GroceryCHOICE. This scheme aims to “[help] consumers find the cheapest supermarket chain in their area without having to compare hundreds of prices”. Every month a survey is conducted of prices on around 500 different grocery items at over 600 supermarkets around the region. These prices are aggregated into “baskets” of goods in the following categories:

• Meat & Seafood
• Fruit & Vegetables
• Dairy
• Breads & Cereals
• Drinks & Other Snacks
• General Groceries
• Household & Personal Care

There is also a “Basic Staples” basket, which includes some items from each of the more specific baskets. Prices of these baskets are averaged across 61 regions around the country and reported on the site for each of the major retail chains.

Italy has introduced a similar scheme, which allows consumers to receive text messages giving them prices around the country for specific items. Unfortunately, the Australian scheme only provides prices for baskets not individual products (supposedly “to prevent the manipulation of the price survey”, but this doesn’t seem to worry the Italian Government), so for an Inner West shopper like myself, if I am interested in tomatoes, this is what I can learn from GroceryCHOICE:

Retailer	Fruit & Vegetable Basket
Coles/BI-LO	$25.05
Woolworths/Safeway	$24.63
Franklins	$25.70
Independents	$27.34

So, while I can save 42 cents by shopping at Woolworths rather than Coles, that’s only if I buy an unspecified selection of fruit and vegetables (possibly including Brussel Sprouts, which I would be prepared to pay not to eat). So, GroceryCHOICE would not seem to be very useful for me. Not only that, while the Italian service explicitly compares prices around the country, the GroceryCHOICE site makes it rather tricky to make regional comparisons.

I took this as a challenge, so I wrote a little script* to extract all the data from the chart and published the results on Swivel. There are separate datasets for the product category baskets and the Basic Staples basket. The data can be easily downloaded, so feel free to explore further!

The results are not too surprising: ALDI is consistently cheaper than all of the other retailers and the independents are the most expensive, as is evident in the chart below.

Average “Basic Staples” Prices

However, first glances can be misleading. For each retailer, these averages are taken across those regions for which prices are available. Since Franklins price data is missing in many of the most expensive regions (such as the Northern Territory), this is an unfair comparison. For example, restricting prices to just the regions where Franklins prices are available brings the Woolworths average price down from $77.57 to $76.26, making it cheaper than Franklins.

Looking at the product category baskets gives us a bit more detail (although ALDI prices are not available for these baskets). The following charts provide a graphical comparison of Woolworths basket prices compared to all of the other retail groups. Blue points represent baskets that are cheaper at Woolworths and red represents baskets that are more expensive at Woolworths.

Grocery Prices: Woolworths versus The Rest

Overall, this comparison makes Woolworths look quite good, but if you are wondering about that outlier where Coles is much cheaper than Woolworths, it is the Fruit and Vegetable basket in North NT. It costs $29.03 at Coles but it will set you back $32.54 at Woolworths, which is an impressive $3.62 mark-up.

To get a sense of the range of prices around Australia, this chart gives the full picture for the Basic Staples basket. It is sorted by the price at Woolworths and I could not help noticing that the cheapest area to shop at Woolworths is Outer Sydney North West. Isn’t that right near head office?

* The script used to scrape the data is available here (choice.pl). Coding tips are welcome!

A Tipping Point for Starbucks?

On 1 July 2008, Starbucks announced the closure of around 600 outlets in the US. More drastically, on 29 July they then announced that 61 of the 84 Australian outlets would be closing.

Over on BeyondDigitalMedia, Chris Bishops posted an interesting examination of the challenges Starbucks has faced in the Australian market and goes on to predict that Gloria Jeans will suffer a similar fate.

Update on Sydney Petrol Prices

A little while ago I wrote about the relationship between crude oil prices and the price Sydney motorists are paying for petrol at the pump. The Australian Automobile Association (AAA) has now released their price data for June and, not surprisingly, prices continued to track moves implied by rising crude oil prices. The simple regression model suggested that average prices would be up 8 cents/litre. The AAA data shows a rise of 10 cents/litre in the average Sydney price.

The Gradual Demise of the Compact Disc

The Australian Recording Industry Association (ARIA), after taking a look at sales for the first half of 2008, has run crying poor to the Herald Sun. While they have not yet released these figures to the public, they presumably continue the trend evident in published figures for 2006 and 2007.

Australian Music Sales

The Price of Carbon for Petrol

Commenting on my petrol prices post, Mark Lauer suggested that excise on petrol should in fact be increased to deal with negative externalities:

Personally I think we should be increasing the excise. It represents the many negative externalities that car use in our society creates: carbon emissions, use of space for (larger) roads; materials, construction and maintenance of (larger) roads; particulate pollution; deaths and injuries from road accidents, and so on, all of which scale with mileage and hence fuel use. And our understanding of all these factors is moving in the direction of increased disutility. Hence the charges should be increased.

I’ve been thinking about petrol and carbon emissions a bit over the last few weeks, so this is as good a prompt as any to put down my thoughts here on the Mule. I should also point out that I have Mark to thank for the back of the envelope calculation that I’ll discuss here.

Sydney Petrol Prices

Soaring petrol prices have led to all sorts of calls for action to help reduce prices. The Opposition called for a 5 cents per litre reduction in the excise on petrol, which currently stands at 38.1 cents per litre. (See note below for an explanation of the strike-throughs). the abolition of the double taxation of petrol by eliminating Goods and Services Tax (GST) on petrol excise. Since the excise is currently 38.1 cents per litre, this would save 3.8 cents per litre. One Victorian Liberal MP, Chris Pearce, went further and called for a 10 cent reduction in petrol excise. The Rudd Government initially claimed that there was nothing more that they could do, but then buckled to the pressure and has proposed the introduction of a national FuelWatch scheme aimed at promoting price transparency at the bowser. The Minister for Competition Policy & Consumer Affairs, Chris Bowen, has indicated that this scheme is expected to save around 2 cents per litre. So, what is going on with petrol prices and what are the merits of these proposals?

Retail Sales in New South Wales

Yesterday the Sydney Morning Herald published an article on the latest retail sales numbers for New South Wales that contrasted the sales growth in take-away food and pubs and clubs with the decline in business for cafes, restaurants and fresh food retailers. This is put in the context of with rising mortgage rates and fuel prices, to suggest that consumer behaviour is starting to shift. The data is published by the Australian Bureau of Statistics, so I decided to dig a little deeper. Prompted by a comment over on the Junk Charts blog, I’ve used a table enriched with spark-lines rather than the heatmap I used in the inflation post.

Blogroll

I had lunch with friends today (Yum-Cha at Sky Phoenix) and mentioned that I’d started this blog. I was astonished to hear that two of them claimed never to have read a blog! Now I know I spend a lot of time dabbling in all things Web 2.0 and I certainly didn’t expect anyone around the table to be plurking, but surely everyone reads blogs, don’t they? Apparently not. Since I gave strict instructions to everyone around the table to visit the blog (and leave comments, nudge, nudge), it seems like a good opportunity to share my blog-reading habits with these blog novices (and everyone else who may drop by).

Anatomy of a Bubble

The Joint Economic Committee is a standing committee of the US Congress is charged with reporting on US economic conditions. Needless to say, the Committee is making a close study of the financial turmoil triggered by the collapse in US house prices and rising delinquency rates among “sub-prime” borrowers. Recently Alex J. Pollock gave testimony to the Committee entitled “Regulatory Implications of the Housing and Mortgage Bubble and Bust”.

Why I Always Buy the Same Sandwich

Until recently, I’d never given much thought to the fact that whenever I buy my lunch at the deli behind my office building, I always get the same sandwich (chicken, avocado, cheese, tomato and lettuce on multi-grain, in case you were wondering). Then I started reading Dan Ariely’s book Predictably Irrational and realised that I’d been “self-herding”.