Supermarket promotional items can sell at up to 70 times their normal rate, analysis shows, in a sign of the market power the grocery giants exert over Australian households that includes a preference to discount junk food.
An upcoming parliamentary inquiry designed to investigate claims of profiteering is expected to place significant focus on grocery specials, while the competition regulator has also suggested it could sue major supermarkets for deceptive promotions. The chains have defended their pricing practices.
While most shoppers believe they are in control of what they buy, research suggests consumers are heavily influenced by marketing, especially when it comes to buying groceries.
That marketing, which includes price promotions and prominent product placement, is heavily biased towards less healthy choices, according to Adrian Cameron, a professor of public health at Deakin University.
The major supermarkets discount unhealthy food twice as often as healthier items, with specials twice the size, according to past research co-authored by Cameron and published in 2019.
“Australians tend to do their shopping based on what’s on special,” Cameron said. “A lot of items put on price promotions are things that you can expand sales on. They call those discretionary purchases, or impulse buys – things like chips, and other junk food.”
The Australian Bureau of Statistics has conducted research showing how much supermarket promotions can affect purchases, with sales of discounted products increasing by many factors from their typical level.
While consumers typically spend five times as much on a product when it is discounted, in some instances this can escalate much higher.
Guardian Australia analysis of the ABS research found consumer expenditure increased 70-fold when a premium brand of olive oil was discounted.
The ABS data, retrieved from supermarket scanner figures collated by the agency, provides an insight into shoppers’ attraction to promoted items, which is even more exaggerated during times of rising living costs.
Jana Bowden, a professor of marketing at Macquarie University, said a limited quantity of discounted products puts consumers into a temporary state of psychological limbo by creating an irrational sense of fear of missing out.
“We are manipulated by these tactics because our behaviour is driven by our pre-existing goals,” Bowden said.
“If our goal is to save money, then seeing a deal makes us feel good, and that in turn operates as a reward signal. It’s a domino effect.”
The temptation of treats
Woolworths is Australia’s biggest supermarket chain, slightly ahead of rival Coles. Combined, the chains control about two-thirds of the market, although that rises to 90% in some locations where there is limited competition.
Promotions are usually funded through an agreement between a supermarket and food manufacturer, with multinationals that sell less healthy items usually wielding the biggest marketing budgets.
Promotional activities will feature in the upcoming parliamentary inquiry, according to the terms of reference, which is scheduled to start its public hearings early this year.
Cameron said the upcoming scrutiny on supermarkets gave policymakers an opportunity to look at junk food marketing, given rules in Australia lag those imposed in comparative markets.
UK regulations restrict promotions and govern store placement for foods and drinks that are high in fat, salt or sugar. The rules are designed in part to combat “pester power”, a term that refers to pressure placed on parents by their children to buy junk food.
There have been calls in Canada to combat “junk food power walls” at checkouts, which are displays that put products within reach of children.
A Woolworths spokesperson said it had announced changes to remove children’s confectionary at the end of checkouts and aisles.
“While the aisle ends still feature ‘sometimes foods’ and treats such as chips that are on special, customers will also see a similar snacking option with a 3.5 health star rating or above on display on a shelf on each promotional end, so that they can make healthier choices,” the spokesperson said.
“When it comes to other items still available near the checkout, such as drinks, choice is important for our customers and we understand that treat foods can occasionally be enjoyed as part of a balanced diet.”
A Coles spokesperson said the supermarket was committed to helping customers make healthy choices.
“Our weekly catalogue also includes some of the thousands of specials we are currently offering, including specials on healthy back-to-school snacks,” the spokesperson said.
Guardian Australia has previously detailed instances of supermarkets briefly raising the price of popular products, before putting them back into their promotions, raising questions over whether they actually represent a good deal.
Poorly executed and confusing supermarket promotions, as well as an abundance of shrinking products, have also raised the ire of many shoppers in Australia.
The Woolworths spokesperson said the company was focused on delivering savings to customers.
“We work hard to ensure we comply with all Australian consumer laws and communicate our prices clearly and accurately through our catalogue, in store and online,” the spokesperson said.
The Coles spokesperson said the company was not aware of “any actual or threatened regulatory litigation” in relation to promotional pricing.
