Friday 21 March 2014

Superpricing in supermarkets

Last week I reported on a supermarket chain that was charging extraordinary markups on the goods it had imported from South Africa. They made the mistake of leaving the price in Rand on the goods and adding a new price sticker with the Pula price. An item on sale in South Africa for R150 was selling here for P176. Once you take account of the difference rates of VAT in South Africa and the current exchange rate that suggested the stores here in Botswana were marking up the price by almost 40%.

All for the privilege of buying in Botswana.

Frankly it’s a rip-off. Despite their claims that they incurred additional costs transporting their goods all the way here from South Africa the maths simply didn’t work out, particularly as their branches in Namibia weren’t marked up nearly as much.

But it gets worse. Our mystery shoppers were out last week looking at other stores, also ones that were the local outlets of large South African chains. It turns out that a markup of 40% isn’t the extreme, there are others that are much worse.

We found a store, part of a huge South African group with several outlets in Botswana, that was selling a range of cosmetics on specially made shelves that display the prices in Rand for their South African customers but they then manually label each item with the Pula price. We saw a lipstick for sale for R69.95 but labeled for sale here for P79.95. Do the same conversion, adjusting for our lower VAT rate and the current exchange rate and you find that the price should really be just under P53, not just under P80. The markup is 52%.

Another store, part of a South African cosmetics chain, does exactly the same thing, but worse. They were selling mascara that in South Africa is sold for R79.95 but which here in Botswana they’d priced at exactly P100. Get your calculator out and you can work it out for yourself. The price here should really have been just over P60, not P100. That’s a massive markup of 66%, the highest we’ve discovered so far.

We contacted the head offices of each of these stores in South Africa and asked them if they could justify these enormous markups. I confess that I expected them to talk about transport costs, like the first store did. But that didn’t happen.

One assured me that they would contact their
“Gaborone management to address the matter regarding the pricing of items.”
The other told me that they had
“alerted our regional and store managers to the incident and have asked them to check their stock carefully for the discrepancy you highlighted. We’ve also requested that store managers, as well as our suppliers, be more vigilant in checking all product and pricing before displaying in stores going forward.”
They concluded by assuring me that
“the incorrect pricing does not reflect our mark-up or pricing approach in any way.”
Guess what? The prices were changed within days.

So what was happening? Is it possible that the local store owners were just profiteering, just exploiting us? It’s possible. It seems that the head office people might not even have known that the local management were ripping us off.

So here’s a lesson for us all. It’s worth complaining. Companies that care about their reputation will take action if enough people complain, they really will.

The bigger problem with supermarkets isn’t price. It’s food safety.

Over the years we’ve heard a seemingly endless series of scare stories about the way food is treated in supermarkets. We’ve heard of food that’s passing its sell-by date being covered in marinades and spices to cover up the smell of impending putrefaction. We’ve heard of the same food that the management know won’t be able to be sold as raw being cooked and sold to customers for lunch. Once it’s covered in spices it’s much harder, perhaps even impossible, to tell that it’s decaying.

The health risks of this are staggering. If food no longer fit for human consumption isn’t cooked thoroughly it’s likely to make the customer extremely ill, perhaps even kill them.

Even when the supermarket doesn’t serve rotten food their expired products can still end up killing you. We heard a few years ago of a certain supermarket that disposed of its expired goods in large bins behind the store. Each night intruders would sneak into the waste disposal area and steal the expired meat products from the bins and the next morning would sell it to street food vendors operating at the station in Gaborone. Once covered with spices and sauce and cooked for ages nobody would know better, at least not until they spend the next few days either in their bathroom or their nearest hospital.

Even if the food is cooked well enough to kill any pathogens it’s still disgusting to be served food you probably wouldn’t feed to your dog.

Unlike certain restaurants I know, we consumers don’t get the chance to see the food preparation and cooking areas in supermarkets. We can’t see how well, or how badly, they’re treating the food they serve us.

We are therefore forced to trust supermarkets to abide by the laws and regulations put in place to protect us. We’re also forced to trust the authorities with the power to regulate them but let’s face it, they can’t be everywhere all the time.

The fact is that there’s only authority you can trust. Word of mouth. Let’s all start spreading the word when we see poor standards or get ill after eating food from a particular outlet. Let’s protect ourselves as well as our family, friends and neighbours from supermarkets who decide to abuse us.

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