Tuesday, April 20, 2010

How grocery stores influence consumers

Two main supermarkets, Coles and Woolsworth, make up the majority of grocery stores in Australia. According to Epoch Times, these stores sell a combined 75% of total packaged groceries in Australia. There is little room for third party competition in the grocery sector in Australia due to the almost complete market domination of these large companies. A study done by the University of Queensland (UQ) found that a correlation exists between the lack of retail competition in the grocery sector and public health-which illustrates how supermarkets have a profound influence on the consumer’s diet.

Since little to no competition exists in the grocery stores of Australia, the companies are not competing for the lowest price to lure consumers into their stores. The consumers then are not given a ‘level playing field’ when it comes to buying fresh fruits and vegetables (ABC News). Not only are the healthy foods like fruits and vegetables expensive, but there is also limited selection and accessibility. Lead researcher Jon Wardle, of UQ's School of Population Health states "The current situation has meant that prices are higher, choice is lower and it is harder to get to places that sell healthful foods. People generally want to eat healthier foods, but the current situation makes it harder for them to do so." (UQ News)

So how is this affecting consumers? Little nutrition exists in the consumer’s diet because of the low intake of healthy, fresh foods. According to Jon Wardle, the lack of nutrition may be implicated in 56% of all deaths in Queensland and 14% of the state hospital’s budget (UQ News).

"We need to look at not just what people are eating, but how it's getting to them in the first place. If we make it harder to access or afford good foods then obviously it's going to be harder to get people to eat well," says Jon Wardle (UQ News)

As Wardle states, supermarkets have a strong influence on the consumer and the consumer’s diet. Supermarkets’ general strategy to lure customers into their stores is to sell ‘a way of life’ which “provides a supportive context to the exchange of goods and services,” according to Jane Dixon (A Sociology of Food & Nutrition). This is done via a variety of practices, using particular language, marketing certain images, but above all, supermarkets want to appeal to the consumer’s lifestyle. For example, in the 1970s a social movement towards an increased concern with health and the environment spurred supermarkets to advertise goods that “had minimal contact with the industrial process and were ‘close to nature’” (Dixon pg. 112). The influential “cool chain,” a process that involves getting produce to stores in an unfrozen but chilled state, which is then ready for storage in supermarkets refrigerators, facilitated this movement of increased consumption of healthier foods because the chilled food seemed fresher (compared to frozen foods), and thus healthier.

The food retailers also influenced consumers’ diets by creating ‘meal solutions’ which solved consumers’ problems of time constraints for cooking a meal and the potential lack of food preparation skills. These meal solutions started with a ‘roto bird’ which was a rotisserie style cooked chickens with potatoes and coleslaw and was then replaced by frozen TV dinners in the 1960s. These meals appealed to consumers because they were fast and easy, but were considered to be a healthier alternative to fast food meals, which were similarly fast and easy.

Grocery markets have a profound influence on the consumer and the consumer diet, whether it be through increased production of ‘meal solutions’ to eliminate time intensive home cooked meals or limiting accessibility to healthful foods through high prices and limited choices. In Australia, lack of competition in the grocery sector has proven to have a severely negative influence on the consumer’s health. Changes are being made though to combat this problem, the ACCC (Australian competitor and consumer commission) has conducted an inquiry on the grocery sector and it was found that “grocery retailing is workably competitive, but there are a number of factors that currently limit the level of price competition.” (ACCC.gov) One of the regulatory measures passed in response to this inquiry is that Coles and Woolworths will no longer be able to demand that shopping centres not lease out space to competitors according to news.com. This will allow other companies with lower prices like Aldi, Franklins, Foodworks and IGA to open up stores adjacent to Woolworths and Coles which forces them to lower their prices to compete.

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