Part 2 AIG Press Release
We know prices are too expensive in Aboriginal community stores around the NT. To prove the point however, we went shopping. The results from our Market Basket survey will shock you.
In April and May, 2020 our shoppers went into 9 stores in the Top End with the same shopping list made up of essential and popular products.
- Mi Goreng Fried Noodles 5pk
- Weetbix 375g
- Weetbix 575g
- Deb Instant Potato Plain 115g
- Bush Oven Bread 700g
- Bushells tea bags rounds 200 pack
- San Remo Spirals small No 15 500g
- Palmolive soap gold 4pack
- Colgate Toothpaste Maximum Floride Cool Mint 110g
- Hazedenes Chicken Cuts 2kg Bag
- Eggs Large Dozen 600g
And the results…..
Our key finding was the store managed by AIG has the cheapest prices for all products on the list – blue ribbon for us! For all the market basket results click here.
More importantly though, how is it possible that one store can charge almost $25 more for the same basket of products? Obviously, it’s because the prices are higher. The trickier and more important question to answer is why?
Lets just break it down a little, and look at chicken prices as an example of how prices influence food security.
Barunga store charges $9.40 for 2kg of Hazledene chicken cuts and Beswick store (which is run by the Commonwealth entity Outback Stores) charges $16.80. Its only 25km down the road! Another community store charges $24.60 for the same product.
Why the price difference?
There are three reasons why the prices are different between stores: rebates, ethics and freight.
A rebate is money paid by the supplier to store management stock their products. Our research shows rebates can range between 1.5 and 25%. Rebates are calculated on each product and the higher the rebate, the more expensive the product becomes. Coke and tobacco reap the highest rebates in community stores. Rebates are given to the store management groups, and not the stores themselves.
Rebate revenue is worth millions of dollars in the Northern Territory alone. Look for example at the Commonwealth owned Outback Stores which last year made more than $2.6 million in rebates https://outbackstores.com.au/wp-content/uploads/2019/12/OS-Annual-Report-19-web-spread.pdf through raising the cost of products in store. That is a lot of tobacco and Coke!
AIG does not accept rebates because we believe it is unethical and drives up prices in the store which further disadvantages the vulnerable and threatens food security.
Usually listed as the primary reason for high prices in community stores, but in reality, has a far lesser impact on the actual prices of products in the store.
Freight is the cost of getting the products from the supplier to the store. If a store is very remote, then the freight is obviously going to be more expensive. Freight should be cheaper for the larger management groups because they order in bulk which reduces the actual freight costs further.
AIG is a small store management group and if we can have low prices while paying freight, it is proof that freight is not as expensive as people are led to believe.
Keep comparing food prices
We want to disrupt how community stores are managed in the NT through creating transparency about prices in stores. Its hard for people in remote communities to understand the situation they are in if they can’t compare prices in their stores to other communities.
AIG has created online shopping for the Barunga and Timber Creek communities which is a great service, but equally important is being able to provide transparency the prices we charge so others can compare to the prices in their stores. We don’t accept rebates from suppliers, and we don’t make a profit on fruit and vegetables. This is how our prices are low. If we can do it, other stores can do the same.