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Why prices are so high – 8 ways retail pricing algorithms gouge consumers

<a href="https://theconversation.com/profiles/david-tuffley-13731">David Tuffley</a>, <a href="https://theconversation.com/institutions/griffith-university-828">Griffith University</a> The just-released report of the inquiry into <a href="https://pricegouginginquiry.actu.org.au/">price gouging and unfair pricing</a> conducted by Allan Fels for the Australian Council of Trades Unions does more than identify the likely offenders. It finds the biggest are supermarkets, banks, airlines and electricity companies. It’s not enough to know their tricks. Fels wants to give the Australian Competition and Consumer Commission more power to investigate and more power to prohibit mergers. But it helps to know how they try to trick us, and how technology has enabled them to get better at it. After reading the report, I’ve identified eight key maneuvers. <h2>1. Asymmetric price movements</h2> Otherwise known as <a href="https://www.jstor.org/stable/25593733">Rocket and Feather</a>, this is where businesses push up prices quickly when costs rise, but cut them slowly or late after costs fall. It seems to happen for <a href="https://www.sciencedirect.com/science/article/abs/pii/S0140988323002074">petrol</a> and <a href="https://www.sciencedirect.com/science/article/abs/pii/S105905601730240X">mortgage rates</a>, and the Fels inquiry was presented with evidence suggesting it happens in supermarkets. Brendan O’Keeffe from NSW Farmers told the inquiry wholesale lamb prices had been falling for six months before six Woolworths announced a cut in the prices of lamb it was selling as a “<a href="https://pricegouginginquiry.actu.org.au/wp-content/uploads/2024/02/InquiryIntoPriceGouging_Report_web.pdf">Christmas gift</a>”. <h2>2. Punishment for loyal customers</h2> A <a href="https://theconversation.com/simple-fixes-could-help-save-australian-consumers-from-up-to-3-6-billion-in-loyalty-taxes-119978">loyalty tax</a> is what happens when a business imposes higher charges on customers who have been with it for a long time, on the assumption that they won’t move. The Australian Securities and Investments Commission has alleged a big <a href="https://theconversation.com/how-qantas-might-have-done-all-australians-a-favour-by-making-refunds-so-hard-to-get-213346">insurer</a> does it, setting premiums not only on the basis of risk, but also on the basis of what a computer model tells them about the likelihood of each customer tolerating a price hike. The insurer disputes the claim. It’s often done by offering discounts or new products to new customers and leaving existing customers on old or discontinued products. It happens a lot in the <a href="https://www.finder.com.au/utilities-loyalty-costing-australians-billions-2024">electricity industry</a>. The plans look good at first, and then less good as providers bank on customers not making the effort to shop around. Loyalty taxes appear to be less common among mobile phone providers. Australian laws make it easy to switch <a href="https://www.reviews.org/au/mobile/how-to-switch-mobile-carriers-and-keep-your-number/">and keep your number</a>. <h2>3. Loyalty schemes that provide little value</h2> Fels says loyalty schemes can be a “low-cost means of retaining and exploiting consumers by providing them with low-value rewards of dubious benefit”. Their purpose is to lock in (or at least bias) customers to choices already made. Examples include airline frequent flyer points, cafe cards that give you your tenth coffee free, and supermarket points programs. The purpose is to lock in (or at least bias) consumers to products already chosen. The <a href="https://www.accc.gov.au/consumers/advertising-and-promotions/customer-loyalty-schemes">Australian Competition and Consumer Commission</a> has found many require users to spend a lot of money or time to earn enough points for a reward. Others allow points to expire or rules to change without notice or offer rewards that are not worth the effort to redeem. They also enable businesses to collect data on spending habits, preferences, locations, and personal information that can be used to construct customer profiles that allow them to target advertising and offers and high prices to some customers and not others. <h2>4. Drip pricing that hides true costs</h2> The Competition and Consumer Commission describes <a href="https://pricegouginginquiry.actu.org.au/wp-content/uploads/2024/02/InquiryIntoPriceGouging_Report_web.pdf">drip pricing</a> as “when a price is advertised at the beginning of an online purchase, but then extra fees and charges (such as booking and service fees) are gradually added during the purchase process”. The extras can add up quickly and make final bills much higher than expected. Airlines are among the best-known users of the strategy. They often offer initially attractive base fares, but then add charges for baggage, seat selection, in-flight meals and other extras. <h2>5. Confusion pricing</h2> Related to drip pricing is <a href="https://www.x-mol.net/paper/article/1402386414932836352">confusion pricing</a> where a provider offers a range of plans, discounts and fees so complex they are overwhelming. Financial products like insurance have convoluted fee structures, as do electricity providers. Supermarkets do it by bombarding shoppers with “specials” and “sales”. When prices change frequently and without notice, it adds to the confusion. <h2>6. Algorithmic pricing</h2> <a href="https://pricegouginginquiry.actu.org.au/wp-content/uploads/2024/02/InquiryIntoPriceGouging_Report_web.pdf">Algorithmic pricing</a> is the practice of using algorithms to set prices automatically taking into account competitor responses, which is something akin to computers talking to each other. When computers get together in this way they can <a href="https://www.x-mol.net/paper/article/1402386414932836352">act as it they are colluding</a> even if the humans involved in running the businesses never talk to each other. It can act even more this way when multiple competitors use the same third-party pricing algorithm, effectively allowing a single company to influence prices. <h2>7. Price discrimination</h2> Price discrimination involves charging different customers different prices for the same product, setting each price in accordance with how much each customer is prepared to pay. Banks do it when they offer better rates to customers likely to leave them, electricity companies do it when they offer better prices for business customers than households, and medical specialists do it when they offer vastly different prices for the same service to consumers with different incomes. It is made easier by digital technology and data collection. While it can make prices lower for some customers, it can make prices much more expensive to customers in a hurry or in urgent need of something. <h2>8. Excuse-flation</h2> <a href="https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high">Excuse-flation</a> is where general inflation provides “cover” for businesses to raise prices without justification, blaming nothing other than general inflation. It means that in times of general high inflation businesses can increase their prices even if their costs haven’t increased by as much. On Thursday Reserve Bank Governor <a href="https://www.afr.com/policy/economy/inflation-is-cover-for-pricing-gouging-rba-boss-says-20240215-p5f58d">Michele Bullock</a> seemed to confirm that she though some firms were doing this saying that when inflation had been brought back to the Bank’s target, it would be "much more difficult, I think, for firms to use high inflation as cover for this sort of putting up their prices." <h2>A political solution is needed</h2> Ultimately, our own vigilance won’t be enough. We will need political help. The government’s recently announced <a href="https://treasury.gov.au/review/competition-review-2023">competition review</a> might be a step in this direction. The legislative changes should police business practices and prioritise fairness. Only then can we create a marketplace where ethics and competition align, ensuring both business prosperity and consumer wellbeing. This isn’t just about economics, it’s about building a fairer, more sustainable Australia.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/223310/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/david-tuffley-13731">David Tuffley</a>, Senior Lecturer in Applied Ethics & CyberSecurity, <a href="https://theconversation.com/institutions/griffith-university-828">Griffith University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/why-prices-are-so-high-8-ways-retail-pricing-algorithms-gouge-consumers-223310">original article</a>.

Money & Banking

Retailer pulls "creepy" and "disturbing" ad for school uniforms

H&M has removed a school uniform ad in Australia after social media users slammed the retailer for sexualising children. The ad, which a few social media users have screenshot before it was removed, features two young girls in school uniform looking back at the camera with the caption: "Make those heads turn in H&M's Back to School fashion." Users on X, formerly known as Twitter, slammed the ad calling it it "creepy" and "disturbing", and sharing their own stories about "being ogled" at school. "What is your intention with this sponsored Facebook ad?" Australian writer Melinda Tankard Reist, whose work addresses sexualization and the harms of pornography, shared on X. "Little schoolgirls generally don't want to 'turn heads.' The large numbers I engage with in schools want to be left alone to learn and have fun and not draw unwanted attention to their appearance." "The little girls parents generally prefer heads don't 'turn' when others see their daughters walking to school, on a bus or in class," she continued. "Why would you want to fuel the idea that little girls should draw attention to their looks, bodies and 'style'?" <blockquote class="twitter-tweet"> <a href="https://twitter.com/hm?ref_src=twsrc%5Etfw">@hm</a> <a href="https://twitter.com/hmaustralia?ref_src=twsrc%5Etfw">@hmaustralia</a> what is your intention with this sponsored Facebook ad? Little schoolgirls generally don’t want to “turn heads”. The large numbers I engage with in schools want to be left alone to learn and have fun and not draw unwanted attention to their appearance 1/ <a href="https://t.co/DDwv42GeNz">pic.twitter.com/DDwv42GeNz</a> — Melinda TankardReist (@MelTankardReist) <a href="https://twitter.com/MelTankardReist/status/1747866459836158415?ref_src=twsrc%5Etfw">January 18, 2024</a></blockquote> Another user wrote: "This is really disturbing. "I remember being cat called whilst waiting for the bus in my school uniform. It made me feel unsafe." "Girls go to school to get an education, not to be jeered at by onlookers," they concluded. The Swedish fashion giant has since removed the ad and apologised for the campaign. "We have removed this ad," they told CNN. "We are deeply sorry for the offence this has caused and we are looking into how we present campaigns going forward." Images: Getty

Legal

Senior wins $38,000 a year for life because of retailer's mistake

A man in the US is set for life after a retailer's blunder led him to win the lotto. Michael Sopejstal, 60, who lives in Illinois, won the Lucky for Life lotto after a retailer at a GoLo gas station accidentally printed a ticket with 10 lines for a single draw. Buying the Lucky for Life ticket has been part of Sopejstal's routine, as he travels from Illinois to Michigan every few weeks to eat at his favourite restaurant, and this time he got lucky. “I checked my ticket one morning and saw that I had won $US25,000 ($A38,000) a year for life,” he told Michigan Lottery officials. “I immediately started thinking about all the things I could do with the money and whether I wanted to take the lump sum or annuity option. “It was an amazing feeling!” Sopejstal chances of winning were one in more than 1.8 million. According to the lottery, Sopejstal recently visited their headquarters to claim his prize. They said he opted for a lump sum payment of $US390,000 ($A590,000) instead of the annual payment. Sopejstal also told them that he plans to use his prize money to travel and save whatever is left. Images: Getty

Money & Banking

Electricity retailer tells customers to leave

A small electricity retailer has told its customers to leave and find another company as they expect their prices to soar. Victorian energy supplier Electricityinabox expects its prices to increase by a whopping 95 per cent on July 1. CEO Morgan Duncan sent out a letter to all customers telling them that "only the lazy or crazy would stay" with the company. The letter begins with a straightforward statement telling customers “you need to find a new electricity provider today". "You need to be aware that smaller low price high value retailers are exiting this market. Four have already exited, some of them closed their doors," it continues. The company will continue to provide certain services but is expected to leave the electricity sector due to the increasing demand making it expensive. Energy companies ReAmped, LPE, Discover, Elysian and Future X have told customers to look elsewhere, while Momentum, Simply, Mojo, CovAU and Nectr have stopped accepting new customers. The news comes just a week after Australian Energy Market Operator (AEMO) called on Aussies to reduce their electricity consumption. Australian Energy Regulator (AER) and Australian Competition and Consumer Commission (ACCC) have warned retailers not to take advantage of the situation. Image: Shutterstock

Money & Banking

ALDI announces new change to all stores

ALDI supermarket has announced an exciting new change coming to all stores across Australia. The German retailer provides large 212-litre carts - which are 1.1m high - for shoppers to use, which have since gained a lot of criticism from elderly, pregnant and short people. Now ALDI has announced it will soon be rolling out half trolleys for customers to do smaller grocery shops. “We recognise that customers are looking for greater convenience when they visit our stores, as it’s almost impossible not to pick up the excellent value products on offer,” the retailer said. “That’s why we’re introducing smaller trolleys across all our locations, so our customers can more efficiently pick up products while doing smaller grocery shops.” Shoppers celebrated the news with many welcoming the change which will see their shopping habits change. “Finally! I almost fall into the big ones to reach the bottom,” one person wrote. “Great news for people who have had hip and shoulder replacement surgery,” another commented. “This is great, I also love the big trolleys at Aldi. They are always in good condition and the height is more comfortable,” someone else welcomed. The exciting news comes just months after ALDI introduced shopping baskets in their stores. Image: Shutterstock

Food & Wine

ALDI looking for fresh meat (graduates)

ALDI Australia is looking to hire a fresh batch of graduates for their insanely popular program. The German retailer’s graduate program is inundated with applications each year thanks to the attractive $92,000 starting salary, a company car and iPhone, as well as five weeks annual leave. Successful applicants will undertake a comprehensive program over a two-year period while rotating through the exciting challenge of the business. “Our graduate jobs aren’t easy but the greater the challenge, the greater the reward,” their <a href="https://www.aldicareers.com.au/Graduate-Program-Application-Process" target="_blank" rel="noopener">website</a> reads. “You’ll have exposure to serving customers on registers, managing sections in our distribution centre, undertaking site meetings with our property team, and developing your skills as a leader - a career achievement you can be proud of.” Applicants who succeed in their training will take on the role of an Executive Manager, giving them the opportunity to run up three-to-five stores. Peter Slaven recently completed the program and is now an Executive Manager of Store Operation in NSW. “I was prepared for a lot of observation and structured training, however I was pleasantly surprised with how hands-on ALDI’s graduate program is,” he told <a href="https://www.news.com.au/finance/work/careers/aldis-insane-92000-job-for-uni-graduates/news-story/fbba33620c65bfad5a5f80df3e730155?utm_campaign=EditorialSB&utm_source=news.com.au&utm_medium=Facebook&utm_content=SocialBakers" target="_blank" rel="noopener">news.com.au</a>. “During the program I worked in three cities and over 30 stores, building relationships with close to 500 people. No two days are the same and I learnt to adapt quickly to constant change and I am still learning new things every day.” ALDI group director of human resources and projects Hayden Rydberg said the program attracted people from all walks of life. “It’s an opportunity for ambitious future leaders to hit the ground running in a supportive environment where you will learn directly from industry leaders, all while accelerating your career with a rewarding and dynamic retail business,” he said. Applicants must be in their final year of study or recently completed a master’s degree in any subject. Applications for ALDI's 2023 graduate program close on Monday March 28, 2022. Image: Shutterstock

Money & Banking

Retailers criticised for ‘outrageous’ markups on rapid COVID tests amidst shortage

Retailers across Australia have been criticised by consumers for marking up the prices of rapid antigen tests for COVID-19, amidst increasing case numbers and a national shortage of tests. Many people around the country are struggling to find any tests at all, which is where services like <a rel="noopener" href="https://findarat.com.au/" target="_blank">Find A RAT</a> come in, helping people share information about stores that have stock, although there are only 149 listings of stores with RATs in stock, compared to 2271 listings of stores that are sold out. Of those stores that do have RATs in stock, many are charging desperate consumers an exorbitant amount for the necessary at-home testing kits. Australians have taken to social media to name and shame retailers that are charging sky-high prices for the tests, including Channel 9 reporter Airlie Walsh, who said that a BP service station in Edgecliff, in Sydney’s eastern suburbs, was selling individual tests for $30 each. She added, “They’re as little as $1 – $2 in Europe, but for a family of four in Oz, you’ll pay $120.” Journalist Eliza Barr was finally able to acquire some tests for $19.99 each, marked up from $12.25 to $13.75 and typically sold as a pack of 20. <blockquote class="twitter-tweet"> The most cursory Google reveals these Innoscreen tests are meant to come in a box of 20 and can cost as little as between $12.25 and $13.75 per test in Australia. This is absolutely unforgivable. <a href="https://t.co/72eih9FOOZ">pic.twitter.com/72eih9FOOZ</a> — Eliza Barr (@ElizaJBarr) <a href="https://twitter.com/ElizaJBarr/status/1478198750401073153?ref_src=twsrc%5Etfw">January 4, 2022</a></blockquote> While online retailer Kogan is now out of stock, as are Chemist Warehouse, Amazon and Harvey Norman, screenshots show that at one point, it was selling individual tests for $44 each. Beauty and health journalist Eleanor Pendleton took to Instagram to criticise the markups, explaining that in November, she purchased over 100 RATs for a production shoot, costing $1200. She wrote, “What cost me $1200 two months ago would today cost $4000! “With PCR tests only available to those with symptoms, the price gouging on RATs is disgusting.” The markups come as Prime Minister Scott Morrison held firm to his government’s decision not to make RATs free, despite individual state governments such as Queensland and Victoria purchasing supplies themselves in order to provide them for free to residents. The price gouging also comes as the need for RATs increases, as governments urge citizens not to line up for PCRs unless they are symptomatic. On Tuesday afternoon, the Australian Competition and Consumer Commission announced that it was on the case. Rod Sims, chairman of the ACCC, said it was monitoring the situation “very closely”, explaining, “If we get a number of reports about excessive pricing from particular outlets, that’s when we can get involved and take whatever we judge to be the appropriate action. We’re gathering information as fast as we can.” Image: Massimiliano Finzi

News

I chose the electricity retailer offering the best deal for my home. That’s not what I got

Households in most of Australia have been able to choose between electricity retailers for more than a decade. The main reason is to <a rel="noopener" href="https://www.accc.gov.au/publications/restoring-electricity-affordability-australias-competitive-advantage" target="_blank">reduce their bills</a>. But past research by the <a rel="noopener" href="https://www.vepc.org.au/" target="_blank">Victoria Energy Policy Centre</a> (at Victoria University) has found only marginal benefits in switching retailers. Our study of more than 48,000 bills from Victorian households in 2018, for example, found households typically saved <a rel="noopener" href="https://theconversation.com/victorians-who-switched-energy-retailers-only-save-45-a-year-leaving-hundreds-on-the-table-122786" target="_blank">less than A$50 a year</a> by switching energy providers. Has anything improved since then? A few weeks ago I decided to test the market for my own household supply. To guide my choice, I evaluated 357 competing offers from 30 retailers using my half-hourly consumption and solar export data for the last year. The 357 offers came from the Victorian government’s price comparison <a rel="noopener" href="https://compare.energy.vic.gov.au/" target="_blank">website</a>, the only comprehensive source of all commonly available offers. After having found the deal I wanted, it was a painless and quick online process to switch to the new retailer. Two weeks later I checked what had actually happened. I discovered my new retailer had not switched me to its cheapest offer, but to one of its most expensive. I estimate I’ll still save about $143 for the year. But I would have saved about $100 more if the company had put me on its cheapest advertised offer (which, after all, was the reason I chose this retailer). These numbers might not be large, but I have a small bill because I have solar panels and consume much less electricity than typical customers. For the typical customer, the differences would be bigger. I have asked my new retailer to explain, but am yet to receive a reply. How I worked out my (lack of) savings My electricity bill has several elements: a daily charge, two consumption rates and a solar feed-in rate. You might note such elements in the offer you choose and then compare them to the offer the retailer actually puts you on. But you’d need to be highly motivated with time on your hands to do so. To do my sums I used special software to scrape and price all competing offers. This software, developed over several years and used in our previous research, is not publicly available. The outcome of my test is broadly consistent with the findings of our previously mentioned research. That analysis – <a rel="noopener" href="https://link.springer.com/article/10.1007%2Fs11149-020-09418-9" target="_blank">using more than 48,000 bills</a> voluntarily uploaded to the Victorian government’s price comparison website in 2018 – found typical households could theoretically save A$281 a year, or about 20% of their bill, by switching to the best possible advertised deal. In reality, however, customers who switched retailers saved only A$45 a year – or about 3% of their annual bill. <img src="https://images.theconversation.com/files/431880/original/file-20211115-13-1wdrcv4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="Child using light switch" /> In theory customers who switch electricity retailers should be able cut their annual bill by 20%. In reality it turns out to be about 3%. Image: Shutterstock I cannot be sure my recent experience is typical. But I think it likely other switchers will have had a similar experience. My study of the 357 competing offers available to me suggests many retailers seem to use “bait and switch” – or “tease and squeeze” – marketing strategies to attract new customers. What should be made of this? Choice can be valuable. Competition can lead to innovations – such as solar and battery packages with zero upfront payment that are now appearing in the the market. But the benefit of reforms making it easier to choose and switch between electricity retailers are not being fully realised. The more complex the market becomes as electricity generation is progressively decentralised and electricity buyers also become sellers, the harder it becomes to assess the merits of the complicated offers from energy retailers. Or even to know if what you signed up for is what you are actually getting. Had I known my new retailer would not switch me to its best offer (the one that attracted me in the first place), I wouldn’t have switched. This underlines the need for governments and regulators to look at how the market is working in practice, not just in theory. Examples of this approach are the 2017 independent review of Victoria’s electricity and gas retail markets <a rel="noopener" href="https://www.energy.vic.gov.au/about-energy/policy-and-strategy" target="_blank">chaired by former deputy premier John Thwaites</a> and the Australian Competition and Consumer Commission’s <a rel="noopener" href="https://www.accc.gov.au/publications/restoring-electricity-affordability-australias-competitive-advantage" target="_blank">2018 inquiry into electricity affordability</a>. But these are exceptions. The devil lies in the detail of how customers search for better offers and then switch to retailers in pursuit of those better offers. Regulations to clean up possibly misleading advertising and “sharp” business practices should flow from that.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/171676/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a rel="noopener" href="https://theconversation.com/profiles/bruce-mountain-141253" target="_blank">Bruce Mountain</a>, Director, Victoria Energy Policy Centre, <a rel="noopener" href="https://theconversation.com/institutions/victoria-university-1175" target="_blank">Victoria University</a> This article is republished from <a rel="noopener" href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a rel="noopener" href="https://theconversation.com/i-chose-the-electricity-retailer-offering-the-best-deal-for-my-home-thats-not-what-i-got-171676" target="_blank">original article</a>. Image: Getty Images

Money & Banking

I chose the electricity retailer offering the best deal for my home. That’s not what I got

Households in most of Australia have been able to choose between electricity retailers for more than a decade. The main reason is to <a href="https://www.accc.gov.au/publications/restoring-electricity-affordability-australias-competitive-advantage">reduce their bills</a>. But past research by the <a href="https://www.vepc.org.au/">Victoria Energy Policy Centre</a> (at Victoria University) has found only marginal benefits in switching retailers. Our study of more than 48,000 bills from Victorian households in 2018, for example, found households typically saved <a href="https://theconversation.com/victorians-who-switched-energy-retailers-only-save-45-a-year-leaving-hundreds-on-the-table-122786">less than A$50 a year</a> by switching energy providers. Has anything improved since then? A few weeks ago I decided to test the market for my own household supply. To guide my choice, I evaluated 357 competing offers from 30 retailers using my half-hourly consumption and solar export data for the last year. The 357 offers came from the Victorian government’s price comparison <a href="https://compare.energy.vic.gov.au/">website</a>, the only comprehensive source of all commonly available offers. After having found the deal I wanted, it was a painless and quick online process to switch to the new retailer. Two weeks later I checked what had actually happened. I discovered my new retailer had not switched me to its cheapest offer, but to one of its most expensive. I estimate I’ll still save about $143 for the year. But I would have saved about $100 more if the company had put me on its cheapest advertised offer (which, after all, was the reason I chose this retailer). These numbers might not be large, but I have a small bill because I have solar panels and consume much less electricity than typical customers. For the typical customer, the differences would be bigger. I have asked my new retailer to explain, but am yet to receive a reply. <h2>How I worked out my (lack of) savings</h2> My electricity bill has several elements: a daily charge, two consumption rates and a solar feed-in rate. You might note such elements in the offer you choose and then compare them to the offer the retailer actually puts you on. But you’d need to be highly motivated with time on your hands to do so. To do my sums I used special software to scrape and price all competing offers. This software, developed over several years and used in our previous research, is not publicly available. The outcome of my test is broadly consistent with the findings of our previously mentioned research. That analysis – <a href="https://link.springer.com/article/10.1007%2Fs11149-020-09418-9">using more than 48,000 bills</a> voluntarily uploaded to the Victorian government’s price comparison website in 2018 – found typical households could theoretically save A$281 a year, or about 20% of their bill, by switching to the best possible advertised deal. In reality, however, customers who switched retailers saved only A$45 a year – or about 3% of their annual bill. <img src="https://images.theconversation.com/files/431880/original/file-20211115-13-1wdrcv4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="Child using light switch" /> In theory customers who switch electricity retailers should be able cut their annual bill by 20%. In reality it turns out to be about 3%. Shutterstock I cannot be sure my recent experience is typical. But I think it likely other switchers will have had a similar experience. My study of the 357 competing offers available to me suggests many retailers seem to use “bait and switch” – or “tease and squeeze” – marketing strategies to attract new customers. <h2>What should be made of this?</h2> Choice can be valuable. Competition can lead to innovations – such as solar and battery packages with zero upfront payment that are now appearing in the the market. But the benefit of reforms making it easier to choose and switch between electricity retailers are not being fully realised. The more complex the market becomes as electricity generation is progressively decentralised and electricity buyers also become sellers, the harder it becomes to assess the merits of the complicated offers from energy retailers. Or even to know if what you signed up for is what you are actually getting. Had I known my new retailer would not switch me to its best offer (the one that attracted me in the first place), I wouldn’t have switched. This underlines the need for governments and regulators to look at how the market is working in practice, not just in theory. Examples of this approach are the 2017 independent review of Victoria’s electricity and gas retail markets <a href="https://www.energy.vic.gov.au/about-energy/policy-and-strategy">chaired by former deputy premier John Thwaites</a> and the Australian Competition and Consumer Commission’s <a href="https://www.accc.gov.au/publications/restoring-electricity-affordability-australias-competitive-advantage">2018 inquiry into electricity affordability</a>. But these are exceptions. The devil lies in the detail of how customers search for better offers and then switch to retailers in pursuit of those better offers. Regulations to clean up possibly misleading advertising and “sharp” business practices should flow from that.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/171676/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/bruce-mountain-141253">Bruce Mountain</a>, Director, Victoria Energy Policy Centre, <a href="https://theconversation.com/institutions/victoria-university-1175">Victoria University</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/i-chose-the-electricity-retailer-offering-the-best-deal-for-my-home-thats-not-what-i-got-171676">original article</a>. Image: Shutterstock

Retirement Income

Why retail workers are wearing a second badge

Since the start of the pandemic, retail workers have been at the forefront of people’s frustrations as they copped abuse on the daily. In April, one woman was filmed racially abusing workers at a Telstra store in Sydney, telling a staff member to “go back to China, while this week another customer berated retailers over their face mask policies, saying such views “have no basis in science or fact”. In a bid to curb the rise of abuse, particularly during COVID, staff at some of Australia’s biggest chains will now wear a second name badge. Employees at stores such as Woolworths, Target, Big W and KFC will have a tag on their uniform stating either “I’m a mother”, “I’m a father”, “I’m a son” or “I’m a daughter” to remind customers they are someone’s family member. A Woolworths employee recently went viral on TikTok after she explained the importance of the badge. “A lot of people have been asking on my videos what this says and it says ‘No one deserves a serve, I’m a daughter’,” Dakota Rae Shaw said in the video. “Basically the union brought them out to us so that people could imagine if it was their daughter they were speaking to.” <img style="width: 323.727px; height: 500px; display: block; margin-left: auto; margin-right: auto;" src="https://oversixtydev.blob.core.windows.net/media/7837116/screen-shot-2020-07-29-at-30527-pm.png" alt="" data-udi="umb://media/e6d21d25f98e44dd8f805dd04bf6cbd9" /> According to the union, over 85 per cent of workers are being abused while they work. SDA NSW secretary Bernie Smith said there has been a reported 44 per cent reduction in customer aggression since the badges were rolled out. “The idea of the badges is to humanise the person behind the counter, so the customer sees them as a person rather than somebody processing their sale,” he told Yahoo. “They’re someone who’s part of a family and part of a community, and the badges make people think twice.” A Facebook user recently shared her experience of a staff member wearing a badge saying “I’m a son” at Woolworths store at Lennox Head, on the northern NSW coast, on Saturday. “He was wearing a second badge … I started asking questions as to why, and he said it was an attempt stop the abuse that they cop,” she wrote. “He said he hasn’t experienced it in Lennox yet but in Byron Bay he did all the time because of (in his words) ‘the sense of entitlement most people there had’. “It breaks my heart that young people just trying to do their job, especially during a pandemic, have to put up with this c**p. “If you witness it, call it out. Not ok.”

Travel Trouble

Fast fashion: how retailers can use pandemic to change our terrible relationship with clothes

Even before the pandemic, the UK fashion retail industry <a href="https://www.bbc.co.uk/news/business-43240996">was struggling</a>. John Lewis, M&S and Debenhams had all announced losses, job cuts and store closures, while House of Fraser was taken over. Since lockdown, Oasis and Warehouse <a href="https://www.bbc.co.uk/news/business-52285231">have entered administration</a>, and John Lewis <a href="https://www.theweek.co.uk/106801/will-john-lewis-close-some-stores-permanently">has said</a> that not all its stores will reopen. <a href="https://www.bbc.co.uk/news/business-43240996">One of the challenges</a> for these retailers is cut throat price competition from international rivals like Primark and H&M, and online retailers like Pretty Little Thing and Misguided. <a href="https://researchonline.gcu.ac.uk/en/publications/doing-it-for-the-kids-the-role-of-sustainability-in-family-consum">Low-price garments</a> became all the more attractive to consumers after their spending power was weakened by the financial crisis of 2007-09. This brought about the era of fast fashion – low quality clothes needing replaced more quickly, and consumers who see them as disposable. The price of these garments doesn’t reflect their true cost. It ignores both the workers who make them and the <a href="https://www.theguardian.com/fashion/2020/apr/07/fast-fashion-speeding-toward-environmental-disaster-report-warns">carbon footprint</a> from more production, more transportation and more landfill. Rays of hope At the turn of the year, there <a href="https://www.theguardian.com/fashion/2020/jan/01/fashion-climate-sustainability-greta-thunberg-i-d-gucci-zero-emissions-carbon-neutral">was a feeling</a> that sustainability might be moving back up the agenda. A surge of consumer protests, led by Extinction Rebellion and Greta Thunberg, seemed to herald a public desire for change. To <a href="https://www.ecowatch.com/fast-fashion-is-the-second-dirtiest-industry-in-the-world-next-to-big--1882083445.html">raise awareness</a> that fashion is the second-worst polluter after oil, Extinction Rebellion <a href="https://www.vogue.com/slideshow/extinction-rebellion-london-fashion-week-climate-change-protests">held a funeral</a> during London Fashion Week 2019. It seemed possible that consumers might be galvanised to shop more sustainably – especially given the extreme weather conditions of 2019, and fears that there are <a href="https://www.independent.co.uk/environment/climate-change-un-report-greenhouse-gases-carbon-dioxide-methane-sea-level-rise-global-warming-a8646426.html">just ten years left</a> to halt the irreversible consequences of climate change. Then came the pandemic. With many high street shops forced to suspend trading, the whole industry has been in flux. Brands like Primark and Matalan have <a href="https://www.theguardian.com/fashion/2020/mar/27/put-earth-first-can-a-greener-fairer-fashion-industry-emerge-from-crisis">cancelled or suspended</a> orders in places like Bangladesh, causing some factories <a href="https://www.theguardian.com/global-development/2020/apr/02/fashion-brands-cancellations-of-24bn-orders-catastrophic-for-bangladesh">to close</a>. There may have been <a href="https://www.bbc.com/future/article/20200422-how-has-coronavirus-helped-the-environment">big environmental benefits</a> from the world at a standstill, but it will be little consolation to garment workers who are furloughed or jobless. Yet amidst <a href="https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/beyond-coronavirus-the-path-to-the-next-normal">all this upheaval</a>, there is <a href="https://www.theguardian.com/fashion/2020/mar/27/put-earth-first-can-a-greener-fairer-fashion-industry-emerge-from-crisis">an opportunity</a> for the fashion industry – both to help these workers and more broadly to put sustainability at the heart of their business. The decisions by fashion retailers like <a href="https://www.theindustry.fashion/burberry-retools-factory-to-make-non-surgical-gowns-and-masks-and-funds-vaccine-research/">Burberry</a> and <a href="https://edition.cnn.com/style/article/fashion-industry-masks-protective-equipment-covid-19/index.html">Prada</a> to divert into making medical gowns and masks for healthcare workers are a good starting point. If companies can make positive changes to help manage coronavirus, they can also address fast fashion. If, for example, companies paid garment workers the <a href="https://labourbehindthelabel.org/our-work/faqs/#1441884831979-53ad6cf0-86251441886042060">living wage</a> for their part of the world, they could use it in their marketing to garner a competitive advantage. Paying a living wage <a href="https://thefableists.wordpress.com/2014/04/03/tailored-wages-new-report-investigates-clothing-brands-work-on-living-wages/">doesn’t significantly increase</a> the cost of garments. Take the example of a T-shirt with a retail price of £29, for which the worker receives 0.6% or 18p. If that was doubled to 36p, it would not increase the overall price by very much. Paying a living wage <a href="https://labourbehindthelabel.org/our-work/faqs/#1441884831979-53ad6cf0-86251441886042060">should enable workers</a> in developing countries to afford nutritious food, clean water, shelter, clothes, education, healthcare and transport, while leaving some left over. One fashion entrepreneur that has developed a different way of helping garment workers during the pandemic is Edinburgh-based Cally Russell. He set up the <a href="https://www.theguardian.com/fashion/2020/may/30/lost-stock-its-like-buying-your-future-self-a-present">Lost Stock initiative</a>, which sells the garments from orders cancelled by UK fashion retailers by purchasing garments directly from manufacturers in Bangladesh. <a href="https://loststock.com/pages/costs">A Lost Stock box</a> of clothes costs £39. Almost a third is donated to the Sajida Foundation, which is giving food and hygiene parcels to Bangladeshis struggling during the pandemic. For maximum transparency, Lost Stock also provides a price breakdown that outlines the costs to the manufacturer, the charity and the initiative itself. Cool to care Another tactic that fashion marketers could use is to encourage in consumers a similar cool-to-care ethos to that brought out by the pandemic – as seen with the UK’s weekly clapping for key workers, for example. Business in numerous sectors are already focusing their marketing message on supporting NHS workers to capitalise on this spirit of collective solidarity. Fashion marketers could channel people’s desire for self-gratification towards buying clothes that contribute to the social good. My <a href="https://www.emerald.com/insight/content/doi/10.1108/QMR-09-2019-0113/full/html">research illustrates</a> the discomfort consumers experience when aware of allegations of both garment-worker and environmental exploitation, so it should be possible for marketers to benefit from doing the reverse. <a href="https://www.toms.com/">TOMS (Tomorrow’s Shoes)</a> is an example of a fashion business with giving at the core of its strategy: for every pair of shoes sold, a pair is donated to a child in need. Since 2006, 100 million pairs of shoes have been donated, and TOMS <a href="https://www.toms.com/about-toms">has since branched</a> into areas like eyewear.Another example is <a href="https://snagtights.com/pages/our-philosophy#:%7E:text=Sustainable,first%20fully%20bio%2Ddegradable%20tights.">Snag Tights</a>, which is supporting NHS frontline workers with a free pair of tights for every order placed. The company markets its tights as vegan friendly and free of plastic packaging, and is trying to develop the world’s first fully bio-degradable tights. Swaps and seconds One other trend that should definitely be encouraged is initiatives that expand the lifecycle of fashion and textiles. <a href="https://www.stylus.com/hmzhcg">London Fashion Week hosted</a> a fashion swap shop in February for the first time. Similarly, the flagship Selfridges store on London’s Oxford Street <a href="https://www.retail-week.com/fashion/selfridges-opens-second-hand-clothing-boutique/7033360.article?authent=1">began selling</a> second-hand luxury fashion and high-end brands with resale site Vestiaire Collective in 2019. There has also <a href="https://www.theguardian.com/fashion/2018/dec/22/fashion-libraries-ethical-clothing-borrowing">been a rise</a> in fashion libraries that rent fashion garments and accessories, allowing consumers affordable access to higher quality and luxury items. Fashion retailers could move in this direction, while also supporting customers by hosting workshops for upcycling garments into something new. In sum, the fashion industry should take advantage of the pandemic pause and the current mood to show constructive leadership to the global economy. It should use its power to help change our relationship with clothing into something more equal and sustainable for the long term. Written by Elaine Ritch. Republished with permission of <a href="https://theconversation.com/fast-fashion-how-retailers-can-use-pandemic-to-change-our-terrible-relationship-with-clothes-140210">The Conversation.</a>

Beauty & Style

ALDI shoppers furious after retailer cancels its annual snow gear sale

It’s an event that shoppers look forward to each year, as they rush to their nearest ALDI for the annual Snow Gear Special Buys sale. The highly anticipated sale has people “working in teams” as they attempt to score a bargain. But unfortunately, the German retailer has had to cancel the snow sale for 2020, forcing shoppers to put that excitement on hold till 2021. Once a year, the supermarket releases items such as jackets, goggles, boots and thermal wear, helping Aussies stay warm as they hit the slopes. But with the coronavirus pandemic stopping people from travelling, the retailer found that it was inappropriate to continue with the sale. Taking to Facebook, ALDI revealed they are shifting their priorities to the grocery sector, forcing them to make the difficult decision of withdrawing its 2020 Snow Gear Special Buys event. “We’ll be back with our best-ever collection next year,” the post read. “We’re looking forward to sharing our best-ever collection with you in 2021. Apologies for any inconvenience caused.” The post garnered over 1000 comments and shares, but people were torn over the decision. Majority of comments came from those who live in colder areas, saying they rely on the sale to stock up on winter clothing. “Pity about the people who live in the colder areas. I was waiting for this to stock up on clothes to work in the paddocks etc. Typical that they only think people who will go on holidays buy this stuff,” one person commented. “Considering not everyone travels to snowy regions; there are thousands of people who actually live in these areas,” added another. “Winter is still coming – would be great if they still brought out the thermals, boots, gloves, & beanies.” In normal circumstances, the sale occurs each year in May and attracts thousands of shoppers around the country as they hope to snap up a cool saving on snow gear.

Domestic Travel

Coronavirus: Harvey Norman retail mogul boasts sales increase

Retail mogul and Harvey Norman co-founder Gerry Harvey has dismissed concerns over the new coronavirus outbreak in Australia, describing the pandemic as an “opportunity” that has spiked up sales. As the federal government moved to <a href="https://www.abc.net.au/news/2020-03-22/coronavirus-australia-live-updates-covid-19-latest-news-lockdown/12078506">close entertainment venues, gyms and places of worship indefinitely</a> to slow the spread of coronavirus, Harvey said he is “not really scared” about getting infected despite being 80 years old. Speaking on 60 Minutes alongside health experts and other business leaders, Harvey said, “It’s not the Spanish Flu that killed 15 million people just after the First World War. Why are we so scared about getting this virus?” <blockquote class="twitter-tweet"> Billionaire retailer Gerry Harvey reckons we should all ‘lighten up’ and not let coronavirus dictate our lives. For a section of the population, “she’ll be right” is the default position, the question is whether that mentality puts ourselves and others at greater risk. <a href="https://twitter.com/hashtag/60Mins?src=hash&ref_src=twsrc%5Etfw">#60Mins</a> <a href="https://t.co/Q6zApNN934">pic.twitter.com/Q6zApNN934</a> — 60 Minutes Australia (@60Mins) <a href="https://twitter.com/60Mins/status/1241677290280345601?ref_src=twsrc%5Etfw">March 22, 2020</a></blockquote> He added, “I’ve got to 80 years of age, I’ve had a wonderful life and I think to myself, I’m just going to keep going as if nothing’s happened.” Older people and those with underlying illnesses are most at risk of serious infection. A study from the Chinese Centre for Disease Control and Prevention showed that the death rate of coronavirus patients aged above 80 was <a href="https://www.businessinsider.com.au/coronavirus-death-age-older-people-higher-risk-2020-2">15 per cent</a>, compared with 0.2 per cent for those under 50. The businessman said the pandemic has propelled consumer demand and boosted revenue across his national chain of electronics stores. “You know, this is an opportunity,” he said. “Our sales are up in Harvey Norman in Australia by nine per cent on last year. Our sales in freezers are up 300 per cent. And what about air purifiers? Up 100 per cent.”

Money & Banking

Harris Scarfe saved from collapse as Spotlight acquires retail icon

Australian discount department store Harris Scarfe has been rescued from receivership after fabric and home fittings store Spotlight agreed to buy the 170-year-old business. The future of the retailer’s 44 stores and about 1,300 staff is yet to be determined as Spotlight and receivers at Deloitte continue discussing the details of the transaction. According to the <a href="https://www.smh.com.au/business/companies/spotlight-set-to-save-harris-scarfe-from-collapse-20200303-p546bm.html">Sydney Morning Herald</a>, the settlement could be finalised by <a href="https://www.smh.com.au/business/companies/spotlight-set-to-save-harris-scarfe-from-collapse-20200303-p546bm.html">mid-April</a>. “There is still a lot of work we need to do together to finalise the transaction and we will be working with the Spotlight Group and the Harris Scarfe leadership team to make this happen,” said Vaughan Strawbridge, partner at Deloitte Restructuring Services. “We are hopeful all of the 44 stores will be retained under the sale but ultimately, this will be dependent on how the transaction progresses over the next couple of weeks.” The retail chain <a href="https://www.oversixty.com.au/finance/retirement-income/harris-scarfe-to-close-21-stores-across-australia">fell into receivership in December</a> and closed down 21 stores in early January as receivers at Deloitte sought a buyer. Harris Scarfe is one of the <a href="https://www.smartcompany.com.au/industries/retail/gerry-harvey-retailers-collapse/">many brands which have collapsed in recent months</a>, with Ishka, Colette by Colette Hayman, Jeanswest, Curious Planet and Bardot entering voluntary administration.

Retirement Income

Brace yourself! Retailers face fines of up to $50,000 as new plastic bag ban starts

Victorian retailers who supply single-use plastic bags to customers could be fined $49,500 per offence under new state laws that come into effect from tomorrow. The plastic bag ban impacts retail outlets in the entire state, which includes supermarkets, fashion stores, fast-food outlets, convenience stores as well as individual businesses who face fines of $9,900 per offence. The new law makes it illegal for any retailer to “lightweight plastic shopping bags with handles with a thickness of 35 microns or less at any part of the bag, including degradable, biodegradable and compostable bags,” according to <a rel="noopener" href="https://www.news.com.au/finance/business/retail/retailers-face-fines-of-50000-as-victorias-plastic-bag-ban-kicks-in-on-november-1/news-story/db6e33ffdd5c8768ab75ec31afc9ae8e" target="_blank">news.com.au</a>. <blockquote style="background: #FFF; border: 0; border-radius: 3px; box-shadow: 0 0 1px 0 rgba(0,0,0,0.5),0 1px 10px 0 rgba(0,0,0,0.15); margin: 1px; max-width: 540px; min-width: 326px; padding: 0; width: calc(100% - 2px);" class="instagram-media" data-instgrm-captioned="" data-instgrm-permalink="https://www.instagram.com/p/B3avG2YHhoO/?utm_source=ig_embed&utm_campaign=loading" data-instgrm-version="12"> <div style="padding: 16px;"> <div style="display: flex; flex-direction: row; align-items: center;"> <div style="background-color: #f4f4f4; border-radius: 50%; flex-grow: 0; height: 40px; margin-right: 14px; width: 40px;"></div> <div style="display: flex; flex-direction: column; flex-grow: 1; justify-content: center;"> <div style="background-color: #f4f4f4; border-radius: 4px; flex-grow: 0; height: 14px; margin-bottom: 6px; width: 100px;"></div> <div style="background-color: #f4f4f4; border-radius: 4px; flex-grow: 0; height: 14px; width: 60px;"></div> </div> </div> <div style="padding: 19% 0;"></div> <div style="display: block; height: 50px; margin: 0 auto 12px; width: 50px;"></div> <div style="padding-top: 8px;"> <div style="color: #3897f0; font-family: Arial,sans-serif; font-size: 14px; font-style: normal; font-weight: 550; line-height: 18px;">View this post on Instagram</div> </div> <a style="color: #000; font-family: Arial,sans-serif; font-size: 14px; font-style: normal; font-weight: normal; line-height: 17px; text-decoration: none; word-wrap: break-word;" rel="noopener" href="https://www.instagram.com/p/B3avG2YHhoO/?utm_source=ig_embed&utm_campaign=loading" target="_blank">👍 Don't forget your reusable bag @vicmarket #reusablebags #VICbagban #melbourne #retail #shopping #plasticbagban #national_retail_association</a> <p style="color: #c9c8cd; font-family: Arial,sans-serif; font-size: 14px; line-height: 17px; margin-bottom: 0; margin-top: 8px; overflow: hidden; padding: 8px 0 7px; text-align: center; text-overflow: ellipsis; white-space: nowrap;">A post shared by <a style="color: #c9c8cd; font-family: Arial,sans-serif; font-size: 14px; font-style: normal; font-weight: normal; line-height: 17px;" rel="noopener" href="https://www.instagram.com/vicbagban/?utm_source=ig_embed&utm_campaign=loading" target="_blank"> VIC bag ban</a> (@vicbagban) on Oct 9, 2019 at 5:34pm PDT </div> </blockquote> In a statement that announced the legislation to parliament, Victorian Environment Minister Lily D’Ambrosio said that the ban is a much-needed step towards protecting the state’s nature from plastic pollution. “Plastic pollution is a significant environmental problem — the actions we take now will help ensure Victoria has a clean and bright future,” Ms D’Ambrosio said. “The feedback on this one was clear. Victorians want to do more to protect the environment from the damage litter causes and are overwhelmingly supportive of banning single-use plastic shopping bags. “We’ve been working closely with businesses to plan for the ban ahead of November and we’ll continue to look at ways we can reduce other types of plastic pollution across Victoria.” The National Retail Association has partnered with the Victorian Government to educate business owners about the ban. They said that thousands of businesses have made the switch to sustainable bags. “Overwhelmingly retailers are embracing this policy,” NRA chief executive Dominique Lamb said in a statement. “We know that consumers are very supportive, and most businesses have already moved to implement more sustainable options well ahead of Friday’s deadline.”

News

“That’s just disgusting”: Frustration over Woolworths issue spotted in store

Customers aren’t thrilled with Woolworths’ “disgusting” use of plastic which has been used to package “mini” versions of fruit. The photo, which was posted to Woolworths Facebook page, shows dozens of plastic packets of fruit, including bananas, apples and mandarins. The poster wrote: “Seriously Woolworths... All this plastic, for what reason? Because they’re “mini”?” <img style="width: 500px; height: 281.25px;" src="https://oversixtydev.blob.core.windows.net/media/7831761/plastic-woollies.jpg" alt="" data-udi="umb://media/81f5ff4492dc4793b83ce79ab54ba376" /> Others were quick to agree, saying that they think the retailer should be more responsible with their packaging. “That’s just disgusting and a complete disappointment. Open your eyes Woolies. This isn’t what customers want. And while you’re at it, get a new manager in charge of packaging,” one person wrote. One person pointed out that if people didn’t buy the pre-packaged fruit, there wouldn’t be a demand. “If people didn't buy them but bought the loose ones instead then Woolies wouldn't make a profit on them and stop selling them. Shame on the people that buy them over loose,” they said. A spokesperson from Woolworths was quick to comment on the post. “Most produce will be available loose for purchase as we know both options appeal to different customers, with many taking advantage of pre-packed versions to better manage budgets at the checkout,” they wrote in a comment. “The packaging on produce helps with reducing food waste. Packaging protects the quality and extends the shelf life of fruit and vegetables as they’re transported from the farm, to the store and to our customers.” However, marketing expert at the University of Technology Sydney Dr David Waller explained to <a rel="noopener" href="https://au.news.yahoo.com/a-complete-disappointment-outrage-over-disgusting-photo-in-woolworths-store-025052783.html" target="_blank">Yahoo News Australia</a> that the concept is sound, but was “poorly executed”. “It’s another example that Woolworths is being inconsistent with their message,” Dr Waller said. “They take away single-use plastic bags, but then they sell bags for 15 cents, then they talk about being green, and reducing plastic, but then give away plastic toys.” Dr Waller also stated that Woolworths likely packaged the fruit this way to target children. “They probably would’ve thought that by aiming at a kid’s market, mothers would love them. There are even many reviews from parents saying they enjoy using them,” he said. “I think they should continue with the campaign to get more kids to eat fruit, but leave them as unpacked fruit, or have them in recyclable mesh or brown paper bags.”

Food & Wine

“Retail sector in recession”: Warning issued for Australia’s oldest department stores

Australia’s population is multiplying day by day, and with prices getting higher, Australia’s economy is in its third decade of continuous recession-free growth. But there’s still one industry that’s suffering significantly: The retail sector. Department stores are some of the oldest businesses in Australia, with Myer established in 1900, David Jones in 1838, Target in 1926 and Kmart in 1968. These stores are notably older than retailers such as Uniqlo and other brands that have only recently made their way Down Under. But despite their age and reputation, those stores are dwindling, regardless of whether they’re high-end or budget friendly. Only last week, David Jones announced the value of their business to be $437 million, with the owner admitting the business isn’t as profitable as they originally believed. “The retail sector in Australia is currently in recession,” said a spokesman for Woolworths South Africa, which bought the department store in 2014. The decrease in numbers for David Jones was a warning to rival Myer, who began to sell their stock, causing the company’s share prices to fall, reversing what appeared to be an improvement earlier in the year. So what went wrong? Throughout the country, stores have been selling the same amount of stock they did 10 years ago. Some say it was the introduction of the internet that spelt doom for department stores, as it allowed for customers to do more research on whether or not they were getting the best price. And if you look at businesses who have well-defined offerings, for example JB Hi-Fi for electronics, ALDI for groceries and Bunnings for home items, their sales are increasing by the day. But despite it being difficult to remain relevant, department stores are here to stay. While the growth has stopped, it doesn’t mean big businesses are ready to close shop, unlike Barney’s in the US who declared bankruptcy last week. Each month, department stores are selling $1.5 billion worth of items each month, the problem lies in the fact that our population and our bank balances are increasing each year, so the items sold to each person have become smaller. Myer’s sales from the first half of the financial year are 7 per cent lower than they were in the same period 10 years ago. But regardless, they are still making profit, it’s just 65 per cent lower. But not every department store is expected to hang on. Take Big W for example, who after years of trading, are slowly closing down their stores due to a decrease in sales. 30 Big W stores are expected to close over the next three years, with the business assumed to report a loss before interest and tax of $80-$100 million this financial year. But perhaps the most important store of all is Kmart, being the shining light for a long time. As shoppers went Kmart mad due to their bargain items, a craze began as people started Facebook groups revealing their favourite Kmart hacks. But then the growth stopped, as in the most recent trading update, Kmart’s comparable sales fell 0.2 per cent. While Kmart is continuing to open new stores, they aren’t experiencing much growth. If the business begins to follow in the same path as other department stores, that will be a cause for concern, with sales not going up by much, but not going down either.

Money & Banking

Why we resort to retail therapy

We all have our own ways to blow off steam – but for some, making an impulse purchase seems to be the answer. Going shopping is one of the top ways of managing stress for Aussies, according to a <a href="https://www.headsup.org.au/docs/default-source/default-document-library/stress-and-wellbeing-in-australia-report.pdf?sfvrsn=7f08274d_4">survey</a> by the Australian Psychological Society. Retail therapy has indeed been proven as a fairly effective coping mechanism – 64 per cent of the survey’s respondents said shopping helped alleviate their stress. A study from the University of Michigan also found that shopping can reduce sadness by restoring one’s sense of control in life. The researchers discovered that making buying decisions helped reduce negative emotions by subverting the belief that “situational forces control the outcomes in one’s life”. Although some may worry that impulse treats may put a dent in their wallet and therefore make their mood even worse, another <a href="https://northstarpsych.com/files_uploaded/8df9f1b646b4900b8dd33849f6e898c5.pdf">study</a> published in Psychology & Marketing suggested that buyer’s remorse is not an issue. “There seem to be few, if any, downside consequences of engaging in the unplanned purchase of treats,” the researchers wrote. The study participants, they wrote, “did not experience anxiety, guilt, or buyer’s remorse,” nor did they “attempt to engage in compensatory activity” or “suffer a downturn in mood post-purchase”. However, retail therapy can only go so far in repairing mood and reducing stress. The study said shopping helps temporary and mild slumps but not “chronic negative conditions” such as loneliness. “We are currently dealing with small transactions and fleeting emotions. I am interested in larger purchases and chronic conditions,” said Scott Rick, a marketing professor at the University of Michigan’s Ross School of Business. “How far can the healing go?” If you want to reap the benefits while still keeping your budget in check, there are a few tricks you can apply. Katherine Burson, a marketing professor at the University of Michigan’s Ross School of Business recommended using your imagination. “The people who simply imagine that they are buying have less sadness at the end of the experiment, suggesting that imaginary shopping may have some of the restorative benefits we see in real shopping, which might be the ultimate solution,” said Burson. You can also make the shopping experience a little less practical by using cash instead of card and removing your credit card details online – you are <a href="https://www.huffingtonpost.com.au/2017/07/30/can-shopping-become-an-addiction_a_23057029/">less likely</a> to buy on a whim if you have to produce bills or manually enter your information. Finally, wait it out – making decisions in a tight time span can cloud your judgment over the true necessity of the item. Plan ahead and give yourself some time before committing to fork out some money.

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Why retailers want you to 'click and collect'

Retailers are starting to realise the benefit of combining online and in-store shopping. And by encouraging you to buy online first and collect later, these businesses are saving in a number of areas. Despite historically lagging <a rel="noopener" href="https://foodmag.com.au/australia-lagging-behind-online-grocery-shopping/" target="_blank">behind the rest of the developed world</a>, Australian retailers are beginning to embrace this approach. From groceries, alcohol, fashion and accessories, sports clothing and even automotive parts, more and more retailers are adopting this strategy. <a href="http://www.moirgroup.com.au/Moir%20Group-%20Retail%20presentation%20by%20Trent%20Duvall%20(KPMG).pdf">KPMG research</a> found that by 2014, 64% of customers in the United States had ordered online and picked up in-store.<a href="https://theconversation.com/the-economics-of-the-money-back-guarantee-80876"></a> In Australia 42% of retailers are now offering click and collect, and perhaps in response to the impending threat from Amazon’s entry, this number is up from 24% in 2015. To supplement their pick up in store service, 38% of retailers also allow customers to return their online purchases in-store. By comparison, 36% of Western European and 31% of North American retailers offer a click and collect service. The UK’s click and collect market is expected to grow 78% by 2020, to £8.2 billion. This is not surprising given the intense competition among retailers within the British market and the strategic shift away from price to convenience. Why you click and collect Customers are embracing buying online and picking up in store because it offers them immediate gratification but with cost savings on delivery. Click and collect provides an immediacy that traditional home delivery usually can't match, particularly in Australia where delivery times have traditionally been slow relative to international standards. Depending on the type of merchandise customers are buying, the costs of delivery can be high. In the US, 73% of supermarket shoppers reported they would pick up items in store to avoid shipping costs and 30% said they were not prepared to wait around for delivery of their online order. The sort of in-store pickup service also helps customers avoid problems with unprofessional delivery services and dodge the dreaded "card in the mailbox", where parcels are returned to the depot. In-store pickup is especially handy for customers purchasing online just prior to the weekend or at peak shopping periods such as Christmas and Easter when timing is paramount. It can also help solve delivery problems for many customers living in apartment blocks, or living or working in properties that are difficult to access. More and more customers are finding it convenient to order online and then pick up their purchases during their lunch hour or on the commute home. Online shopping doesn't allow for tactile purchasing – actually touching the products – while in-store collection enables customers to check the quality, as well as assess the colour, style and size prior to leaving the store. Any problems can be resolved immediately in-store and returns can even be processed at the same time if products don’t meet customer requirements. With many retailers increasingly moving away from the traditional online "price wars" and recognising the importance of connecting with customers through multiple channels and touch points, click and collect is the natural progression to encourage customers back into physical stores. Why retailers are adopting click and collect Retailers can save a lot on click and collect. It reduces operational costs and leverages impulse purchases. Retailers are finding that in-store collection also provides them with additional opportunities to connect with customers and enhance the customer experience. One of the main benefits for retailers from shoppers who come into the store to collect their online purchases is that almost 50% make an unplanned purchase. A <a href="https://bellhowell.net/en-US/Forms/2017-Retail-Click-and-Collect-Consumer-Preference">study by company Bell and Howell</a> of 530 shoppers found 49% of customers were likely to purchase an additional item when picking up their online order. The <a href="http://www.thecenterofshopping.com/news/consumers-spent-16-more-on-holiday-purchases-than-2015-omnichannel-retailer">International Council of Shopping Centres found</a> 61% of shoppers who bought items online and picked up in-store, made an additional purchase. This was higher for younger shoppers, with three-in-four millennials making impulsive purchases when popping in to collect. Offering click and collect also means customers feel more comfortable about returns as well. A <a href="https://solvers.ups.com/assets/UPS_Pulse_of_the_Online_Shopper.pdf">report from packaging company UPS</a> found 82% of shoppers are more inclined to purchase online if they can return the product in store. Average parcel delivery costs in Australia are around $25 for a 5kg parcel (for next business day delivery) with courier services even more expensive, particularly for large and bulky items. The majority of retailers provide in-store collection free of charge, however some retailers are charging a fee for pickup in order to recoup staffing and storage costs. At the cheaper end of the scale <a href="https://www.kmart.com.au/click-and-collect">Kmart charges a A$3 fee</a> while Ikea Australia recently announced its fees which <a href="http://www.ikea.com/ms/en_AU/customer_service/Collection_Points/Collection_Points.html">range between A$59 and A$149</a>. "Bricks and mortar" retailers see click and collect as a way to differentiate and defend themselves from online players. In the US, Walmart announced last month it would offer discounts on products shoppers ordered online, but picked up in stores as a tactic to combat Amazon. Now Amazon has started its roll out in Australia, any edge over this competition will be an advantage. Deploying click and collect into a store allows retailers to compress sale time. Australian retailer, Super Cheap Auto recently announced shoppers could click and collect their online purchases within 90 minutes - and is now exploring how it can reduce that time down to 60 minutes. While shoppers continue to seek convenience, the frequency of online shopping (forecast to hit 12.5% of total retail sales by 2025), will also increase. But getting the product to the customer will continue to be a challenge for retailers. So you can expect more retailers to adopt a click and collect strategy. If you can't get the products to the customers, get the customer to the products.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/83094/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> Written by Gary Mortimer, Associate Professor, Queensland University of Technology and Louise Grimmer, Lecturer in Marketing, University of Tasmania. Republished with permission of <a href="https://theconversation.com/why-retailers-want-you-to-click-and-collect-83094">The Conversation</a>.

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Discount retailer wars: Could this be the end for Kmart?

Costco has unveiled plans its giant Australian distribution centre that will service all their stores nationwide as well as their new online store, which will be launched next year. The $78 million facility will be finished in March 2019, with the company planning to move the store online in Australia shortly after that. Experts say that the retail giant’s online store could pose a huge threat to other discount stores, such as Kmart. The distribution centre in Sydney’s west will allow for more Australians to sign up to the $60 annual membership to get products delivered to their door. “Everything we do makes people change. The warehouse concept wasn’t here 10 years ago so we’ve had some impact on the retail scene,” Costco Australia General Manager, Patrick Noone, told <a href="https://www.9news.com.au/">Nine News</a>. The online store will still require a Costco membership, with the company promising to have exclusive online offers around home appliances, furniture and other big-ticket items. Earlier in the year, market research firm Roy Morgan reported that Costco Australia was narrowly beating Kmart in customer satisfaction. Kmart had a nine per cent profit in the first quarter of 2018, which was largely attributed to the retailer’s online store. Costco’s online store will try to compete with other Aussie retailers by stocking the equivalent of 30 stores worth of stock. QUT international business expert Gary Mortimer believes Costco will “absolutely” be able to compete online in Australia, reported <a href="https://thenewdaily.com.au">The New Daily.</a> “Costco is certainly concerned about Amazon's entrance to the Australian market,” he said. “Ultimately, it does represent a threat to incumbent supermarkets and department stores in Australia.” Costco’s distribution centre, which is the size of 17 Olympic football fields, will create close to 1000 jobs and have the capability to distribute to 30 warehouses. “This location is ideal for housing our depot and providing hundreds of jobs in Sydney's booming west,” Mr Noone said. Last week, Costco opened a $55 million warehouse in Epping, Melbourne. Are you excited for Costco’s online store to be launched in Australia? Let us know in the comments below.

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