By Graeme Samuel, Chairman of the Australian Competition and Consumer Commission
Shopper dockets, which enable supermarket customers to obtain discounted petrol, have been around long enough to demonstrate that consumers benefit. A major role of the ACCC is to promote consumer welfare by encouraging healthy and vigorous competition between businesses, big, medium and small, which can advantage the Australian public.
The ACCC believes that shopper docket schemes are driving competition between supermarkets and petrol retailers. The latter are responding to the challenge by innovations such as additional services, like car washing and establishing on-site convenience stores that cater for time poor consumers. With the modern car needing less servicing, convenience stores that sell food, drinks and snacks, are becoming the secondary source of station income, after petrol sales, and replacing servicing.
The growth of convenience stores demonstrates the desire of many consumers for one stop - shopping. Before customers pay for the petrol they can top up the larder with groceries, purchase a microwave dinner or a hot takeaway coffee. This can save a lot of time. Convenience stores, located at urban sites, are often used by nearby residents because they are convenient and open long hours. Groceries can be the aim rather than petrol.
The retail sector rarely stands still. Supermarkets have drastically reduced the number of corner shops while retail petrol outlets have fallen - over the past three decades - from 20,000 to 8,000. This is the result of larger sites with more pumps and prime highway locations. In this situation shopper dockets are considered to be only a marginal player in the exit of retailers.
In the United Kingdom where supermarkets have been involved in petrol retailing for more than 10 years, discounting is continuing. The UK Office of Fair Trading reported in 1998 that “price competition between the supermarkets and oil majors has contributed to petrol price falling in real terms (minus tax and duty) by about a third since 1990”. Retail petrol outlets had fallen from 40,000 in 1964 to around 11,500 in 2003. The OFT stated that there appeared to be a sufficient number of strong players in the market to ensure that competition would continue to benefit consumers.
With petrol pricing a major issue for most Australians, the ability to obtain a discount at the bowser has a significant influence on where groceries are purchased. It can have a moderating impact on the rate of inflation on the household budget especially if there is a long drive to the workplace.
Shopper dockets were introduced into Australia by Woolworths in 1996; they have been a factor forcing businesses to become more innovative. Many smaller businesses devise ways to get more consumers through their doors and this is shown by the fact that the ACCC has received over 100 shopper docket notifications since Woolworths introduced it. The Coles and IGA chains are among them. An innovation by IGA invites shoppers to take advantage of cheaper groceries by using their dockets from any petrol retailer. Foodland has been trialling a shopper docket scheme in some areas.
The fight back by smaller supermarket chains against the majors is demonstrated by Metcash Trading announcing increased sales in the 12 months to April 30 and outlining its plan for another 45 super IGAs in the next three years, possibly 100 if they meet store criteria.
The ACCC sees shopper dockets as the latest innovation in an industry that is undergoing significant change. Low petrol margins in many locations inspire competitive innovations such as convenience stores with a growing range of products and services. The ACCC is aware of concern about market concentration but realises that concentrated markets are not the sole determinant of market power. It will remain alert to aggregations of market power that could substantially lessen competition.