The Commerce Commission says Kiwis are likely losing “tens of millions of dollars a year” from supermarket pricing errors.

ComCom has also challenged major supermarkets to improve and publicise their refund policies, which it believes are either inadequate or unknown to consumers, to improve the accuracy of their pricing.

Grocery Commissioner Pierre van Heerden said clear and accurate pricing is a consumer right, but the commission is “still hearing about too many examples of misleading or inaccurate pricing” in New Zealand supermarkets.

“Kiwi consumers expect and deserve better. The continuing level of pricing errors happening across the major supermarkets is simply unacceptable, and I don’t believe the major supermarkets are doing enough to fix these problems and get it right for the future.”

Van Heerden said the responsibility for fixing the issues lies with senior management of Foodstuffs and Woolworths NZ.

The commission had sought a commitment from the chief executive of each of the three companies.

“Consumers should be able to trust that the price advertised is what they will pay,” van Heerden said.

“The groceries sector is a $25 billion a year business, so even if errors only make up a very small percentage of sales, the total overcharge paid by Kiwis at the checkout would run to tens of millions of dollars every year and this is unacceptable.”

Commerce Commission Grocery Commissioner Pierre van Heerden.

He added he would be introducing a “mandatory disclosure standard”, requiring major supermarkets to regularly disclose information about customer complaints, including pricing and promotional issues.

“Making this information visible will help consumers be better informed and have more confidence their complaints will be dealt with.”

ComCom’s expectations of major supermarkets

The commission has outlined three expectations it has of major supermarkets to contribute to mitigating potential compliance issues in the future.

The expectations are;

• - Review and amend refund policies to ensure they demonstrate a commitment by the supermarkets to pricing integrity and motivate customers to bring any pricing integrity issues to their attention. For instance, offering a full refund of the purchase price of mispriced goods.
• - Prominently promote their refund policies – in-store, online and through direct mail communications.
• - Ensure there are comprehensive policies, systems and processes to record and categorise all complaints about pricing and promotional issues, and appropriately train staff in these policies, systems and processes.

Van Heerden said these expectations were separate from ongoing investigations under way under the Fair Trading Act relating to pricing and promotions.

‘Lack of clarity’ in recording customer complaints

Van Heerden also criticised major supermarkets’ processes for recording customer complaints.

“The lack of clarity and reporting means supermarkets can’t identify potential compliance issues within their businesses,” he said.

“Complaint data is a helpful source of information to identify trends and issues so they can be remedied.”

He said there was a general “lack of clarity” in how customer complaints are escalated and remedied.

“Customers can play an important role in bringing pricing issues to the attention of supermarkets. However, current refund policies across the major supermarkets are either absent, inadequate in the benefits they offer, or not advertised clearly and prominently.

“A generous and well-promoted refund policy will help empower and motivate customers.”

‘Committed to doing better’: Major supermarket responds to Commerce Commission

Van Heerden said major supermarkets had responded positively to the commission but it would be “watching to see if they follow up their words with action”.

Correspondence between the commission and major supermarkets was posted on its website.

In a letter addressed to van Heerden, Woolworths Group New Zealand said as a business it was “committed to doing better” and was “working extremely hard” to make improvements.

“We feel we are making good progress, but we accept there is always more we can do,” the letter continued.

Woolworths said as a business it is "committed to doing better".

“We understand the importance of pricing integrity, why the commission has concerns about this issue and why you are seeking assurances we are taking steps to address those concerns.

“We know that errors in our stores, even minor ones, could be perceived by customers as a sign that our commitment to pricing integrity is not where it needs to be and that this can erode their trust in us.”

Woolworths said it was also working to ensure customer complaint systems and processes are fit for purpose and consistent across all of the channels through which it receives complaints.

“We are in the final stages of updating our refunds policy and, once we have done so, we will prominently promote it and ensure our staff are appropriately trained. We believe that policy leads the market in New Zealand, which we are very proud of.”

Consumer NZ ‘concerned’ shoppers will carry the load

Meanwhile, Consumer New Zealand has expressed its concerns that van Heerden failed to address systemic issues with major supermarkets’ pricing discrepancies, leaving responsibility to shoppers to police these errors.

“Based on feedback from the public, as well as our research, it’s fair to say the supermarkets need to sort their pricing and promotional practices out. The lack of initiative and investment by the duopoly in addressing these issues is disappointing,” said Consumer NZ’s head of research and advocacy, Gemma Rasmussen.

“It’s a basic requirement that businesses display accurate prices. Shoppers are entitled to expect this at a bare minimum.

Consumer NZ head of research and advocacy, Gemma Rasmussen.

“It’s great to see the Commerce Commission has recognised problematic pricing practices are costing New Zealanders tens of millions of dollars a year, but we think the focus should be on the supermarkets fixing their problems, not putting the responsibility on shoppers to chase the supermarket every time there’s a pricing issue.”

Consumer NZ said shoppers last year provided large amounts of evidence, demonstrating the scale of problematic pricing practices at major supermarkets. These problems included the price on display not matching the price at the till, loyalty card pricing being displayed as the default, and multibuys that worked out to be more expensive than purchasing the products separately.

“We have concerns that without careful monitoring by the commission, there could be room for the supermarkets to game the system. Consumer thinks the commission should be responsible for monitoring pricing discrepancies, not shoppers,” Rasmussen said.

Benjamin Plummer is an Auckland-based reporter who covers breaking news. He has worked for the Herald since 2022.