Supermarket Pricing Information

John Denham Excerpts

Tuesday 15th January 2013 Commons Chamber

[Mr John Denham (Southampton, Itchen) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require supermarkets to publish pricing data on all the goods they sell in a standardised, accessible, online format suitable to enable comprehensive comparison of the price of supermarket goods by retailer, store and product, and to enable independent analysis of pricing; and for connected purposes.

My aim is simple: to enable supermarket shoppers, which is most people in the country, to compare the prices of goods, product by product, store by store, company by company through an app on their smartphone, laptop or personal computer. None of the information that I want shoppers to have is secret. It is all publicly available. The problem is that, to get our hands on it, we would need an army of volunteers to go into every store, every day, to check the prices of every product. That is possible in theory, but it is quite impossible in practice.

The spread of smart devices, public familiarity with apps, and the development of a community of innovative app designers capable of handling data analysis in sophisticated ways has made things possible that could not be done a few years ago. I think that this is the time to harness that technology in the interests of consumers. If we do, we can even things up just a bit between the supermarket giants and the consumer.

Barely a day goes by without someone in the House saying that times are tough for hard-working families. Real wages have fallen for many. Family budgets have been squeezed. For many, the weekly supermarket bill—about 16% of family spending on average, but much bigger for many low-income families—is one of the largest single parts of family spending. No one has money to waste. Shoppers want to know that they are getting the best value for money for their hard-won pounds.

We want to know which supermarket genuinely has the best prices. We want to know how much extra we will pay if we go to the small branch—the local, the express—rather than a superstore of the same company. We do not want to be lured in by attractive headline promotions, only to be ripped off once we are inside the store. We want an easy way to work out the difference in cost between vegetables, some of which are bagged, some of which are loose and some of which are sold confusingly in different quantities. The truth is that no one can be sure that they are getting the best deal or the best information on any of those things today.

The major supermarkets are quick to say how competitive the grocery market is. It is true that there are 10 major companies competing on the high street, but that does not mean that the market always works for consumers. The supermarkets have a huge advantage over the rest of us. They amass data about our shopping habits—I am not talking about the data they have on each of us individually, but about the information they have on our collective shopping habits. They know what shoppers buy, how much and how often. They know what sort of price promotions attract us. They know when and what sort of pricing does not put us off because it looks good, because it is an essential, or because we just cannot work it out while pushing a trolley with kids in tow.

While the supermarkets have a huge amount of information on us, most shoppers are still left shopping around in a way that we would recognise from 20 years ago. Use of price comparison websites is growing fast, but those sites do not cover all supermarkets, all products or all stores. It is not an equal battle. As a GCSE economics student would tell us, markets only work well when everyone has the same level of information about what they are buying. It is not surprising that numerous studies have highlighted what is going on, and I have tried to summarise some of them on my website. Briefly, last year, The Grocer magazine found that in Tesco’s Big Price Drop campaign, for every two items that dropped in price, three went up. On 7 January, mySupermarket.co.uk highlighted current problems, and I shall give the House two examples. Sainsbury’s Goodfellas pizza—two for £4.50. Not only was that product cheaper in two other retailers where the customer would have had to buy only one, but the offer price was 16% higher than the price in Sainsbury’s most of last year. Innocent Smoothie—two for £5 in Asda and Waitrose, but cheaper in two other retailers and an offer price 20p higher than the average in those shops over the past 12 months, a price which had fluctuated between £2.79 and £2.30.

On Friday my office looked at a basket of 12 items in a Sainsbury Local in Bethnal Green and the Sainsbury superstore in Whitechapel. Across the basket of groceries the local store was 10% more expensive, with bananas 42%, carrots 59% and broccoli 49% more expensive. I accept that most people must know that local stores are more expensive, but do they know how much, and is it not worrying that the mark-up is so great on fresh fruit and vegetables?

The picture is clear. It is almost impossible to get comparable and reliable information about prices across all supermarkets and all products. It is hard to be sure when a price promotion is a bargain and when it is a rip-off. It is difficult to get the facts we need to question why prices vary so much from store to store or week by week. All these data are held on central supermarket IT systems. If the data were made available, online and in real time, innovative entrepreneurs would quickly produce apps that would not only compare prices but would, automatically and online, police such misleading deals and shed a light on store-by-store pricing policies.

I think those same entrepreneurs would focus on areas that currently see little competition but which are expensive, such as gluten-free foods. They may link pricing data to other data on organic food, farming practices, sustainability and local sourcing, for shoppers who want to combine value for money and their other values. I stress to the House again that I am talking only about data that are, in principle, a matter of public record. I am not asking supermarkets to reveal any commercially confidential data. But making public and really available real information about real prices would be enough to throw the spotlight on value for money and misleading discounts.

In November the Office of Fair Trading published a report on discount pricing policies and promoted a voluntary code of practice. In my view, the previous Government, of whom I was part, often found themselves between the rock of statutory regulation, burdensome and heavy handed, and the hard place of voluntary guidance, usually shot full of holes. The current Government are often in the same place. The simple beauty of my proposal is that a minor regulation could make the whole panoply of statutory regulation and investigation by the OFT largely redundant. Price transparency, backed by efficient data analysis, would simply drive sharp practice and misleading pricing out of the marketplace.

So far the supermarkets have been reluctant to say this is a bad idea. How could they? In principle, the data are public already. The issues they raise are mainly financial and technical. So I challenge the supermarkets today: you put up your technical experts and your systems managers, and I will assemble an independent team of experts, put them together, and let us see how hard it would be.

I have limited my proposal to the 10 supermarkets that would be covered by the current Groceries Code Adjudicator Bill, but many independent convenience stores may wish to join. Most use propriety software for their pricing and tills, and once an industry standard is established, it would be simple for that software to be upgraded and to give those stores the chance to join.

My proposal has gained the support of the consumer organisation Which?, comparison websites, and the chief executive of the Open Data Institute. Open data is an unstoppable movement. As a Cabinet member I made Ordnance Survey mapping data freely available, to the benefit of the public and innovative businesses alike. This Government have supported the Open Data Institute for public data. Over time, what is good enough for the public sector will become a demand on the private sector. As smartphones and consumer apps grow in availability and popularity, the supermarkets will not be able to ask, “Why should we do this?” They will have to explain why they have not done it.

Unless I am very lucky, this Bill may not become law, but I predict that this is only the start of a movement for transparent pricing and online information that will grow and grow. I commend the Bill to the House.

Question put and agreed to.

Ordered,

That Mr John Denham, Dr Alan Whitehead, Mr Nick Raynsford, Paul Blomfield, Lorely Burt, Jonathan Edwards, Justin Tomlinson and Caroline Lucas present the Bill.

Mr John Denham accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 1 February, and to be printed (Bill 119).