Developing a Culture of Bullying or Worse
Monday, 26th November, 2007
- David Farmer
Listen to the full interview courtesy 2GB
In 1974 the government passed the Trade Practises Legislation which among many things brought an end to retail price maintenance and tried to level the playing field with a set of rules so everyone could compete fairly. It has been very effective and in the liquor industry has saved consumers billions of dollars. What then do you think of this exchange on the radio station 2GB on 1st November, 2007?
Ray Hadley (RH) is the voice of 2GB from 10.00AM to 1.00 PM with a fast moving current affairs programme. He is talking to Alan de Costa (AC) manager of a group of 300 small independent liquor stores who trade across N.S.W. under the banner Local Liquor. Alan has a vast experience in food and liquor and has operated out of Canberra for many decades. I have extensively abbreviated the exchange.
RH ...Tell me if I have got it wrong. Wolf Blass on special at Local Liquor $6.99.. normally retailing closer to 11 or 12 bucks. A one of special.. You buy this from Fosters and then all of a sudden the 'whadda you call it' hits the fan..
AC ..Got a phone call from the key account manager who looks after me and he asked me to put the price up from $6.99 to go $7.99.. no we are happy with the price we are going... he said if you stay at $6.99 it will cause a huge problem with Woolworths and Coles and they will spit the dummy. I’m not changing my price. we are running a red-hot special..
RH ..They found out about this because one of your operatives said to a Fosters rep... we have a beaut special coming up on Wolf Blass. This filtered back to head office...
AC Got to head office.. and they gave me a ring...
RH ... What happened next..
AC ... Well they pretty much said we may have to review our case allowances or our discounts we give you if you going to go to such a ridiculous price. And then they said I’m going to have to report it back to my fellow colleagues who look after Woolworths and Coles so they get notified of this price...
RH ....So they would tip off Woolworths and Coles - to in other words warn them.. and they would probably put it down to $6.79 or something..
AC Or pull it off the shelves...
RH Is this anti-competitive...
AC ..It certainly is. Without a doubt..
AC ..Suppliers offer us a discount and then if you sell it to cheap we won’t give you the discount.
AC ..Every week I would have a conversation with manufactures who do not want us to go to cheap as it will upset Woolworths and Coles.
end quote
From my own experience I would say that bullying from liquor representatives over maintaining price points has never been so prevalent as it has been since about 2000 and remember they do what they are told. Some have been stupid enough to send emails. Where is the pressure coming from?
Recall the great rules of retailing. All retailers want an exclusive product that all customers want. Of equal importance is price and if you can control the price which means always being cheaper, you have the recipe for success. It cannot be easy selling to goliaths like Woolies and Coles and the guardian consumers have is the ACCC and they may not have been vigilant enough. As far as liquor retailing in Australia is concerned the ACCC should know that while there are 20,000 other outlets to service customers none have any buying power at all.
You can listen to the full interview below or download the mp3 courtesy of 2GB here...
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