- CMA Warns of Price Display Issues in Grocery Sector
- Consumers with Limited Access to Large Stores or Online Shopping Impacted
- Pricing Laws Criticized, Calls for Government Reform to Assist Consumers
People who cannot travel to large stores or shop online and rely on expensive corner stores do not benefit from robust competition in the grocery sector, according to the CMA.
The consumer watchdog has cautioned that some stores are not displaying prices as explicitly as they should.
According to the Competition and Markets Authority, this could impede consumers from comparing prices.
Evidence suggests, however, that historically high food price inflation is not the result of feeble retail competition, and that rising costs have not been fully passed on to consumers.
However, not every consumer can benefit from “strong” competition. The authority stated that individuals who cannot travel to large stores or shop online may rely on convenience stores with higher prices.
The CMA has written to retailers whose pricing is unclear and warned them to make the necessary adjustments or face enforcement action.
In addition, it has requested that the government reform pricing laws assist consumers in identifying the best bargains.
The pricing regulations themselves were criticized by the regulator.
According to the CMA, the laws “leave too much room for interpretation” and permit “harmful inconsistencies” in retail practices. Consequently, it may be more difficult for consumers to compare prices, it was stated.
The CMA found issues with price labeling in all eleven supermarkets and seven variety stores it examined. Some compliance issues were “relatively minor,” while corner businesses, among others, had the most.
Different measurements are used for comparable products, making it difficult for customers to compare similar deals, according to the CMA.
The regulator provided an example of tea sachets. Sometimes they are charged per 100 grams, whereas other brands were priced per tea bag.
Store fittings and promotional items sometimes concealed small text on shelves and labels, the watchdog said.
The CMA exonerated grocery stores of profiteering and reflation.
In the grocery industry, operating profits decreased by 41.5% between 2022 and 2023, while the average margin outlets made on sales decreased from 3.2% to 1.8% as costs increased quicker than revenue.
“Rising costs have not been fully passed on to consumers,” stated the regulator.
As price rises slow, the CMA says grocery businesses may recover their profit margins.
To maintain competitive pricing as prices fall, the authority will monitor this in the coming months.
Chancellor Jeremy Hunt praised the work of the CMA.
“It’s reassuring that supermarket competition is working, but the CMA has my support to investigate price increases for 10 essentials,” he said.
