When shopping, comparing prices is often a must. Between brands, the differences are often significant. But within the same brand, it is not uncommon to see different prices depending on the location of the stores. How to explain it? Is this practice legal? We explain to you.
John, a resident of Middelkerke, is offended by this practice! “We notice that the prices are cheaper on the Coast. There can be two euros of difference on a product of the same sign however. We started taking pictures to realize that. We are really starting to be cash cows!“, he exclaims.
This observation is shared by several people via the orange Alert us button. “Colruyt stores sell cases of beer at €5.25 in Mouscron and Comines. But in Menen, the same product is sold at €4.40. This is not normal“, offends Jean. “Why at Lidl does a carton of 12 eggs cost €1.55 in Middelkerke, €2.02 in Mons and €1.55 in Brussels?“, asks Yvon.
How to explain such differences? To understand this, we go to the nerve center of Colruyt, located in Hal, on the outskirts of Brussels. Every day, the chain compares the prices of 62,000 products from its competitors. This represents 1,302,000 price readings per month. On site, a hundred employees are in charge of encoding the competitors’ prices. “I look at the competitors’ leaflets and I look at the promotions they offer. And we adapt to have the same prices at home”, indicates Bruno Frédéric, employee.
This comparison takes place both at the national level and at the regional and local level. In other words, if Colruyt employees discover promotions carried out by a brand present only in Antwerp, they will adapt their prices only in their Antwerp stores. Colruyt can also count on employees who survey competitors’ prices by going directly to their competitors. Customers can also play the role of informants by informing regarding promotions and lower prices spotted at the store.
Depending on the supermarkets in the vicinity, prices can be reviewed. This sometimes explains the price differences from one store to another. “We are price followers. We react to both regular shelf prices and promotions“, explains Jean-Christophe Burlet, regional director for Colruyt Best Prices.
The practice is legal. Retailers are free to set their prices, confirms Test Achats. “Apart from not selling at a loss, there are no constraints for supermarkets, the only solution is to be well informed regarding prices or the arrival of new competitors.“, says Lisa Mailleux, spokesperson for Test Achats.
Behind these maneuvers, of course, hides a real marketing technique. “The principle is that a store can guarantee the lowest prices, but not everywhere in the country. This will allow him to have the lowest prices locally, but to keep the prices higher with larger margins in other geographical locations in Belgium.“, enlightens us Pierre-Alexandre Billiet, CEO of the magazine Gondola, specializing in distribution.
“Consequently, the farmer, the breeder and part of the food chain will have lower margins. And at some point, this strong competition and therefore the lowest prices that seem attractive to the consumer will damage the entire food chain. With today pressure on margins and tomorrow probably much lower food quality than today since farmers no longer know how to manage expensive and quality food for their animals and livestock“, warns Pierre-Alexandre Billiet.
