Fruit retailing by supermarkets noted

Press, Volume CXI, Issue 32637, 19 June 1971, Page 18

Fruit retailing by supermarkets noted

Supermarkets are less efficient retailers of fruit and vegetables in Christchurch than other types of retailer. This was one of the major conclusions to come from a study recently completed by Mr G. W. Kitson for the Agricultural Economics Research Unit at Lincoln College.

The study was based upon several extensive surveys of Christchurch fruit and vegetable retailers of all types, including supermarkets, grocers and dairies, and large and small fruiterers. The surveys included two of fruit and vegetable prices, a case study in a Christchurch supermarket and a survey of .costs and efficiency for all

types of fruit and vegetable retailer.

The main objective of the study was to ascertain which type of retailer was technically most efficient in handling fruit and vegetables in terms of distribution costs fpr each unit of output. The ingredients of distribution costs were examined in detail, and results related to studies of prices, margins, and procurement costs for each type of retail outlet. Although supermarkets were the least, efficient retailers of fruit and vegetables alone, they were the most efficient of all retail types in their over-all operation. For this reason, their fruit and vegetable prices and margins, both for individual items and over all, were among the lowest of all groups. Their fruit and vegetable operations were in effect being subsidised by other lines. For all operations, supermarket profit earning rates were higher than any other form of outlet, with the grocery and dairy groups earning the lowest rates. A major factor in this was found to be the rate of use of facilities by customers. This Mr Kitson considered to be a very important economic incentive for supermarkets, especially to build facilities of an optimum size at a carefully chosen location and to ensure that they were fully used by extensive advertising which, the study indicated, lowers average costs, the benefits of which may or may not be passed on to the consumer as price reductions.

Special attention was given to distribution costs, packing costs, and costs of produce spoilage. The study of distribution costs gave two interesting results. The first was that for apricots both the grower and the retailer were considerably better off when this fruit was traded direct rather than by the wholesale auction system. The study indicated a saving in marketing costs of about 30 cents a case where apricots were traded direct.

The second interesting result was that the average cost of getting supplies from auction floor to the shop for members of the grocer and dairy groups, who commonly have this done for them by other middlemen, was about double that for other retail groups. Packaging costs when calculated separately varied little between retail types and were about 3c for each dollar of sales.

Wastage costs were found to be lowest for supermarkets at less than 1 per cent, and highest for grocers and dairies at nearly 4 per cent of sales. Wastage rates were highest among stone fruits, where they were up to 15 per cent.

Naval quartet. There were four Royal New Zealand Navy vessels at Lyttelton yesterday. They were the minesweepers, Inverell and Kiama, on a routine cruise, and the two fisheries patrol vessels, Mako and Haku, which are on routine patrol work.