Scrutiny in community store pricing continues

Slowly but surely momentum is building on raising awareness and calling out price gouging in Aboriginal Stores and this makes us HAPPY!!

Minister for Indigenous Australians wants answers

In early May Minister for Indigenous Australians Ken Wyatt started the cogs turning by calling on the Prime Minister to investigate why prices are so high in Aboriginal communities, which we see as a massive step in the right direction.

An article by the West Australian dated May 1, 2020 and titled Probe into sky high food costs describes how Minister Wyatt wrote to the Prime Minister Scott Morrison to identify how the Australian Government, State and Territory governments as well as food retailers and manufacturers can work together to ensure that prices are kept affordable as possible in Indigenous communities.

In the same article Minister Wyatt asked for the Prime Minister’s approval to set up a federal parliamentary inquiry by the House of Representatives,  Standing Committee on Indigenous Affairs which will be tasked to identify any course of action available to the Australian government to address the price gouging.

The inquiry has begun, and our CEO Steve Smith copped a mention in Parliament today.

Steve has a problem with who is making money

Steve’s name came up as being part of a group challenging the cash reserves of  Outback Stores. For a long time, Steve has made no secret of questioning how a Commonwealth company with a role of food security and supply can have $35 million in the bank.

You can hear the audio recording of the enquiry meeting here (0:44 – 01:07){5D85438C-38B9-434D-A34D-D0EBBC936BCE}

This isn’t about competition

AIG has been upfront about wanting to disrupt the way stores are managed in Indigenous communities. We believe the way store management groups conduct their business is questionable and results in higher prices at the checkoutl. We want to make food more affordable for people who shop in community stores, this is the goal.

“Prices in stores are high so the shoppers are losing out. Stores are running at a loss so there are no profits for store owners. Outback Stores is the only group with money in their pocket. Does anyone else see an issue with this because I most certainly do” says Steve.

Taking rebates is not a good business model

The West Australian Newspaper continues to be persistent in highlighting the issue of pricing in community stores, and Steve was quoted in an article today titled Government owned company responsible for selling food in remote WA towns makes millions. The article is challenging Outback Stores on their operational model and the use of rebates.

In the article Steve was quoted as saying “if their operational model is not sustainable, it’s not up to communities to be price gouged in terms of this rebate system they’ve got going”

Outback Stores is a Commonwealth owned company, established to improve access to affordable, healthy food for Indigenous communities, and as far as practicable, to operate sustainably However, we believe it is very much a commercial organisation.

Spend a short time around Steve and you’ll learn pretty quickly that rebates is a dirty word in his book.

A rebate is money paid by the supplier to store management providers such as Outback Stores to stock their products. Our research shows rebates can range between 1.5 and 25%. Rebates are calculated on each product and the higher the rebate, the more expensive the product becomes. Coke and tobacco reap the highest rebates in community stores. When the rebate system is used, there is a lot of money to be made from selling items like Coke and tobacco.

Rebate revenue is worth millions of dollars in the Northern Territory alone.

Inquiry continues, we’ll keep you in the loop

The enquiry continues with Outback Stores conducting their own market basket survey. It’ll be interesting to see what they come up with when interviewed by the committee next week.

You can read about the results of our market basket survey here

We’ll keep you updated how things go, but we’re hopeful this will be the start of changing the way Aboriginal stores are managed.