The analysis on the prices of different kind of supermarket

in three different states, Australia

Executive summary
Findings --

Introduction
Business problem
Competition in the retail grocery industry has long been a big issue concerned by Australian
Competition and Consumer Commission (ACCC). The two major chain stores—Coles and
Woolworths reach a combined market share of approximately 75% on packaged groceries (ACCC
2008, p6) [1]. However, in recent years, the competitive came from a famous German grocery brand
—ALDI made the relatively stable retail grocery market violate. ALDI promised to offer consumers
very low prices on a limited range of groceries (ALDI 2009) [2]. Not only has the industry level,
competition for consumers also happened on a localized level. The perishable nature of groceries and
the frequency of shopping times per week made the location and price critical factors in the
customers’ choices (Walker & Webber 2004) [3]. After knowing the competition is more than price,
the aim of this paper is try to find out the relationship between the price variance and location of
different retail groceries and then make possible explanations.
Statistics Problem
Methods --we start with a sample of 120 retail groceries from Coles/BI-LO, Woolworths/Safeway,
Independents and ALDI. They are located both metropolitan area and elsewhere in NSW, Queensland
and Victoria and the counts of each are 30.
Methods: We use the Excel 2003 to do the analysis and download the KaddStat plug-in from
www.johnwiley.com.au for histogram function. Descriptive statistics were conducted on the prices of
Basic Staple basket at different supermarkets, across three States and different locations among the
supermarkets. Median, mean and standard deviations for describing the location of prices and the
variability of prices were calculated. Then the variability of prices was compared by coefficient of
variation. Finally, coefficient of skewness and kurtosis were presented to comment on the shape of the
distribution.
 Body
Question1
Descriptive analysis
The most striking feature of the price data is that compared to three other kinds of retail groceries,
ALDI had the overwhelmingly lowest prices of its items. The means of the prices in Coles,
Woolworths, independents and ALDI was $83.30, $82.11, $84.47 and $60.43 respectively. For Coles
and Woolworths, most of the pricing are in their $80-$84 range and $80-$82 range, respectively.
Figure 1 Frequency Distributions of prices of the Basic Staple Basket at different supermarkets
(a) Coles (b) Woolworths

10 20
8 15
Frequency

Frequency
6
10
4
2 5
0 0
76 78 80 82 84 86 88 76 78 80 82 84 86
Prices($) Prices($)

(c) Independents (d) ALDI

8 12
10
6
Frequency

Frequency

8
4 6
4
2
2
0 0
76 78 80 82 84 86 88 59. 61 60. 01 60. 41 60. 81 61. 21 61. 61 62. 01
Prices($) Prices($)

Table 1 Descriptive statistics on prices of four different kinds of groceries

Group Count Sum($) Mean($) Median($) SD Variance Kurtosis Skewness Range($) CV
Coles 30 2498.88 83.30 82.37 3.73 13.92 -0.099 0.826 13.88 4.48%
Woolworths 30 2463.37 82.11 81.52 2.32 5.36 1.188 0.405 11.15 2.82%
Independents 30 2534.21 84.47 84.50 3.39 11.50 -0.169 0.292 14.29 4.01%
ALDI 30 1813.04 60.43 60.25 0.62 0.38 4.373 1.511 3.04 1.02%

Location of the distribution

The means, medians and the histogram (Figure 1) will be analysed for explore locations. Because
median is unaffected by the magnitude of extreme values while the mean is affected by all values
including the extreme one, so it is appropriate the location by using them both. In the cases of Coles
and Woolworths, both of their means were higher than their median, which indicated that the locations
of them are positively skewness. While although in the cases of Independents and ALDI, their means
were extremely similar with medians, the location of Independents was still negatively skewed while
that of ALDI was positively skewed.
Shape of the distribution
According to the statistics of Kurtosis and Skewness, their distributions were all positively skewed.
However, ALDI had the most positively skewed shape. And ALDI had the most obvious Leptokurtic
distribution, while Coles and Independents had both Platykurtic distributions.
Variability of the data
We use mean and standard deviation to represent the variability. According to the data above,
Independents had the largest amount of prices with a second largest degree of SD. It means the prices
of Independents varied largely which were volatile in different locations and States. The similar
situation occurred both on Coles and Woolworths as well. But the degree is relatively moderate
compared to Independents. However, ALDI showed us an attractive result which had not only the
lowest prices, but also the smallest prices variance among the four. It means the price in ALDI was the
cheapest and most stable one in different locations and states.

The possible reason could be as followed. As for Independents, because they belong to private
companies which had less competitiveness than big supermarkets, they tend to have smaller scales but
more variable and higher prices in different location and States for maintaining their turnover and
against the large chain stores such as ALDI, Coles and Woolworths. However, as for ALDI from
Germany, its lowest prices derived from its character as a discount retailer. As for Coles, Woolworths
and ALDI, the relatively uniform pricing will be convenient for managers to regulate the price tickets
and therefore make financial saving possible. Furthermore, the uniform pricing can offer customers a
“price guarantee” which will benefit the overall customer numbers (Walker & Webber 2004).

Compare the variability of data by using Coefficient of variation

According to the CVs above, Coles had the largest coefficient of variance (4.48%), while ALDI had
the lowest one (1.02%). It showed us that customers suffered the largest potential money losing when
buying products in Coles, while in ALDI, they would not worried about the pricing fluctuation
problem among the four types supermarkets.
 Question 4
Descriptive statistics
Figure 2
NSW Queensland

Victoria

Table 2 Descriptive statistics on ALDI’s price tickets in three different states

Group Count Sum ($) Mean($) Median($) SD Variance Kurtosis Skewness Range CV
ALDI NSW 10 603.59 60.36 60.25 0.45 0.202 -1.02 0.388224 1.31 0.75%
ALDI Queensland 10 599.36 59.94 60.025 0.19 0.035 -0.68 -0.56263 0.59 0.31%
ALDI Victoria 10 610.09 61.01 60.84 0.58 0.334 9.87 3.133484 1.9 0.98%

Location of the distribution

From the histogram above, we can see that the ALDI in Victoria had the highest and price.
The means, medians and the histogram (Figure 2) will be analysed for explore locations. Because
median is unaffected by the magnitude of extreme values while the mean is affected by all values
including the extreme one, so it is appropriate the location by using them both. In the cases of ALDI
NSW and ALDI Victoria, both of their means were higher than their median, which indicated that the
locations of them were positively skewness. However, in the cases of ALDI Queensland, the mean
was lower than median which means the location was negatively skewed.
Shape of the distribution
According to the statistics of Kurtosis and Skewness, their distributions were all positively skewed
with exception of ALDI Queensland which was negatively skewed. Among them, ALDI Victoria had
the most positively skewed shape. Furthermore, ALDI Victoria had the most obvious Leptokurtic
distribution, while ALDI NSW and ALDI Queensland had both Platykurtic distributions.

Variability of the data

We use mean and standard deviation to represent the variability. According to the data above, ALDI
Victoria had the largest amount of prices with a largest degree of SD. It means the prices of ALDI
Victoria varied largely which were volatile at different locations in Victoria. While ALDI Queensland
showed us an attractive result which had not only the lowest prices, but also the smallest prices
variance among the other two. It means the price in ALDI was the cheapest and most stable one in
different locations and states. However, there is one point which should mention. AS for the data of
ALDI Victoria, there is probability that the price of $62.50 in certain shop of ALDI Victoria is an
outlier.

Compare the variability of data by using Coefficient of variation

According to the CVs above, ALDI Victoria had the largest coefficient of variance (0.98%), while
ALDI Queensland had the lowest one (0.31%). It showed us that customers suffered the relatively
largest potential money losing when buying products in ALDI Victoria, while in ALDI Queensland,
they would not worried about the pricing fluctuation problem.

和他们说 location 可以考虑统一运输节省成本问题。大城市人多，交通方便，因此就应该相对

便宜，乡村的话贵。
Conclusion
This study was conducted on the basis 120 groceries sampling in relation to 4 types of supermarkets in
different location at three states NSW, Queensland and Victoria in Australia. As shown in the survey,
at supermarkets level, ALDI had the lowest average prices ($60.43), smallest coefficient of variance
(1.02%) and prices variance (SD: 0.62), while Coles and Independents had the relatively highest
average price ($83.30 and $84.47 respectively), biggest coefficient of variance (4.48% and 4.01%)
and prices variance (SD: 3.73 and 3.39) different locations and states.

At the level of one kind of supermarket—ALDI, although the result were similar among those divided
by states, statistics showed that ALDI Queensland had the lowest average prices ($59.94), smallest
coefficient of variance (0.31%) and prices variance (SD: 0.19), while ALDI Victoria had the totally
opposite result: the highest average price ($61.01), biggest coefficient of variance (0.98%) and prices
variance (SD: 0.58).
However, with the limited sampling size of each kind of retail grocery, this sampling survey cannot
make an exactly accuracy location, shape and variability of those location.

Implication
As for the retail groceries
As for customers

Appendix one

Reference
[1] Australian Competition and Consumer Commission 2008, Public Submission to the ACCC
Grocery Inquiry—Summary of Key Issues, ACCC, Melbourne.
[2] ALDI 2009, about ALDI, accessed 21/8/2009,
http://www.aldi.com.au/au/html/company/3775.htm?WT.z_src=main
[3] Walker, J & Webber, T 2004, ‘Retail Grocery Prices in Victoria: The Relevance of Local Market
Conditions’, The Australian Economic Review, vol.37, no.3, pp317-28.