by Mark Harrison


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     Economists have been accused of wanting to run our schools like supermarkets. My experience is that supermarkets are staffed by friendly, hardworking people and are open long hours. Most people are quite satisfied with their supermarkets. Clearly schools and supermarkets are different. But imagine if we ran our supermarkets the way we run our schools. Due to the importance of equality of opportunity to buy groceries and to protect children from starvation due to negligent and ignorant parents buying the wrong groceries, we have government provided supermarkets, financed by taxes, at which shoppers can get a basket of groceries for free.
     Customers are forced to shop at the supermarket in their suburb, and can only change to another government supermarket with permission, and subject to room at that supermarket. There are private supermarkets, but customers have to pay for their groceries there. Entry of new supermarkets is heavily regulated. New supermarkets are not allowed in areas of declining population. The government favours private supermarket proposals from the large national chains.
     The public supermarkets in each State are run by huge Departments of Supermarkets. Pay, staffing and working conditions are centrally determined, by negotiations with the unions. Some regions find it difficult to attract staff. Employment conditions are strictly regulated, with rigid job classifications (check-out operator, shelf-stacker, trolley retriever, price labeller). Hours worked and tasks are strictly mandated. The number of staff in each position in supermarkets is strictly regulated. Pay rises tend to be uniform across all classifications. Although the public supermarkets seem to be overmanned, particularly when compared to the private sector, checkout queues are much longer and shelves are frequently empty.
     Managers find it difficult to order supplies on time, experiment with new suppliers, fix windows, get supermarkets painted or build new facilities. All these decisions are overseen by central office and involve much bureaucracy. Most spending goes on salaries. Cuts in the equipment budget mean that shopping trolleys are very old, most with three or four wobbly wheels. Home delivery has been abandoned as a cost-cutting measure. Many ideas introduced in the private sector, such as express checkouts, and checkout scanning devices have not been adopted in the public sector due to union opposition.
     There are large differences in quality of supermarkets between suburbs, the rich areas seem to have the best supermarkets. Quality of supermarket is an important factor in determining where to live.
     There are many laments about the quality of public supermarkets. Independents and minor parties often raise election funds and support from the Checkout Operators Union with strident demands for more spending on public supermarkets, to reduce the enormous check-out queues. Bans on private supermarkets are periodically proposed, so that the rich will use their political influence to keep the quality of public supermarkets high, but many politicians, bureaucrats and public supermarket employees do their own shopping at the private markets.
     Media reporting of supermarket issues is usually based on `facts' supplied by the well-organised public supermarket lobby group.
     What products are stocked on government supermarket shelves is a controversial political issue, and is subject to much special interest pressure. Public supermarkets stock Australian goods only and do not cigarettes and alcohol. The Commonwealth Government is funding a campaign for a national shelf-stocking policy, which will outlaw all fatty foods and environmentally unfriendly products.
     Managers are appointed by a local board, on which the Checkout Operators Union has substantial representation. Hiring is done through the central department. High school leavers who want to be checkout operators must do a special course in the Faculty of Shopping at local TAFEs. Subjects studied
     include the sociology of shopping. Firing staff is a complicated process. Pay depends mostly on seniority, but a master checkout operator allowance is available, mainly to those operators who acquire qualifications in product selection and show support for the government's supermarket social justice aims. Gender equity requirements where married couples must share shopping duties are being introduced.
     Supermarket closures are a controversial political issue, and the subject of many government inquiries and customer demonstrations. No suburb wants to have its supermarket closed. Supermarket closures are resisted with violent demonstrations. Governments have been re-elected on promises not to close any public supermarkets. The option of selling ex-public supermarket buildings to be operated as private supermarkets is explicitly banned.
     There is much academic research into appropriate shelf stocking policies, optimal supermarket size and various measures of supermarket productivity. Very little of the research is used by those operating supermarkets. But there is much pressure to increase staff-customer ratios. A commonly used indicator of customer satisfaction is customer retention rates, those supermarkets whose customers spend the most time in obviously being the best.
     Supermarkets find it difficult to know what customers would prefer. Some managers have tried including customers on boards, but it turned out most customers did not want the chance to run the supermarkets themselves. Managers are never sure whether those customers on the Board are representative or are pushing a pet interest. In any case, many important decisions are made by those in central office, who have even less information on consumer desires and special needs and little incentive to promote consumer satisfaction. Issues are resolved on the basis of political clout, not consumers' choices, and the producer interests dominate.
     Proposals made by senior opposition spokesmen that supermarkets be open weekends, public holidays and after 5 p.m., as some private supermarkets do, have been quashed by industry representatives, claiming most consumers do not want to shop at these times, and it too difficult to introduce because not all stores want to open these hours. Instead, more `customer free' days have been proposed, where staff from different supermarkets can liaise and discuss product selection.
     Economists have proposed that supermarkets be allowed to organise themselves, that new supermarkets be free to open and that customers be given the right to choose which supermarket to shop at, giving supermarkets the incentive to cater to customer needs. Supermarkets would be accountable to customers rather than the central bureaucracy, those that offered what customers wanted at least cost would do best. Most find these ideas impossible to envisage. Producer interests have come out strongly against the proposals, arguing that untrained customers cannot possibly judge what is an appropriately stocked shelf and the poor would suffer the most. Groceries are too important to be left to the private sector they say.
     We should be thankful that politicians consider running shops trivial enough to leave to the private sector. Or is it too important to be left to the government?

This article is Copyright (c) 1997 by Mark Harrison, Department of Economics, Australian Natual University. It is reproduced here by permission of the author. All rights reserved.


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