The Jersey Competition Regulatory Authority has published a draft report on the market for groceries in Jersey.
This suggests that competition is working, although other factors are contributing to higher prices for consumers.
Competition in the Jersey grocery market appears to be working. Grocery suppliers are not making excessive profits, and comprehensive survey data indicates that Jersey customers are well served by the market.
Inflation has played a part in increasing the costs of groceries, and the draft report shows that pressure on prices in Jersey has been no different from other jurisdictions, including the UK and Guernsey. It is these factors that are pushing up prices – rising input costs such as transport, energy, and the price of raw ingredients – rather than higher retailer margins or lack of competition in the marketplace.
However, higher on-Island operating costs and the lack of low-price suppliers, do mean that Jersey consumers are paying more for their groceries, for example the cost of a shopping basket at the same retailer is c.12% lower in the UK than in Jersey. And this reflects higher costs (primarily freight and labour) and tax differences, rather than competition issues.
Within this context, continuing to find ways to further support the competitive process and consumers remains a priority and the Authority is setting out options for the recommendations in the final report. These include:
- Improving price transparency with investment in Jersey Consumer Council’s price comparison service, to encourage greater price based competition.
- Maintain a competitive and dynamic groceries market, by minimising entry barriers and promoting Jersey as a testbed for innovation;
- Follow up recommendations from the 2021 market study into Freight Logistics, to increase competition and reduce freight costs.
Peter Hetherington (pictured), Chief Economist at the Authority said: “It is important to remember why we carry out market studies: the purpose is to see if a market is working well for consumers. Everyone is feeling the pinch from rising shopping bills and, while clearly global inflation is a contributor, we wanted to understand if other forces are coming into play.
“The draft report suggests that there are no immediate competition issues for Jersey’s groceries market. Nonetheless, we are proposing recommendations for policy makers to consider to further support the competitive process and consumers. We look forward to securing feedback from stakeholders to help us further understand the market and how we can drive positive outcomes for Jersey consumers.”
Alongside the Draft Report, the Authority has also published the results of a consumer study conducted by independent research agency, 4Insight. The research explored grocery shopping behaviours, attitudes, potential improvements for consumers and key drivers for change and has given the Authority a 360-degree view of both the demand and supply side of the market.
The Consultation closes on 21st July 2023.
