Woolworths to start rounding all prices to numbers with a zero

But margins are somewhat inflexible when the consumer decides the price is too high, lowering demand. The subterfuge for raising prices without obviously raising them in peoples’ minds is somehow for our benefit so nobody need worry about adding numbers in the ones place. Really. :open_mouth:

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Does this mean that all future price rises will be in 10 cent increments?

Perhaps it will be in “at least 10 cent increments”?

I suspect that most folk have missed the probable reason for this - that the 5c coin is probably shortly to be withdrawn and eventually demonitised. New Zealand got rid the 5c coin more than a decade ago, and the Australian government has certainly made noises about doing this before. I suspect that the larger cash handling entities, such as supermarkets, may have been advised first. Time will tell, but I think before the end of the year there will be an announcement re the end of the 5c coin

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I punt most people use cards, not subject to rounding or coinage. Since “rounding to coins available” is about paying, if you have 50 items in your trolley the final amount could be anything today, and round you might at the till. That would at most be $0.05 up/down if they are honest about it if $0.10 increments are really important.

Changing the price of each of the 50 items? Nothing but cynical opportunism as I see it.

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@mlphilatelics

As Phil, @PhilT said:

& I have said earlier:

So, if the 5c coin is taken out of circulation as you have suggested, then rounding on the TOTAL amount will go to the nearest zero up or down (not 5c as we have suggested), IF & only if paying by cash, otherwise no change to the final amount.

Ergo, there is no justification to round ALL the prices except avarice.

Except that is not what Woolworths are saying - in a marketing sleight of hand not seen since, well, last time, Woolworths seem to have sprayed weasel-words at us all … and the press have run with it, led by the SMH. This is evident in the first two sentences of the linked SMH article:

In a move that’s being touted as a simpler way for shoppers to stick to a budget, Woolworths is moving all its prices to round numbers.

Key words “moving” and “round numbers” but no mention of “rounding”. OK so far …

Turning its back on the age-old wisdom that customers put more weight on the dollar figure than the cents on a price tag, the supermarket giant is progressively rounding all its prices to numbers with a zero at the end.

And in the second sentence the SMH take the bait. “rounding all its prices to numbers with a zero at the end” - which at face value of what Woolworths is quoted as saying, is incorrect.

What Woolworths are actually saying:

“The prices are not all rounded up or rounded down, it’s about hitting the right number,” Mr Donohue said.

I’d reckon it would be more accurate to call this “changing the price to the right number” where “right number” is what the Woolworths marketing department have determined will maximise shareholder return, and is (more) round - it might look like the number has been subjected simply to rounding in a subset of cases where the resulting right and more round number happens to also be the product of applying rounding to the original number, but thats not what Mr Donohue is quoted as saying.

@PhilT linked another rather interesting article above - if people didn’t see it, here it is again - well worth the read:

Pardon my pedanticism and cynicism, but I reckon its a common theme among spin doctors to knowingly cast weasel-words knowing they create assumptions or impressions but that they can later say while displaying their carefully practiced innocent look “that wasn’t what we said” …

I can’t find specifics of a Woolworths press release on all this. If anyone has links to more detailed information from Woolies that might be interesting …

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Actually, almost all Woolies’ prices currently end in a 9. Rounding practice requires rounding to the nearest round figure not the lowest, so in fact ALL those “$x.x9” items will increase by 1c. There’s no “50% will round up, 50% will round down” in this at all. They all go up in price.

And if you meant per basket at the checkout, then if you added together a basket of goods from the old system where most were priced in $x.x9 increments, then you had a 50/50 chance that the entire basket would be rounded up or down by up to 4c.

But if all items are priced ending with a 0 then ALL those items were already rounded up beforehand and you’re paying an extra cent per item consistently. (As there’s no further rounding possible with all prices being already round.)

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Your math is lousy. Three items @ 99c = $2.97, which rounds down to $2.95. Three items @ $1 = $3. That’s 5c in Woolies pocket. And they claim they’re doing us a favour. Oh, please. Remember Woolies doesn’t round every item, just the total of the bill.

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Another nail in the Woolworths coffin.

All items rounded individually does not equal the total rounded.

If Coles does the same, I guess I will be shopping exclusively at Aldi instead of trying to share it around.

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If you’re naive to think that statistically it will balance out - think again. I’ll bet a hundred bucks that this has been on the agenda for a while and prices have crept to that “higher plain”, so when “rounding up” takes place, that basket you’re used to will cost a lot more … What other reason would they have? Prices are determined by many factors but the biggest one is what people “expect to pay” for something. I don’t think I’ve ever seen a product in Woolies that cost $X.x2 or 3 or 4! I won’t shop at Woolies at all now. IGA and Aldi.
:- (

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It has been interesting to read all the reactions to the rounding news from Woolworths.

I’m not an expert in this area, but whatever happens, I’m sure that the real-world results will be complex. The nature of competition and the current need for businesses to achieve perpetual growth indicate to me that there could be room for unexpected developments.

One factor to consider alongside the probability of higher prices is consumer psychology. For example, this study on odd pricing indicates that using odd numbers increases consumer demand. So, while the prices might be higher, the demand may reduce. Alternatively, if the prices round significantly lower (say from $99.99 to $99.90 or even $99) then demand may increase, and in real terms we’ll all be saving a bit but spending more money overall.

But perhaps I’ve missed the mark here. If you have some experience in this area, either aa a consumer, retailer or at an economic level, I am keen to hear your thoughts.

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I have no experience in this area Brendan, apart from purchasing groceries for 34 years (did the family shopping from
age 15) and I can only say that if a price has .99 at the end of it I have always just naturally rounded it up to the next
dollar…

I suppose the only way to really know is through testing customer demand and logging the results.

I believe when Amazon starts selling in Australia the supermarkets may have to rethink their entire Marketing Strategy
as this company is bigger than all of them and they will certainly put the pressure on for price competitiveness…

I will watch and wait with interest…

Cheers Nat :slight_smile:

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Hi, what do I think of what woollies (or coles) are doing, they just continue to do things their way, not the way of consumers, never. That is why I do not buy from woollies or coles. I thought there was some body/level of government that watched and controlled unfair price hikes.

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I agree with you carrolbates1, changes are only for their (W & C) benefit, or else they wouldn’t change.
Pam

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… this is NOT what Woolies are saying (see my previous post quoting their marketroid guy). Rounding is applying a rule to an existing number/price to get a more round number based on that price as per the specific rounding rule (round up from .5 for example) which is Not what Woolies are saying - they are simply stating they will change the pricing to round numbers. This could mean changing 3.99 to 5.00 - 5.00 is ‘more round’ than 3.99 but 5.00 is not what most of us would assume rounding rules would arrive at given the starting price of 3.99. Likewise 3.00 is more round, but typically I’d ‘assume’ a round down from 3.99 would be 3.90, maybe 3.50 but 3.00 feels more like a ‘truncate’ than a round. Still, 3.00 is ‘more round’ than 3.99. “Rounding” is something the press introduced into the discussion, I see nowhere that Woolies have been quoted as rounding anything, they have only mentioned round numbers… Changing the price to a round number that is the “right number” is what Woolies have said.

Essentially - expect that they have thrown all their prices into a mixer and come up with new prices, that are the ‘right prices’, that have no specific basis in any previous or starting price, but they happen to be ‘round’ or ‘rounder’.

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