Open letter to:
Merchandise Manager | The Dairy Farm Company Ltd. – Specialty Stores
Dear Mr. Gore-Andrews,
This unsolicited comment was sent earlier today. I have blanked the actual language used to protect the gentle ears of yourself and your ivory tower colleagues.
‘Birds eye chicken pie £1 stated on the box….market place price $49… They’re taking a f****** liberty.’
That is FOUR times the marked price. You really need to fire your buying agents, Mr. Gore-Andrews.
Taking into consideration your comments when you last responded to our challenge and comparing prices of ‘similar’ goods in other stores I would add to the above, ‘Mr. Gore-Andrews, you really think people are bloody stupid, don’t you?’
I fully expect you to ignore this, but I have to say that another person told me this afternoon that they intended to adhere a notice to your doors warning shoppers of your unethical and dubious trading policies.
Why don’t you do what we used to do and compile a price comparison chart. You might start with Marks and Spencers.
a response. As promised here it is in its entirety:
Many thanks for your emails.
On the subject of pricing of imported products generally from all over the world, I do hope you understand that in almost all cases due to shipping and labelling costs there will be a price differential between the price here in Hong Kong and the price in the country of origin. We do our best to minimise this in order to offer imported products at what hopefully are acceptable prices to our customers.
Regarding the Youngs Prawns, I do understand your frustration at what is seemingly a very large gap in the price when you convert our $67 price back into pounds. As stated in your blog, there are various costs associated with wholesalers and importers which will affect the price. We buy this particular product in very small quantities and we do not buy directly from Youngs. We instead consolidate this item with other frozen products from the UK. As I’m sure you’re aware, UK supermarkets will run special price promotions that are printed on the pack like in this case. Unfortunately, the offer does not extend to overseas markets.
As for the Market Place by Jasons in Gold Coast, I am sorry that we are disappointing you in terms of service and range. Are there any particular products that you are looking for that I can help in adding to the range? We are working towards providing a relevant and appropriate range in all our stores and if there is anything in particular that you see in ThreeSixty that you would like added to the Gold Coast, I’d be happy to see what I could do.
We do appreciate your feedback and hope to see you again in our store soon.
Merchandise Manager | The Dairy Farm Company Ltd. – Specialty Stores 5/F Devon House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong
Thank you Andrew. I am sure our ‘not enormous but extremely interested’ readership will appreciate your candour.
I do not wish to be churlish, but the prices you charge in the Gold Coast ‘Wellcome’ store (which you have conveniently renamed Market Place by Jason) are several percentage points above those of identical products available at Wellcome. The premises are still the same, the layout is still less than ideal, the aisles are still too narrow for more than one trolley to travel in comfort at a time. In short the store is misrepresenting itself as being of a higher quality than its predecessor.
The suspicion remains that you are capitalising on a captive market and I cannot see any argument that might make the lie of that.
I would remind you of the Competition Bill, salient points of which I am sure you have read on the blog.
As a past marketer (and CIM Branch Chair) and now, thankfully enjoying retirement and occasionally teaching adult and business English, I would strongly advise an extensive course of training for your customer relations people. They may be nice and loyal but they have little idea of the meaning of the two words by which they are defined, viz: Customer and Relations.
When I was in business we certainly would not have permitted the nonsensical spin with which your staff endeavour to avoid potential problems.
The best advice I received from a client was this: ‘Don’t hide problems. If you cannot give me what I want when I want it – tell me. I will respect you and your company and I will be able to take alternative action.’
Whilst your business and mine are quite different I am sure you understand the importance of that advice.
You will, no doubt, be aware of the Lego response to an eleven year old boy. If not you will find it on the blog.
Thank you once again.
Re-reading this I was, once again, struck by the pompous attitude of HK businesses. Do they honestly think we are going to lap up this rubbish?
Thank you for your feedback.
Your valuable comment had been brought to the broad attention of all our related departments.
We do strive to offer an international range that represent good value.
Your understanding and support is significant to us.
Wishing you a prosperous year.
Yours sincerely, Maggie Ngai
Maggie, go to the end of this post for a special message just for you.
It is called price gauging
”It’s a free market. This is Hong Kong. If you don’t want to shop at market Place you don’t have to. In a free market a business can charge whatever the market will stand.”
All truisms and all comments that have been made as a result of our piece about the $67.00 packet of ‘prawns.
OK. Let’s take a look.
It’s a free market.
A free market is a market into which and out of which companies may pass at will.
NYT says: A free market economy is an economy in which the allocation for resources is determined only by their supply and the demand for them. This is mainly a theoretical concept as every country, even capitalist ones, places some restrictions on the ownership and exchange of commodities.
In Hong Kong there are several sources of food products. There is Wellcome, Market Place, 360, Park n Shop, International, Taste, Great, Fusion … that’s two! Then there is Jusco and, of course the wet markets and independent food retailers. What happens when an outside supermarket company attempts to enter? What happens when an independent trader decides he wants to enter the market. Simple: They are blocked. No Walmart, no Tesco (the two biggest supermarket chains in the world), No Aldis, no Carrefour, no Waitrose, no Sainsbury’s.
Free market? Is it a free market when wholesalers are pressurised to refuse service to new comers? Is it a free market where many HK supermarkets are positioned on estates already owned and managed by the same big hongs? Is it a free market when an unofficial cartel (see Competition Bill below) operates to keep market entrants out and force up prices?
Nope. That’s not a free market. That is basically a monopoly and there are laws in most modern countries to protect consumers from monopolies.
Did you know this?
A Competition Bill was passed by the Legislative Council on 14 June 2012
What does it mean to us?
a prohibition of agreements, decisions and concerted practices that prevent, restrict or distort competition in Hong Kong (the “first conduct rule”); and
a prohibition of the abuse of a substantial degree of market power in a market (the “second conduct rule”).
That’s cartels. Cartels are now or soon will be illegal in Hong Kong. Why then are the same prices found in the major competitive supermarkets? Why do both companies have similar discount structure, similar design criteria, similar disregard for their customers? Why is the supermarket segment still divided by agreement?
No, we do not have a free market in Hong Kong.
This from Mayer Brown JSM
‘The enforcement focus is expected to be serious cartel activity amongst competitors, which includes agreeing on customer prices or price-elements such as discounts or price ranges (price-fixing), allocating segments of the market amongst competitors such as by territory or customer type (market-sharing), subverting the normal competitive nature of tender processes by agreeing with competitors who will make what bids (bid-rigging) and agreeing with competitors to limit production or sales output to drive up prices or otherwise maximise market positions (output-restriction). Infringements of this nature will be dealt with most seriously.’
Lets remind ourselves of how we got here. HK$67.00 for a 180gram pack of frozen prawns labelled at £2:10 (about $26.00).
If you don’t wish to shop at Market Place (Dairy Farm) you don’t have to. Right. We could ‘pop’ down to Sam Shing where there is a Wellcome (Dairy Farm) or we could go to Sham Tseng where there is an International (Hutchison Whampoa Limited) Cartel, remember? Other than that there is CRC in Aegean which sells nothing you want or a trip to Chi Lok market where, at least, the shop keepers greet you with a smile. But the alternatives to Market Place take valuable time from peoples busy schedules.
So we have a choice? Not really.
We have quoted extracts from a report on the Competition Bill from the Mayer Brown JSM website.
What MBJSM don’t remind us (and they have neither obligation nor interest in so doing) is that the Hong Kong ‘government’ can’t scratch its own XXXX without permission from the hongs. The economy depends to a large part on property prices and these are dictated by the huge property companies who also just happen to own (to all intents and purposes) the very supermarkets under discussion.
So, before anyone attempts to spin the position of Market Place by Jasons let them read the above and then answer accordingly. Until then we will chase and chase until we get a straight answer.
And we promise them and you that we will publish their response and will be prepared to eat humble pie if we are proven wrong.
While we appreciate your response we must voice the opinion of many Hong Kong Gold Coast residents. They (correctly you have shown) forecast a reply such as this.
Many of our readers are very experienced business men in Hong Kong with vast experience of retail, import and export. I worked in chain stores for several years in my youth and, before coming to Hong Kong, was chair of one of the largest branches of the Cha rtered Institute of Marketing.
The information in your kind letter is misleading and, some may say, untrue.
Your pricing is NOT confusing. This is quite clear and we are at this moment awaiting a response from manufacturers of various products sold by you.
You are NOT committed to supplying popular products from all over the world, ‘Great’ in Pacific Place carries a far wider range of imported products than you do. Indeed ‘360’, part of your group, offers better value on products and shopping experience than Market Place.
Market Place in the Gold Coast is Wellcome. The staff are Wellcome quality, the management is Wellcome quality, the range of products is Wellcome quality.
To reach the price of HK$67.00 for the bag of prawns each shipping container would have to cost about HK$100,000.00 to transport from Grimsby. If you can show me that that is the case you can have my apology and that of several others. Transport, logistics and st orage (are they not the same? The world’s largest logistics companies certainly believe they are.) are also costs that Tesco, Sainsburys, Asda etc. all have to bear and not one of those companies in any of their branches would dare to ask HK$67.00 for a small bag of frozen prawns.
No, Miss Ngai, let’s be honest for a moment shall we?
Dairy Farm changed Wellcome to Market Place by Jason for the sole reason of increasing their profit margins and to exploit a captive market. There is no realistic competition as you are well aware.
This email and yours will be posted in the blog today or tomorrow. Should you be prepared to offer a truthful answer we would be very pleased to post that as well. At this moment you are known, by the ex-pat community of the Gold Coast and several local people, as the most expensive and ‘crooked’ company in Hong Kong.
One final point, Maggie, I completely sympathise with your position in Customer relations. We reall y want a response from the manager of the frozen food purchasing department, not from Customer Relations. You are losing Customers and certainly are not attempting to forge good Relations. It would appear that the Purchasing manager is not in a position to justify this scam or perhaps lacks the courage!
Let him prove us wrong.
Still waiting. Come on Maggie. All you have to do is pass this to your frozen food buyer, Is that Sean? So hand it to Sean and ask him to reply. Then you can go back to doing what you do best, that is burying your head in the sand hoping that we will go away.
Is it GREED or fair trading?
The photograph below was sent in by a reader who asked ‘How can Market Place justify charging HK$67 for an item that retails in the UK for £2.50?’
Good question, sir.
Lets make a few guesses and rough calcs and see whether our friends at Market Place would like to comment.
First £2.50 is the shelf price and represents either excellent value for a good quality product or fair value for a low quality product. Youngs, as far as we know are not known for poor quality.
Of course £2.50 is the shelf price, not the bought in price. Checking on mark-ups proved difficult with quoted figure between 12% and 300% rather depending on the product, the company and the purpose. Prepacked frozen, peeled prawns, we would guess, is not a high volume product,
So let’s say the UK supermarket buys at £1.25 delivered. That price will also be available to Market Place (if they buy direct, which they tend not to do) that’s HK$15.28 delivered to the store or the docks. Probably f.o.b. might even be cif!
In one container you could theoretically pack 122,000 packs at 180 gms. We couldn’t find a price for a refrigerated container from UK to HK without more work than we were prepared to do on a Sunday morning. But even if the cost was HK$122,000 we could add a dollar to the cost making it HK$16.28. Import taxes, warehousing (which we now have to call logistics) might add another dollar. Price now HK$17.28. We are looking for another HK$49.72.
OK the product goes to an importer who sticks his mark-up on top but an importer/wholesaler works on a smaller mark-up than a retailer who must account for higher rental and staff costs and waste, which can be 50%. OK so Market Place buys the product for HK$21.60. Let’s be generous. Let’s say they buy it for HK$30.00. Now we are looking for HK$37.00.
At this point lunch was served and so we throw the topic over to our friends in the purchasing department of Market place. How can you justify charging HK$67.00 for a product the retails in the UK at £2.50.
The German for ‘greed’ is habsuchtig which means ‘to have a sickness for’. Says it all really!
Market Place post your reply please.
24 December 2012
When was the last time you checked out the extortionate prices in Market Place. Here are a couple of examples taken from their websites.
Remember Wellcome and Market Place are the same people. Market Place is an excuse by Dairy Farm to make you pay MORE for the same stuff!
US Large brown Eggs (12s) Wellcome=$16.90, Market Place= $17.90
Chocolate Pound Cake. Wellcome=$15.50, Market Place= $25.40!!!
Nescafe Rich Blend Coffee (200gms) W’come=$54.90. M’ket Pl = $57.90
Campbells Chicken/Veg Soup 305gm. W’come=$9.17. M’kt Pl = $9.50
Note: Any special offers have been taken into consideration. The service at Sham Shing Wellcome and at Gold Coast Market Place is equally dire.
More to come.