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Retailers' push back after being named and shamed as alleged price gougers

27 March 2020 - 07:41 By wendy knowler
People are buying toilet paper in bulk as they fear the spread of coronavirus. Toilet paper was identified as one of 22 'critical' pandemic products.
People are buying toilet paper in bulk as they fear the spread of coronavirus. Toilet paper was identified as one of 22 'critical' pandemic products.
Image: 123RF/Maitree Laipitaksin

Several major South African retailers have not taken kindly to being named and shamed by the National Consumer Commission (NCC) for alleged price gouging during the Covid-19 pandemic.

All stand accused of bumping up the price of one of 22 “critical” pandemic products —  including hand sanitisers, face masks, Dettol and toilet paper — but they’ve protested that the official complaint from the NCC reveals little to no detail of their alleged “crime”.

Working jointly with the Competition Commission, the NCC has launched an investigation into allegations of price gouging by 30 retailers throughout SA, acting on calls by consumers to the NCC’s contact centre.

Acting National Consumer Commissioner Thezi Mabuza named 11 stores which, she said, had been notified that a price gouging allegation against them was being investigated.

With the exception of Spar, which has individually owned stores, all the large retailers named have a central pricing model — prices are set by head office and store managers don’t have the authority to change those prices in their stores.

“It is very disappointing to be publicly named as being under investigation,” said Rachel Wrigglesworth, Clicks’ chief commercial officer, responding to the inclusion of Clicks’ Westgate Mall store on the list of 11 stores which the NCC is to probe.

“Clicks has consistently and publicly committed that it will not exploit its customers in this time of crisis, and we have kept this promise by maintaining or lowering prices on hygiene products.

“The complaint simply states 'Hand Sanitiser', which makes it difficult to understand and respond to, other than that there is a suggestion that Clicks inflated its prices for one of the many hand sanitiser products it stocks.

“Our prices for all hand sanitisers in the past weeks have either stayed the same or decreased — indeed many were on promotion at the time of the complaint,” she said.

“It is sad when a retailer which is doing the right thing gets this type of exposure, and we hope that in future the regulators will consider the veracity of the complaint before going to the media.”

Two Spar supermarkets appeared on the list — Silver Oaks SuperSpar in Pretoria, and  Spar in Plattekloof, Cape Town.

Group marketing executive Mike Prentice said when one of those stores sold out of hand sanitiser, a supplier the store owner hadn’t dealt with before offered him a different brand “at an inflated price”.

He bought it, added his usual mark-up and put it on sale in his store.

“It wasn’t a case of price gouging,” Prentice said. “He bought expensive and sold expensive.

“But it would have been better for him to have been out of stock of hand sanitiser.”

Prentice said the group was watching its retailers’ pricing very closely.

A Pick n Pay store was also accused of price gouging — the Milnerton branch in Cape Town.

“Although the commissioner has publicised a complaint against us, she has not given us any details of the product,” the retailer said.

“We have given an assurance that we will never raise prices artificially as a result of this or any other crisis, and we stick by that assurance. We are providing the information the commissioner requires to support this.”

The Shoprite group’s store on the list is the Checkers Hyper in Kempton Park, Gauteng.

“The investigation relates to a 2.5kg pack of Snowflake flour which has been on regular promotion in recent months,” the group told TimesLIVE last night.

“We deny any allegations of excessive pricing; our product pricing will not change during these unprecedented times and we will continue to act in the best interest of consumers.”

Massmart made the list with its Makro store in Durban’s Springfield Park.

“We are concerned by the allegation made by the acting National Consumer Commissioner during yesterday’s media conference,” a spokesperson said.

“She indicated that a certificate had been issued to Makro for alleged price gouging, relating to an unidentified brand of toilet paper, sold at a Makro store in Durban.

“We have no record of any such certificate being issued to any Makro store, facility or office,” he said.

“Massmart takes such allegations extremely seriously, as they fundamentally damage the reputation of our business.

“Since the announcement, our teams have been reviewing our price files and we have found no evidence that we have raised any prices above our regular everyday low price on the approximately 22 lines of toilet paper that we sell in our Durban-area Makro stores.

“Our own internal investigation has also indicated that our toilet paper pricing is market related.”

A hefty fine of up to 10% of a company’s annual turnover, or imprisonment for at least a year will be imposed on a company or retailer found guilty of price gouging, the NCC said.

“I urge all South Africans to continue monitoring the market and lodge complaints should they notice a sharp price increase,” Mabuza said.

The NCC’s toll free number is 0800 014 880.

This is the full list of companies so far revealed to be under investigation for price gouging:

  1. Silver Oaks SuperSpar — Silverlakes, Pretoria east (Gauteng)
  2. Spar in Plattekloof, Western Cape
  3. North Safety — Paarden Eiland, Western Cape,
  4. Checkers Hyper ——Kempton Park, Gauteng
  5. National Overalls- Villeria Pretoria
  6. Makro — Springfield, Durban
  7. Clicks — Westgate Mall (Gauteng)
  8. Free State Pharmacy — Bloemfontein
  9. Mopane Pharmacy — Nelspruit
  10. Sea Side Pharmacy — Table View, Western Cape
  11. Pick n Pay in Milnerton, Western Cape