Pricing strategy in remote community stores under investigation

Food items which are deemed less healthy are marked up as part of a food nutrition policy, a parliamentary committee was told today.
Food items which are deemed less healthy are marked up as part of a food nutrition policy, a parliamentary committee was told today.

Federal Government-owned Outback Stores faced questioning today over the pricing strategy used at 40 stores it supports in remote communities across Australia.

A Federal parliamentary committee wanted to know why it was charging its mostly Aboriginal clients double what other consumers were paying for items such as orange juice, lettuce and even toilet paper.

Outback Stores and other operators of the sole stores in isolated communities have been accused of price gouging and other forms of profit-taking from vulnerable customers, particularly during COVID-19 lockdowns.

It was the reason the Indigenous Affairs Committee of the Federal Parliament was directed to find out what was in fact going on.

In April there was a clash between Outback Stores and the Aboriginal Investment Group over claims one was stockpiling goods at the expense of the other.

Outback Stores is a Commonwealth company established in 2006 and operates many general stores in remote areas of the NT including Beswick, Ngukurr, Dungalan and many others.

Outback Stores supports stores across the NT, Western Australia and South Australia which are usually governed by community based boards.

The company was formed in 2006 from a need to improve the health of Indigenous people in remote Australia by addressing nutrition-related health problems, unreliable food supplies, stores closing because of poor management and build-up of debt.

Chief executive officer Michael Borg told the committee today most of their price comparisons were done against roadhouses or "convenience" stores in nearby towns.

He said the tried not to compare prices with supermarkets because they did not have the same buying power.

"We are very strong on affordable pricing on key items," he said.

Some items deemed less healthy such as orange juice with high sugar contents were marked up, he said.

Policies to drive up the cost of sugary drinks and drive down demand had worked, Mr Borg said, pointing to chronic diabetes problems in many Aboriginal communities.

Some of the other prices raised by the committee such as toilet paper were inflated for a short time because of panic buying in the cities which meant they had to source other stock often containing more toilet rolls than they generally sold.

"We sell water for a dollar, I bought the same bottle today in Darwin for three dollars," Mr Borg said.

He pointed to the high operating costs of remote stores which had few customers and high freight costs.

Mr Borg said Outback Stores worked to provide food security to these stores and nutritious food as well.

Plus they marked prices down on staple items like flour and powdered milk, he said.

Mr Borg agreed with members of the committee they were well supported during the COVID-19 lockdowns with support of in demand goods from Coles and Woolworths.

Committee members believed Outback Stores could look to forming permanent relationships with a bigger supermarket chain to use their buying power to lower prices.

Back on May 7, Mr Borg said Outback Stores had seen a 75-100 per cent rise in sales largely due to the extra $550 per fortnight in in payments to income support recipients.

The Committee is due to present its final report by the end of October.

The National Indigenous Australians Agency has launched its first ever "basket of goods" analysis across hundreds of stores in remote communities across Australia to check whether price gouging claims are correct.

That first sweep of about half of all stores is expected to finished within a month and handed to the Federal Government.

Lingiari MHR Warren Snowdon is deputy chair of the committee.

This story Pricing strategy in remote community stores under investigation first appeared on Katherine Times.