Pricing Errors in the Supermarket: Who Pays?

Abstract

Electronic scanning check‐out systems now operate in most New Zealand supermarkets, and three‐quarters of all grocery products bought by New Zealand households are optically scanned. With the introduction of optical scanning technology at point‐of‐sale comes the debate on price accuracy. Based on a sample of 18.129 products bought in 86 New Zealand supermarkets, the level of pricing errors and the monetary value of pricing errors are examined. Previous research in the USA has suggested that consumers suspect pricing errors may disadvantage them rather than the retailer. However, the monetary consequences of price inaccuracy resulted in a net average undercharge to the consumer of 31 cents in every NZ$100 spent; half of this net average undercharge resulted from uncharged goods, that is, goods free to the consumer. Price inaccuracy in the New Zealand supermarket industry is disadvantaging the supermarket retailer. Extrapolation of the results of this research shows that this industry could be losing nearly NZ$18 million per annum from pricing errors. Recommends detection of pricing errors and greater emphasis on staff training and supervision for check‐out operators and for those responsible for price changes.