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Warehouse Extra's bad report card in a survey of supermarket prices may have helped prospects for a bidding war when regulators decide on May 25 whether to clear the sale of The Warehouse Group.
High prices at Warehouse Extra revealed in the survey are unlikely to encourage the Commerce Commission to be concerned about the sale of a competitor to the supermarket duopoly of Foodstuffs and Wool-worths Australia.
The commission is set to wind up its five-month investigation into applications by the two supermarket operators to buy The Warehouse that will include checking out the impact on the grocery market.
While The Warehouse has only two Extra outlets and is only planning for 15 in its initial expansion, the launch of the grocery offering led the two supermarket giants to each take 10 per cent and prepare a takeover offer.
The Warehouse Group has marketed its Warehouse Extra offer as providing low prices as well as being an attraction for people to visit its general merchandise store.
But the Consumers' Institute survey backs the potential buyers' view that the Extra stores won't have a big impact on the market.
The survey showed that of six surveyed supermarkets, The Warehouse Extra in Sylvia Park was the fifth most expensive in a comparison of 39 items purchased, beating only the Woolworths supermarket in Milford.
Some items were priced significantly higher than for the cheapest supermarket, Pak 'N Save, with a 1kg block of cheese selling for $10.99 compared with $7.99, and butter $2.95 compared with $1.89.
The Warehouse commercial director Ed Connolly rejected the Consumers' Institute report. "We price check weekly on the best-selling lines and offer competitive priced products," he said.
"On groceries we will ensure we are competitive with shelf prices of other grocery chains.
"The survey is a snapshot in time and we believe it reflects promotions that competitors were running at the time. We have been quoted as the cheapest in some surveys and more expensive in others," Connolly said.
