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Food Bank Collection 'Risky' For Supermarkets

Susan Edmunds, Money Correspondent

Supermarkets asking customers to donate to food parcels risk riling under-pressure shoppers, one marketing expert says.

New World has been asking customers to buy "foodbank friendly products" or buy a pre-filled $20 bag to be donated to the City Mission or local foodbank through its foodbank drive Family2family.

When items are purchased from New World, the supermarket makes its normal margin on those goods. But a Foodstuffs spokesperson said people could also donate items bought elsewhere.

New World would also give its own $250,000 donation.

It said as at 5 May, 40,000 bags had been donated.

But some customers had expressed concern about the campaign.

"I can't help thinking it's irresponsible for supermarkets to be making such big profits and pushing charity donations, rather than looking at their own prices and how much they pay their workers," one Mt Roskill shopper said.

Another shopper, in Christchurch, asked whether it was right that the supermarkets were making profits from the sale of items in the parcels destined for charity.

Massey University marketing expert Bodo Lang said people could view such initiatives as unfair "and some may even see it as hypocrisy".

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"People have a deep-seated sense of what is fair and what may not be fair. And violating these perceptual boundaries can likely tip consumers' sentiment towards supermarkets further into the red.

"As consumers may see it, there are several issues with asking consumers to donate to food parcels. First, asking consumers to donate is a widespread practice across many contexts in New Zealand... However, these donations are often called for by smaller organisations or not-for-profits. The two supermarket chains, on the other hand, are two very large organisations with tens of billions of revenue, so supermarkets asking consumers to donate food is likely to agitate consumers."

He said people would also be concerned because of questions raised about supermarket profitability.

He pointed to the Commerce Commission's draft report, which suggested supermarkets were making $430 million a year in "excess profits", a claim the supermarkets dispute.

"Both chains state on their websites that they are making donations to improve food affordability," Lang said.

"Both chains claim to donate $6.1m and $7m, so a combined amount of around $13m per year. This sounds impressive. But when you put it into context it isn't. It is merely the tip of the profitability iceberg. This is about 3 percent of their excess profits... this discrepancy between the supermarkets' exceedingly high profitability and their underwhelming commitment to lowering the food costs to those most in need will strike many consumers as deeply unfair.

"Third, asking consumers to make food donations while many households are squirming under high interest rates and in the middle of a cost of living crisis is prone to upset consumers."

He said high grocery prices were the second-largest expense for households and one of the largest factors in the cost of living crisis.

"As a result of these issues, many consumers will think it unfair that supermarkets ask them to donate to food parcels."

Foodstuffs spokesperson Emma Wooster said New World was the only Foodstuffs brand currently running a foodbank drive. Pak'nSave had previously had a similar foodbank drive called PakcanSave for a couple of years.

"Again customers weren't asked to donate money, customers were invited to donate product, it didn't have to be from Pak'nSave, and they facilitated getting the donated product to the local foodbank or City Mission. Pak'nSave donated $100,000. They aren't planning to do another one. That said they will continue with store giving initiatives like PakYourPantry."

She said Foodstuffs also donated to City Missions and Foodbanks through its partnership with the NZ Food Network.

"There's the social supermarkets as well of course where stores buddy up to open and support them."

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