The Future Is Here Already
We happened to enter the Woolies supermarket together and stop at the big box full of broccoli, attractively priced at $1.50 per kilo. She was a mature, well-dressed woman, clearly just out of an office or professional environment. I was just looking for a good deal, just as I used to do when wandering around a betting ring with 20 or 30 bookmakers keen to get my cash.
“Wow”, I said, “What a great price”.
“Is that good?” she asked. “Try four bucks”, I responded, quoting a more usual price.
Which tells you a lot. First, that Woolies had tumbled on to a huge pile of the stuff. Second, that it allowed them to use it as a “loss leader”, as the trade terms it, and thereby encourage shoppers to visit the store. And then buy more high priced items just down the aisle.
The supermarkets are past masters at this practice, far more so than the airlines which get all the publicity about managing yields by charging different fares at different times to different market segments.
For example, for 52 weeks a year Woolies charges just on $5 a bunch for rhubarb but I can get it for half that at the local greengrocer just down the road. No such competition exists inside the shopping centre (unless there is another supermarket) because Woolies has frozen out the greengrocer we used to have, along with the butcher and the deli (so no longer can we buy freshly-made lasagne). And when an enterprising Japanese food outlet started up just opposite its doors, Woolies immediately opened up a similar counter to divert the customers. Happily, it did poorly at that and it has discontinued the effort. A small victory, but a victory nonetheless.
The third lesson from my brief encounter was that some smartly-dressed mature women have not got a clue about the value of things, or maybe they don't care. There is a remarkable parallel there to today's happy gambler jumping on to the Fixed Odds prices being offered by Tabcorp and Tattsbet, regardless of their poor value. If you have $5 to spend, just whack it on. That includes the odds-on favourite which now is so short that it will never be possible to make a profit on it. But who cares? You may win enough to buy the next round of drinks, or some broccoli.
Another parallel is with the era when TAA and Ansett operated under the Two-Airline-Policy with set fares and identical numbers of planes. When their managements met every Monday morning they were little concerned about weekly profits or customers but instead whether they had 51% or 49% of the business. By comparison, when Woolies dropped milk prices to a fixed $2, Coles did exactly the same thing and later Aldi followed suit. Or was it vice versa, but who cares. Well, producers did and so were forced to breaking point in many cases. Personally, I would have been quite happy to pay $2.50, and I suspect many other folk would have had the same view. The point is that the supermarkets were concerned only about getting a jump on the other guy. Benefits to consumers or producers never came into it.
Meantime, airline fares are now half what they used to be since Gareth (Biggles) Evans, then Minister for Aviation, brought in deregulation in 1989 which, incidentally, has been of huge help to the thousands of greyhound trainers shuttling around the country.
I might add that that was one of the only three things Labor governments ever did to improve things. Another was floating the dollar and the other when Whitlam stopped inserting “British Subject” in my passport. I hated that and never took any notice of it anyway, so it was a nice touch.
Which leads us to the tweedledum-tweedledee nature of Fixed Odds prices. The differences are small and often hard to get hold of anyway, whether you are a big or small punter. But it is why Racing NSW is now making a song and dance about their anti-competitive practices. CEO V'Landys, in his usual noisy fashion, is threatening dire consequences unless they conform to normal (oncourse) bookmaker principles. A fine idea, of course, but threatening to deregister them, in effect, is unlikely to get anywhere. It involves his implied power over the copyright to field lists, which is a state by state matter rather than a national one. It might work with Tabcorp, which is licensed in NSW, but not with operators licensed in other states, which is all the others.
What the Northern Territory and Tasmanian governments do is all that matters, especially in a digital era when copyright power is becoming more and more irrelevant and difficult to police. And they are two tiny states which do need the extra taxes.
Certainly, quite a lot of punters are not happy at the moment. But mature, well-dressed women from an office environment or builders on a work site trying to get set via their IPad or mobile may not know or care. The power of the people is just not there, unfortunately. Without that push, state racing ministers are unlikely to show much initiative.
The ideal message would be to ask punters to walk away unless the price is right. That's exactly what would have happened in a decent old-time betting ring. Sadly, many investors now seem to know the price of everything but the value of nothing. Ideally, the industry might encourage the development of punters who do know what it is all about yet the facts suggest the opposite is occurring.
It is a classic case of people with knowledge outwitting those without it. That surely makes a case for more government intervention, which is principle I do not like, but what else can you ask for?
Otherwise, only a national reform of the betting market offers hope of improving the lot of today's punters and gamblers, to say nothing about the future prosperity of the industry. Is a Royal Commission out of the question?