We hate rebates - learn why
If you spend time with any of the AIG store management and executive management team, you will quickly learn that rebates is a dirty word in our opinion.
For those less in the know about the workings of community stores, and how suppliers, managers and owners work together, it probably better to start at the beginning.
What is a rebate?
A rebate is a monetary incentive from the suppliers (and often manufacturers) to stock their product in the store. Our research revealed rebates can range between 2% and 25% which is reflected in the price of the product on the shelf. Also known as third party benefits, rebate revenue is worth millions of dollars in the Northern Territory alone.
Rebates generally increase for items that are popular. For example, Coke and cigarettes can be rebated at 25% and sugar and flour might be rebated at 7 or 8%. You can generally tell how much something is rebated by how expensive it is compared to the big supermarkets. So, if you’re in community and see 10kg of flour costing $48 compared to $7.50 in Darwin, a lot of that price discrepancy is because of rebates – someone is pocketing money to charge more in community stores.
Rebates put upward pressure on pricing in stores
Rebates from suppliers to community stores was worth $5 million in the NT in 2017-18 financial year. A higher rebate means a higher shelf price which is generally accompanied with a reduction in product range. This is because store managers have shown to favour products that offer higher rebates (more kickback money in their pocket). This in turn shrinks the product range and leaves only the expensive (rebated) products on the shelves. This is how it can cost $48.85 for 10kg of flour in community store versus $7.50 in Darwin. There is no choice for the consumer – pay $48 or don’t buy flour.
Impact on health
Limited choice and expensive products mean people can’t afford to buy a healthy range of products. Naturally shoppers will choose cheaper products, which in most cases means less healthy. A pie instead of a fruit and vegetables for example or takeaway fried chicken instead of cooking at home with fresh produce. The impact on health is significant, and unethical. The incidence of chronic disease in Indigenous populations is in large part due to the food choices available in community. The potential of the community store to impact community health negatively or positively is significant.
We need to disrupt status quo
More than anything we want to disrupt how community stores are managed in the NT (and further afield) and highlight the unethical practice of store management groups that are taking rebate revenue from the community stores and making a huge profit.
We also believe rebates should not be a part of trade with community stores. Keeping prices down and the range of products available in store as wide (and healthy) as possible should be the priority – not lining the pockets of greedy management groups.
AIG does not accept rebates from suppliers which means we are able to keep shelf prices low and healthy food available in the store we manage. We are proof it is possible – you just need to take greed out of the equation.