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From next Monday the customers of the Woolworths franchise in the Pretoria suburb of Waterkloof Ridge will be able to enjoy discounts on some of their food purchases.

October 19, 2007 By Ann Crotty Johannesburg – From next Monday the customers of the Woolworths franchise in the Pretoria suburb of Waterkloof Ridge will be able to enjoy discounts on some of their food purchases. And from November 15, all 80 of Woolworths’ franchisees across the country will be able to offer discounts if they want to. This follows the settlement that was agreed on Wednesday evening between Woolworths and Dennis Hamer, the owner of Serious Foods, which owns the Waterkloof Ridge franchise. The settlement ended the action Serious Foods brought before the competition authorities. It was reached just hours before the competition tribunal was due to hear an urgent application for interim relief from the company. In its application, Serious Foods claimed that Woolworths was frustrating its efforts to charge lower prices than those set through Woolworths’ central pricing system. It claimed that Woolworths refused to allow Serious Foods to advertise that it offered the “cheapest prices in town”. Serious Foods alleged that these practices by Woolworths resulted in a contravention of the Competition Act, which prohibits companies from engaging in the practice of retail price maintenance. Serious Foods’ franchise in Waterkloof Ridge is so far the only franchised Woolworths store in Pretoria East. When Serious Foods learnt that Woolworths intended to open a full-line store in close proximity to its store at the end of this month, it attempted to implement a marketing campaign through which Serious Foods would lower its prices on selected products. The discounting, which was a bid to retain and expand its existing customer base, was to be done in conjunction with an advertising campaign. Woolworths refused permission for the advertising campaign and Serious Foods was unable to implement the price cuts because of Woolworths’ electronic pricing system. This system determines pricing for all Woolworths products at central level. It does not allow individual stores to upload a different price. It is possible to override this pricing system at the check-out point but this involves lengthy delays and would undermine Woolworths’ image as a convenience store. In terms of the agreement between the two parties, Woolworths will implement an in-store price promotion management system by the middle of next month. Meanwhile, Serious Foods can implement a manual system to adjust prices. Woolworths has also approved Serious Foods’ advertising campaign.