How supermarket operators exploit customers, workers with hidden trade tactics

With price labels often conspicuously absent on products, shoppers at various supermarkets and grocery stores are left in the dark about the true costs of what they intend to purchase as profit margins soar unchecked. BABATUNDE TITILOLA writes about the illicit practices that enable owners of supermarkets and grocery stores to prosper amid economic hardship, revealing disturbing shenanigans that breach consumer trust, undervalue workers, and make the promise of fair pricing a distant illusion

The grocery store was buzzing on Sunday evening as shoppers tried to squeeze themselves into small spaces available for movement. As this reporter approached the payment point, he sensed the frustration in the conversation between a shopper and an attendant over the cost of goods.

Both passionately traded words for and against the arbitrary increase in the prices of goods picked for purchase.

After back-and-forth arguments that lasted a few minutes, the shopper had no choice but to agree with the attendant on the cost of the goods. As he moved away from the queue, he displayed gesticulations that showed he was helpless in the situation, a disturbing trend he said had continued since the country’s economic situation worsened.

In an era whern consumer choice has never been greater, supermarket and grocery store owners are accused of carving out a dubious plan to exploit the very customers keeping them in business through patronage. A closer look at this retail industry reveals a labyrinth of tactics designed to maximize profits at the expense of ethical practices.

From paying meagre wages that barely meet the needs of their employees to the troubling trend of omitting clear price labels that leave shoppers in a haze, these retail business owners and operators have developed models executed to outsmart customers by making them part with more money to purchase overpriced goods to keep their margins fat, and by so doing, prioritise profit-making over customer trust and satisfaction.

Borrowing to sell on credit

Findings by this reporter showed that the economic hardship in the country has not only impacted the profits that supermarkets and grocery stores make in their daily operations; it has also pushed them to the point that they only care about surviving.

It was also discovered that many of these business entities are surviving on selling on credit or obtaining loan facilities to keep their businesses afloat. This, according to managers of some supermarkets and grocery stores, who spoke with our correspondent, is a major way to survive as the economy continues to deal huge blows to their businesses.

A 38-year-old store manager in the Ketu area of Lagos State, Uthman Wahab, revealed that surviving in the grocery business requires courage and the hope that nothing goes wrong. Wahab disclosed that he just finished repaying the debt he owed to restock his shop in February, adding that the unstable economy in the early months of the year took a toll on his business.

His shop, located near one of the motor parks around Ketu, offers him the chance to get customers’ patronage daily without any fear of a dry day at his shop. Wahab said, “I usually give my regular customers a chance to buy on credit. You cannot survive in this business without trying to make sure that some customers keep coming back. As long as I know that you will come back to pay, I do not mind selling on credit.

“I faced some setbacks early this year. The economy did not help. Imagine buying goods at certain prices and selling them at those prices only to go back to your dealers to discover that the prices have changed. How will you manage to buy the goods at the new prices unless you add your money?”

The store manager said grocery store owners find it difficult to be on the side of the customers as it would negatively affect their earnings on sales. This, he attributed to the fluctuating economy, which he said had made it almost impossible for stores to appear truthful in the eyes of the customers.

He said, “Shop owners are going through a lot right now, and the government is doing nothing to make life bearable for us. Prices are not fixed. They fluctuate almost every week. And unfortunately, our customers do not want to hear such excuses when they come and you tell them that prices have changed.

“I know it does not make sense to explain to your customers that the price of something has changed three times in two weeks. But there is nothing we can do. I would rather tell you the price that will not make me run at losses than use my money to cover the remaining cost if I sell something for you for an old price.”

Wahab, a father of three, explained that his reliance on the profit generated from his store had reduced as he could only make enough to keep the business running. However, with the help of his wife, who works as a fashion designer, he could hold his family together. “I hope things change for the better because this is hard,” Wahab said in a disturbing tone.

Low Pay, Staff Reduction

However, the story is very different for supermarkets as their operators cannot afford to sell on credit. In a series of conversations with heads and managers of supermarkets, this reporter gathered that many supermarket operators obtain loans to survive.

A former manager at a supermarket in Ibadan, Oyo State, who identified himself simply as Segun for fear of victimization, said the owner of the mall where he used to work had to obtain a bank loan to boost operations as they were already running at losses.

He narrated how the supermarket’s owner was struggling to stay in business until he became frustrated and was pushed to sack some staff members, including him, in a bid to reduce administrative costs.

Segun said, “We had some troubles last year in November. I heard that our owner had been paying debt before then, but that November was tougher. Around December, he (the owner) had a meeting with some of us who were senior staff and said he would consider sacking some people because he was spending more than we were making.

“January went, and there was no issue. In early February, he called us again and said he had decided to sack some senior staff because he could no longer pay our salaries. He said he had to take another loan and add it to our January sales to stock and did not want to have issues with paying the loan. That was how I left.”

As Segun learned later, apart from most of the senior staff members who were disengaged, a few junior staff members were also replaced. “I know he sacked them too because of the salary he was paying them. The new ones he employed would not be collecting the amount he was paying the ones he replaced,” Segun, a graduate of history, said.

Digging further, our correspondent, on Sunday, July 7, walked into a popular supermarket in Magboro, Ogun State. Following an official request, the manager, Timothy Oladipupo, said some supermarkets were still operating due to loan facilities.

Though he refused to comment on whether the supermarkets are cutting staff or paying low salaries, he, however, revealed that it was common knowledge that attendants were not being paid enough.

“It is what everybody knows and that is what everybody will tell you. I agree that staff can be paid more, but no business owner will spend more than what he earns. Some will tell you they are using loans to fund their businesses, and “It is what everybody knows and that is what everybody will tell you. I agree that staff can be paid more but no business owner will spend more than what he earns.

“Some will tell you they are using loans to fund their businesses, and it is true. It is hard for many enterprises to survive in this current economy,” he added.

Sustainability sacrifices

Unlike medium-sized grocery stores, many supermarkets did not have the luxury to offer their goods on credit. Though they continue to survive as new ones are springing up, findings have revealed that their survival significantly rests on the sacrifices of their staff members who are only paid peanuts.

On Tuesday, July 9, this reporter stepped into a supermarket in the Berger area of Lagos State. After finding the stationary section, a lady dressed in a bright purple top greeted him with a smile. However, it was soon discovered that her smile was in contrast to the challenges she was facing.

Born in the eastern part of the country, Chinonye said she relocated to Lagos for greener pastures. But her experience working as an attendant in a supermarket left her wondering if truly the grass is greener on the other side.

“The economy is the same everywhere,” she said, displaying a frown on her face as if she were mimicking someone scornfully. The manager of the supermarket had told them several times that the reason for their low pay was that the economy had not improved and the supermarket must be maintained “by all means.”

Chinonye said, “That was what he told us anytime we complain about our salary. What does N30,000 a month do for me in this economy? If we talked, they would say there was no money. But does it stop the power supply here or does it stop us from putting on the generator if there is no power supply? The attendants will always be the ones to suffer for it.”

This reporter visited more supermarkets in Lagos and Ogun states to speak with attendants in the guise of shopping. Their stories were similar as they all lamented that their monthly pay was not proportionate to the efforts that they put into keeping the businesses running.

Non-labelling strategy

Findings by our correspondent showed that people feel comfortable visiting supermarkets and shopping malls for patronage as they are a better alternative to local markets.

Customers with the financial strength to purchase necessary everyday items encounter fluctuating prices at these business entities due to the absence of price labels on products, resulting in prices being determined by checkout attendants on the spot.

However, it was discovered that most of these shoppers are unaware of the current prices of the goods they pick, therefore making them susceptible to exploitation.

A shopper in one of the superstores in the Orile Agege area, James Adaji, shared with Sunday PUNCH his frustrations regarding fluctuating prices and how the lack of price tags affected his shopping experience.

“I entered the supermarket and most of the goods there did not have price tags. You do not know the price of what you want to buy until you are about to pay. The attendants can call whatever price, and you can either pay it or leave,” Adaji said.

During visits to supermarkets in Mowe, Magboro, Berger, Ikeja, Agege, and Oshodi areas of Ogun and Lagos states, this reporter found a low level of compliance with pricing standards. Some stores had entirely removed price tags from products and shelves, while in other locations, the price tags on shelves displayed outdated prices that conflicted with the new prices announced at the checkouts.

Practices against relevant laws

An investigation by this reporter revealed that the Federal Competition and Consumer Protection Act of 2018 serves as Nigeria’s legislation for promoting and protecting consumer rights.

Signed into law on January 30, 2019, part of the Act’s purposes is to shield consumers from unfair trading practices and to promote specific rights, including the right to safety, the right to be informed, the right to choose, and the right to seek redress.

However, supermarket and grocery store owners were discovered to be in disobedience of the Act’s provisions, raising concerns about compliance and the protection of consumer interests in the marketplace.

Section 115 of the Act states that “An undertaking (a supermarket) shall not display any goods or services for sale without adequately displaying to the consumer a price of those goods or services.

“A price is adequately displayed to a consumer if, in relation to any particular goods or services, a written indication of the price, expressed in the currency of the Federal Republic of Nigeria, is annexed or affixed to, written, printed, stamped or located upon, or otherwise applied to the goods or services, or to any band, ticket, covering, label, package, reel, shelf, or other thing used in connection with the goods or services, or on which the goods or services are mounted for display or exposed for sale, or published in relation to the goods or services in a catalogue, brochure, newspaper, circular, or similar publication available to the consumer or to the public generally.”

The section further provides that a supermarket shall not require a consumer to pay a price for any goods or services higher than the displayed price for those goods or services, or if more than one price is concurrently displayed, higher than the lower or lowest of the prices so displayed.

Regulatory warning

The sharp practices by males are at variance with a directive from the Lagos State Government Consumer Protection Agency that supermarkets and malls in the state must display price tags on all products.

Upon observing that shopping malls in the state were neglecting the use of price tags, the agency’s General Manager, Afolabi Solebo, warned that such practices could result in price exploitation and the violation of consumer rights.

“LASCOPA’s warning aims to ensure transparency and protect consumers from potential price exploitation, as the non-disclosure of price tags can lead to misunderstandings and inconvenience at the point of sale,” Solebo said in a statement.

In a follow-up interview with our correspondent, Solebo affirmed that the agency would safeguard the interests of shoppers, emphasizing that supermarkets must adhere to the legal requirement of labelling their products with prices. He added that the fluctuating economy should not be an excuse to exploit shoppers.

Solebo said, “Most of them use the chance to dupe unsuspecting members of the public, and they don’t expect us to fold our arms and watch them like that. Some of them hijack prices, and we have been getting complaints.

“It is proper for them to change prices, but most times we discover that the prices they have on their shelves are different from what they sell to the shoppers. They must display the prices of what they sell. The law is the law; it is not about sentiments. If they can close their stores for 20 or 30 minutes, they will put prices on all those products. It is against the law not to do so.”

On Thursday, April 18, the Federal Competition and Consumer Protection Commission conducted raids on several supermarkets in the Federal Capital Territory to uphold compliance with regulations regarding price displays and quantities.

The Executive Secretary of the commission, Dr. Adamu Abdullahi, stated that the operation aimed to eradicate price gouging and unlawful pricing practices in supermarkets. He also mentioned that the commission would soon carry out inspections in Lagos, Port Harcourt, Kaduna, and Ibadan in Oyo State.

Earlier, on February 16, the FCCPC sealed a supermarket in the Garki area of Abuja for engaging in “misleading pricing and lack of transparency in pricing.”

“This exercise is in continuation of our efforts to ensure that prices in the market reflect what is displayed. Nowadays, we have found that there is a lot of pretence in what’s happening, especially for markets around the major cities in the country,” Abdullahi said in a statement.

Exploitation continues

As the marketplace continues to be dominated by supermarkets and grocery stores with operators who stop at nothing to keep their business running, the cycle of exploitation and debt continues. While some businesses prey on their staff and customers by cutting wages, inflating costs, and removing price labels, others obtain loans from banks.

Though these retail stores obtain loans to sustain themselves, they are not just trying to make enough profit at the end of the day. They are pushing the limits with enticing promotions and misleading pricing strategies to lure customers into webs of price exploitation.

Reacting to these growing concerns, a business solutions advisor, Wole Oyeniyi, in an interview with our correspondent, said supermarket and grocery store operators should not exploit their staff members or customers in a bid to survive.

He explained that there were other ways to build a thriving enterprise, and the attendants should not have to suffer because of the harsh economy.

Oyeniyi said, “Supermarkets usually come and announce that they have implemented some innovative measures to keep the business running. And sometimes, these measures often negatively affect either the staff or buyers. So, innovation is an often-abused term. I will advise supermarkets to stick to the core principles. They should treat their staff and customers well.

“They (staff and customers) should not have to suffer for a supermarket’s inefficiency. The subscription/membership model is one strategy that has worked for supermarkets in Western societies, and I’m sure our supermarkets can design a Nigerian version that caters to our peculiarities.”

Oyeniyi said the Nigerian legal system could only do so much to counter exploitative tendencies among supermarket owners. He urged customers to be more intentional about what they want from the supermarkets they patronise.

“There is no point in patronizing a business with bad practices. Citizen journalism can help too. It is our collective responsibility to call out unfair practices. If we do so consistently, the people doing the right thing will win,” he added.

On effective cost-cutting measures, the consultant said supermarkets and grocery stores could implement sustainability without compromising customer satisfaction, adding that there was no general answer as each business had unique business data.

“Each supermarket has to pore over its business data, overhead costs, and customer buying patterns, especially, to know what to add or subtract. Some supermarkets spend on all sorts of pseudo-marketing gimmicks when all the customer is asking for is improved service delivery and better value for money spent.

“The interesting thing about cutting costs is that it often starts with considerable upfront spending before the gains can be felt over time,” he added.

Oyeniyi further stated that to improve customer experience, a supermarket operator must train and retrain its staff members and offer decent working conditions.

He noted that “increasing wages is not the only way to deliver improved working conditions. Supermarkets also need to start thinking like direct marketers in their obsession with their staff and customers.

“Improving work conditions for staff goes beyond wage increases. A supermarket can improve work efficiency for its staff members, and sometimes, it is the little things. Subsidised transportation, free lunch at work, and free internet are examples.”

Experts advise

As the cycle of exploitation deepens, findings have shown that the implications extend far beyond individual shoppers as they affect the economy at large.

Experts in economic policy and consumer behaviour are increasingly alarmed by the patterns emerging from supermarkets’ aggressive tactics and their role in perpetuating financial instability.

These economists highlight how the allure of convenience and measures for sustainability often mask a more insidious reality.

A professor of Economics at Covenant University, Olasupo Alege, agreed that the economic situation allowed supermarkets to exploit their workers and shoppers.

He said, “That is what is happening now. We have a highly unstable economy. So, the system is distorted so much that anybody can apply any policy now, and they will still give an excuse for their actions.

“Everyone wants to rip off somebody in Nigeria. There is no fear of the law. I think that is what the government wants to protect by saying that supermarkets must put prices. It is a good policy, but it is only doable in a stable economy. If my cost of production rises, who pays? It is through what I sell that I will recover the increase in the cost of production.

“So, it is a two-way thing, and unless the macro-economy is improved, all the other micro-components will be in trouble, like what we are seeing now. The economy does not allow any serious producer to do anything tangible (like fixing price labels) because they do not know what the price will say tomorrow. And when it comes, they cannot say because they love the customers, they will pay for the increase and sell at old prices. It is not logical.”

A business analyst, Eno Eka, noted that the methods employed by supermarkets to survive the harsh economy, such as cutting salaries, reducing staff, increasing workload, and manipulating prices, were short-term and unsustainable.

She said while the tactics might provide temporary financial relief, they could lead to significant issues like decreased employee morale, high staff turnover rates, and poor customer service.

“Instead, supermarkets should consider strategic cost-cutting in areas like supply chain management, investing in technology and automation, diversifying revenue streams through partnerships, and implementing customer loyalty programs to stimulate sales and improve customer retention,” she added.

The analyst explained that employing low-paid and inexperienced attendants in malls might also have several adverse effects as it could result in poor customer service due to a lack of necessary skills, poor working conditions, and low staff morale and productivity.

Eka, who is the founder of the Business Analysis School, said the government and policymakers should improve the economy by supporting businesses through grants, low-interest loans, and tax incentives.

“They can also support businesses by investing in infrastructure and creating sound fiscal and monetary policies that help maintain price stability and promote economic growth. They should also monitor the system to ensure fair treatment of employees across supermarkets.

“Adherence to labour laws, providing opportunities for staff training and development, and establishing grievance procedures that allow employees to voice concerns are all steps that can be taken to prevent staff exploitation in supermarkets and grocery stores,” she added.

She explained that to thrive in a challenging economy, supermarkets should focus on stocking essential goods, which are more likely to be bought regardless of the situation, and they should also introduce flexible pricing strategies and offer discounts to attract more customers, thereby leading to increased sales and revenue.