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Dis-Chem denies exploiting Covid-19 for mask price increases

Says it was faced with demand and supply challenges.
Dis-Chem struggled to meet the demand for surgical masks and had to think of alternative ways to meet consumer needs. Image: Supplied

Dis-Chem denies increasing mask prices as a form of exploiting the Covid-19 pandemic for profit, saying that at the time of the mask increases the state of National Disaster was yet to be declared and the regulations were not yet published.

The pharmaceutical retailer appeared before the Competition Tribunal on Monday, after the Competition Commission charged it with abusing its dominance and accused it of hiking mask prices by as much as 261% during the State of National Disaster, in early March.

The commission is asking the tribunal to issue the maximum penalty against the chain.

In its defence, the retailer noted that it had increased surgical mask prices prior to the Department of Health (DoH) suggesting the importance of such masks to the public.

When were prices increased? 

The retailer’s advocate Michelle le Roux, however, explained in a presentation that Dis-Chem saw a “substantial” increase in demand for masks towards the end of January and early February 2020.

She says the vast majority of the customers buying masks in January were not consumers doing so for personal use, but were bulk buyers.

However, Dis-Chem says it cannot conclude that the masks purchased were for export or domestic resale opportunities, therefore, it would be a “logical inference” to draw since that volume of masks could not be for personal use.

The pharmaceutical retailer says it did not “alter” prices in January despite the increased demand. It, however, introduced the Surgical Face Mask Foliodress Blue on January 30, 2020, which it repackaged.

It says, even currently, these surgical face masks, with a single unit retail price of R1.31 (excluding Vat), are sold as single items, as well as in boxes of five, 10 and 50 to ensure that it has sufficient stock to satisfy the needs of its retail customers, as opposed to bulk buyers which are likely resellers or exporters.

By breaking down the larger pack sizes into single units the retailer wanted to meet the increased demand while avoiding stock outages.

Though it was able to meet the surge in demand in January, it did, however, start to increase the volume of new mask stocks available to purchase.

Dis-Chem says that this number was insufficient to replenish the stock sold in January as it was unable to procure the volumes required.

Seeking alternative ways to meet its customers’ needs for surgical masks, the retailer says it temporarily shifted away from the sale of larger pack sizes of masks in order to ensure that its day-to-day customers had access to masks.

Le Roux says that when the first case of coronavirus was reported in South Africa in early March, the focus was on washing hands, coughing and sneezing etiquette, and avoiding contact with people who were sick.

“No recommendations regarding the use of masks were being made at this point in time.”

After the World Health Organisation (WHO) characterised Covid-19 as a pandemic and later, when the South African government declared a state of National Disaster, the demand for masks further surged – particularly between March 1 and 18.

“Dis-Chem was unable to meet total demand for masks, and, due to its movement to smaller pack sizes, sales for the whole of March, were, in units, less than 50% of its February volumes,” Le Roux says.

It then increased its prices again, giving “careful consideration to the competitive landscape around it”.

“At no point did Dis-Chem operate without explicit regard to the prices being charged by its competitors. Indeed, Dis-Chem sought to ensure that its unit price was at all times lower than those charged by its main rivals so as to continue to deliver value and affordable products to its customers,” Le Roux says.

March was also the first month in which Dis-Chem was forced to use new suppliers in order to meet the surge in demand.

The next hearing will be on Wednesday, May 6, 2020.

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Ivan is (trying to be) clever – – and so too his advocate – – yet I saw the price of gloves yo-yo and when i raised it at the local stores i was told at the one store – another supplier – the other store admitted it was the same supplier – just GREED-

Ivan and his merry people won’t see me in any of their stores ever again!

They’ve used this sad state of affairs as a marketing ploy, free exposure, free advertising

Clicks is as good an alternative if not better!

Lemme guess they also deny exploiting landlords for wanting to pay little or no rent as the items they were selling were (ironically masks) not profitable. Skelm, corporate greedy company indeed. Shareholders first to the lifeboat guys the rest of you can drown.

This is stupid by compcomm. So now I can’t get them at Dischem for R150 per 50pc, I have to pay R540 per 50pc at online retailers instead. Laughable.

Because RSA is going backwards

The whole world is going backwards right now. But the environment is smiling!

“It says, even currently, these surgical face masks, with a single unit retail price of R1.31 (excluding Vat)”
I don’t understand this – Yesterday I bought some very basic surgical masks from Dischem in Blackeheath.
They cost R14.95 each!
I could see a rip-off happening, but I had no choice.
I regard myself as an astute shopper and my recent impression is that Dischem are not covering themselves in philanthropic glory.

Coming to hand sanitizer: I recalled paying in excess of R60 at Dis-Chem (around last week in March) for a 500ml bottle of “infecti-Guard” 70% alcohol.

Was it a fair price?

Masks: you have at the low end ‘paper’ based masks selling cheaply (single use…cannot be washed) versuss cloth masks which are washable, etc. Price? Let’s do a Mercedes vs Datsun analogy.

Maximum penalty please, jail time would be welcome as well.

Their behaviour in terms of price gouging is as disgraceful as the way they handled the rental issue – trying to get out of contractual rent due notwithstanding them being open for business. Everyone applauds a business that looks to exploit an opportunity, but this operation oversteps time and again.

I suspect that Dischem’s actions in this crisis will be case study material for business books.

How to shoot yourself in both feet and one hand with one bullet.

Unless I have no choice I will only buy at owner managed local pharmacies forever. I don’t care if some of my local pharmacy’s over the counter stuff is cheaper at Dischem.

Have you seen the prices of Vitamin C?

Used to be the cheapest of the vitamins by miles. Now the most expensive. Even more than multivitamins.

Absolute joke!

I paid R 50 for a mask @ Dischem and R 20 for a mask in a different store??????????????????????????????????????????

Dischem – started reading the article and stopped because I simply hate lies. Lawyers are great at formulating technical arguments based on lies. Why would anyone buy masks for export from a retailer and not the manufacturer? Really? Further, your stores are full and you don’t want to pay full rent? A company dominated by greed and dishonesty. How can you invest in a company that has dishonest management? Eventually it catches up i.e. Steinhoff.

Not Dis-chem, but dis-honest and dis-graceful. I spent over R2,000 per month on average at Dis-chem. I will never buy even buy half an earbud grom them ever again. Their rental stance was an absolute dog show and now price gouging. Really??

Scoundrels will always try to hide behind lofty principles. Dodgy commercial practices should not be afforded shelter behind important economic principles. The wisdom in those economic principles are lost once crooks use them as defence.

It’s not just governments that cripple the freedom of citizens. Corporations do it too. They use different tools but will hike their prices as high as they can when consumers have no choice. This is simply monopoly or cartel behaviour. It should not be tolerated because it will have no end. There are always exploiters who care so little other humans that they have to be stopped. Not all of them work in government.

Dischem was caught out. They deserve to be fined. Others have not been caught.

End of comments.

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