The nation’s largest supermarket groups and the Australian Retailers Association leapt to the industry’s defence in the wake of the Australian Competition & Consumer Commission (ACCC)’s much-anticipated Supermarket Inquiry on Friday.
The report includes 20 recommendations to increase competition and price transparency for consumers and suppliers. The commission concluded that Aldi, Coles and Woolworths had increased their average product margins over the last five financial years, and that they are among the most profitable supermarket businesses globally.
While Coles and Woolworths issued statements disputing the overall tenet of the findings – claiming they had already addressed many of the issues raised – the ARA found a positive: that the commission had found “no evidence of price gouging”.
The ARA said the report acknowledged the rising cost of doing business has driven higher grocery prices and that “the competition in Australia’s grocery sector continues to evolve”.
“We believe the Australian grocery sector remains highly competitive, with a growing number of physical and online shopping alternatives,” said ARA chief industry affairs officer Fleur Brown. “New entrants are gaining market share, and cross-shopping behaviour among consumers is at an all-time high, ensuring strong competition within the industry.”
She said the ARA welcomed recommendations that improve transparency for suppliers and customers but cautioned the government against adopting measures that would increase red tape, stifle productivity or further drive up costs.
The pan-retail body defended Coles’ and Woolworths’ profit levels, declaring that over the past five years, Coles’ net profit margin of 2.6 per cent and Woolworths’ of less than three cents in the dollar have remained stable.
Woolworths: We are already doing this
Woolworths Group said it would carefully consider the report’s findings and recommendations but claimed the ACCC had “included many recommendations that the group has already taken action on to improve the experience and transparency for customers and suppliers”. It cited promotional programs, increased price transparency in the horticulture sector, and having made it easier for customers to find and compare the best unit prices for products on the Woolworths website and app, as examples.
“As per the ACCC recommendation, Woolworths already publishes all product prices online.”
Coles: Our industry is highly competitive
Coles took a similar tone, arguing the industry was “highly competitive, is evolving rapidly, and offers consumers greater choice than ever before”. The company said it has not only been competing with traditional rivals like Woolworths and IGA, but faced erosion of market share to multinational companies like Aldi, Costco, and Amazon. “For example, Amazon has substantially grown and has introduced more than 6000 product lines that overlap with our offering, significantly increasing competition from a new source.
“We also fiercely compete with thousands of specialty retailers and independent supermarkets, as well as major retail chains like Bunnings, Chemist Warehouse, and Priceline, who are all now selling products found in supermarket aisles.”
Coles claims that the ACCC’s own analysis shows grocery price inflation in Australia has been lower than in Canada, the UK, the US and New Zealand.
The company said it understands the cost-of-living challenges families face and is “continuing to invest in value through measures such as price investment, promotions, Flybuys and Own Brand, especially as mortgages, rents, energy, fuel and other expenses continue to add to the household budget”.
