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Convenience stores join price war debate

 

moneyThe head of the the Australasian Association of Convenience Stores (AACC) is calling for suppliers and wholesalers to reconsider costs to their convenience store customers to enable them to be more competitive against the supermarket chains.

According to the AACC, major supermarkets that continue to act as wholesalers as well as retailers, selling directly to convenience stores and other small businesses, creates a raft of negative flow on effect that not only harms small business but also consumers.

Jeff Rogut, CEO of AACC, said while it’s not new for convenience stores to source stock from supermarkets, it’s nevertheless disappointing that small business owners can in some instances pay less for stock at the supermarket than they do from suppliers and wholesalers.

“This practice highlights the need for suppliers and wholesalers to reconsider costs to their convenience store customers to enable them to be more competitive,” Rogut said.

“It also reinforces how the supermarkets use their overwhelming market share to pressure suppliers into anti-competitive deals. Suppliers and wholesalers are effectively being held to ransom as the supermarkets strengthen their market dominance while smaller customers pay the price.”

Rogut says wholesaling from supermarkets has a snowballing negative effect, as the greater volume of stock sold reinforces their importance to suppliers, unlocking further financial advantages based on the increased volume, while they also benefit from advertising and other supplier rebates. Meanwhile margins for smaller retailers are squeezed because they are missing out on this supplier advertising and marketing support.

“Where suppliers are concerned, this practice also dilutes the real volume statistics for the convenience channel, diminishing their ability to measure the true value of their convenience store customers and jeopardising their investment in the convenience channel when it comes to new products, promotions and campaigns.

“Until measures to address the anti-competitive landscape in Australian retail are introduced at a legislative level, we urge suppliers and wholesalers to the convenience industry to support their individual store customers, which offer a more personalised round the clock service and engage customers in innovative, tailored ways that supermarkets cannot.”

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