Major Supermarket giants force higher grocery prices: association

The market domination of supermarket giants Woolworths and Coles means consumers faced higher prices, the chairman of the National Association of Retail Grocers of Australia says.

John Cummings, who is also a part-owner of three independent Perth supermarkets in Perth, said grocery suppliers were also “being done over on a daily basis” due to a lack of competition in the grocery sector.

Speaking today at the National Press Club in Canberra, Mr Cummings said the dominance of the big two had grown to such an extent that some analysts estimated their combined sales now accounted for close to 40 cents of every retail dollar spent in Australia.

He said the market share enjoyed by Woolworths and Coles, estimated to be close to 80 per cent, was unparalleled anywhere else in the developed world, adding that in areas where only Coles and Woolworths operated, prices were usually higher.

“Surely no-one believes that the cheapest petrol can be bought in a town or suburb where there is only one service station, no matter what the brand of petrol sold,” Mr Cummings said.

“Likewise, I would contend if you want cheap bread you will find the cheapest where there is a Coles, a Woolworths, and Aldi and a couple of large independent stores in close proximity.”

Mr Cummings said that in a recent trip to Sydney, he priced a basket of goods at a shopping centre where only Coles and Woolworths operated.

He said the prices of the goods were the same in both stores but five per cent higher than in his own stores and Woolworths and Coles stores in Perth. Suppliers were also at the mercy of Coles and Woolworths, he said.

“… manufacturers of our foods in Australia are being done over on a daily basis by the practices of those two companies,” he said.

“In its submission to the Australian Competition and Consumer Commission inquiry, George Weston Foods pointed out that the increasing introduction of private label products by the chains has put pressure on Australian food and grocery manufacturers.”

“They acknowledged that all of their brands were at risk of being delisted by Woolworths or Coles, and that many enduring national brands are disappearing because of the exercise of marker power by the two supermarket chains.”

He said the current inquiry into grocery prices being conducted by the Commission would undoubtedly receive mixed messages regarding pricing and pricing practices around Australia.

But he also suggested the Commission had so far failed in its responsibility to ensure and encourage competition grocery markets.

“I think in that instance they have failed, I don’t think you can look at it any other way.”

“As a matter of fact, it would appear that the regulator has been sitting in the stands cheering on Woolworths and Coles since 1974 as the growth in market share has been constant and consistent.”

Woolworths, however, disputes the claim it and Coles enjoy an 80 per cent share of the Australian grocery market, saying their combined share was closer to 50 per cent.

“We calculate our (market share) to be about 30 per cent and Coles’ to be probably be under 25 per cent,” Woolworths spokesperson Clare Buchanan said.

Ms Buchanan said the figure of 80 per cent stemmed from data supplied to marketing information company ACNielsen.

But she said that only three firms – Woolworths, Coles and Metcash – had supplied the relevant data to ACNielsen.

“So if you want to say we have 80 per cent of the market, that’s fine, but that’s only 80 per cent of Coles, Woolworths and Metcash (sales).”

“It’s a very, very narrow determination that actually misses a huge chunk of the food retail market.”

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