The much-awaited report from the ACCC inquiry into Australian supermarkets has been released with the competition watchdog concluding that Coles, Woolworths, and ALDI are among the world’s most profitable chains.
At the same time, among numerous findings, the Australian Competition and Consumer Commission (ACCC) said it was difficult for new larger competitors to enter the market.
The ACCC said the average product margins for the three majors had increased over the past five financial years, resulting in “worse” outcomes for consumers and suppliers.
“In the past 12 months, the ACCC has heard from more than 20,000 consumers who responded to our consumer survey, received more than 100 public submissions, held eight supplier roundtables, reviewed tens of thousands of internal documents, conducted private hearings and ten days of public hearings, and analysed billions of points of supermarket data,” ACCC Deputy Chair Mick Keogh said.
ACCC Suggests State-Backed Community Stores
The ACCC also suggested government support for community-owned stores in remote areas where running costs are higher, mandatory publication of pricing information for customers, and changes to zoning regulations to allow for more commercial development of supermarkets.The report also mentions that the entry of a larger chains are difficult, citing ALDI’s 20-year journey to secure just 9 percent of the Australian market. At the same time, Metcash’s IGA has been closing stores.
The ACCC said simplifying planning and zoning laws could help smaller existing players, and toughening merger laws.
Clearer Pricing to Deal with ‘Shrinkflation’
The report notes that while consumers increasingly prioritise convenience, price-conscious shoppers are becoming more focused on comparing costs.A key concern raised by consumers during the inquiry was the lack of transparency around price hikes, particularly the practice of “shrinkflation.”
This occurs when a product’s size decreases while its price either stays the same or rises.
To address this, the ACCC has recommended that supermarkets be required to notify consumers when shrinkflation takes place—previously this was dealt with by displaying a “per unit” price to break down the pricing.
“This information would, at a minimum, need to be displayed near the product ticket on shelves and on the product’s webpage,” the report states.
Coles Says Inflation Driving Up Electricity, Rent, Wages
Coles and Woolworths have responded to the ACCC’s supermarket inquiry, defending their pricing strategies while acknowledging the need for greater transparency.When contacted by The Epoch Times, a Coles spokesperson said Australia’s grocery sector is “highly competitive and rapidly evolving,” noting that the company faces increasing competition from ALDI, Costco, Amazon, and independent retailers.
“Customers are increasingly cross-shopping and splitting their grocery spend, which means Coles must compete vigorously for a share of consumers’ grocery baskets,” the spokesperson said.
Coles added that rising grocery prices are driven by higher operating costs, such as electricity, rent, wages, and transport.
“We do not control these inflationary costs, but they contribute to higher grocery prices,” the spokesperson said.
The supermarket chain also pointed out that its net profit margin has remained stable at 2.6 percent over the past five years, meaning it earns around $2.60 for every $100 spent—less than 3 cents to the dollar.
Woolworths Outlines Current Initiatives
Woolworths also acknowledged the ACCC’s findings, stating that many of the recommendations align with steps the company has already taken.“We have worked constructively with the ACCC to help it understand our business, the sectors in which we operate, our suppliers and supply chains, and the considerable competition we face,” Woolworths Group CEO Amanda Bardwell told The Epoch Times in a statement.
It outlined recent initiatives, including clearer price transparency, the launch of a new Watchlist tool for specials, and an increase in affordable private-label products.
Chalmers Supports ACCC’s Call for Action
Treasurer Jim Chalmers welcomed the ACCC report, reaffirming the government’s commitment to addressing supermarket dominance.He stressed that the government is already acting on several recommendations, including making the Food and Grocery Code mandatory, funding the ACCC, and working with states and territories to ease zoning laws for new competitors.
“We’re reforming the Unit Pricing Code, which is all about that sneaky ’shrinkflation' that drives people crazy. We’re working with the states and territories on planning and zoning to make it easier for new competitors to come in and compete with Coles and Woolworths,” Chalmers said.
The treasurer also highlighted the government’s efforts to fund supplier groups, giving them more power in negotiations with the supermarket giants.
Farmers Back Report
The National Farmers’ Federation (NFF) also welcomed the ACCC’s Supermarkets Inquiry Final Report.NFF President David Jochinke said, “The fact that the majority of the report’s 20 recommendations focus on fresh produce supply chains demonstrates that our concerns were valid.”
Jochinke emphasised that the report’s findings confirm long-standing worries from producers about supermarket market power.
“For two years, debates have raged about supermarket market power, but this independent report provides clear confirmation: fresh produce suppliers are facing serious, real challenges,” he said.
