Woolies disputes duopoly charges

Stiff competition cited

The nation’s largest retailer Woolworths has hit back at suggestions the supermarket sector is dominated by a cosy duopoly run by itself and rival Coles, arguing shoppers were treated to “high levels” of competition and choice.

In its submission to a senate inquiry on supermarket pricing and market power, Woolworths said competition had intensified in recent years.

“The empirical evidence demonstrates that Australian consumers enjoy high levels of supermarket competition and choice,” Woolworths said.

Meeting the allegations of price gouging levelled at the supermarket sector head on, Woolworths said it was crucial for the chain to remain price competitive to keep customers loyal, with competitors such as German supermarket Aldi and retail behemoth Amazon able to exploit any artificially high prices designed to ramp up corporate profits.

“With the arrival of three of the world’s biggest and most competitive retailers (Aldi, Costco and Amazon) in Australia, consumers have even more choice,” the company said.

“Customers have taken advantage of this choice, with 86 per cent of Woolworths customers also shopping across Aldi, Coles and/or IGA in the last 12 months.”

Woolworths in its senate submission said throughout the recent inflationary period it had taken steps to provide affordable groceries. It said given the $120bn sector was a highvolume, low-margin industry, it only recovered a slim portion of sales into profits.

“Australia has one of the most efficient and productive grocery sectors in the OECD,” Woolworths said. “We make around 3.6c in every $1 in our Australian Food Group (supermarkets).

“This is before our investment back into making our business, and indeed the Australian grocery sector, more resilient, innovative and efficient through our balance sheet.”

Much of the furore around supermarket pricing has centred on meat prices, with farmgate prices falling but meat prices in the supermarkets hardly budging, leading some to argue this was evidence of price gouging as well as the supermarkets squeezing farmers.

Woolworths strongly defended its meat pricing, saying for beef, for example, it used forward contracts to offset some of the volatility in spot livestock markets.

“For this reason, spot saleyard prices are not an appropriate guide to our costs,” it said.

Coles meanwhile argued that while food and grocery prices had increased in recent years – mostly driven by price hikes from suppliers – its profit had remained largely stable.

“Coles operates under a competition and consumer regulatory framework that is world leading, robust and fit for purpose,” it said.

The nation’s second-largest supermarket chain said a number of factors influenced the price of groceries, from tax, transport, labour costs and packaging to natural disasters and supply chain disruptions.