Australian supermarkets may soon be facing some unwelcome attention with a senate inquiry into pricing.
The Greens party has successfully secured enough support to establish an inquiry to investigate market concentration and pricing strategies used by the duopoly of Coles and Woolworths.
“For too long the big supermarkets have had too much market power. This allows them to dictate prices and terms that are hitting people hard,” Greens spokesperson for economic justice Nick McKim said.
“This inquiry is a critical step toward dismantling the market concentration that’s led to unfair pricing and stifled competition.
“We’ll find a way to dismantle their power and bring grocery prices down.”
Billion-dollar profits
Coles recorded a $1.1 billion profit for 2022-23 and Woolworths a $1.62 billion profit for the same period.
The Guardian described the Woolworths’ result as a “dramatic lift in margins” despite the cost-of-living crisis. The report said there was a near 20 per cent rise in earnings from the group’s Australian supermarkets.
I’m not sure how successful the inquiry will be. Unless it finds a ‘smoking gun’, such as an email on pricing or a willing whistleblower, it’s going to be hard to prove.
And as publicly listed companies, Coles and Woolworths can, and should, say their first responsibility is to provide value to their shareholders, not their customers.
Even if they do find there has been price gouging and market manipulation, what’s the next step? Forcing them to sell stores to competitors? Australia is run by people who love a free market economy; neither side of the political fence is going to jump into that particular nest of vipers.
Would fines be the answer? Well, I think we all know how that would work, the expense would just be passed on to the consumer.
Difficult questions
While I’m sure the sentiment behind all these announcements is sincere, the end result will be politicians who are keen to be seen doing something, rather than any meaningful action.
I’m reminded of the senate inquiry into rural and regional bank closures. All good in the headlines, but no-one in their right mind thinks our Big Four banks are going to reverse their decision to close branches because some senators asked a few difficult questions.
So what’s the answer? At a micro level, shop around. Don’t give your money to the duopoly if you can avoid it. On a macro level, I have no idea, and I suspect neither do the senators.
This week’s best specials
IGA
Sensible: MasterFoods Tomato Sauce varieties, $2.75, save $1.45. You can try all the fancy sauces you like, Australians will always come back to this one. Sauce of choice for Bunnings sausage sizzles everywhere.
Indulgence: Hard Solo four-pack, $19. Grab it now before it has to be rebranded. The regulators took a dim view of this product, agreeing with a complainant that these looked too much like the soft drink. I can see their point. Anyway, they will be renamed Hard Rated in the new year, so if you want the old packaging, buy up.
See the catalogue here.
Coles
Sensible: Bonds Men’s Trunk underwear, half price, $12.50. Just in time for the socks and jocks present for the bloke (or yourself) in your life. Bonds’ quality isn’t what it used to be, but the convenience of being sold at the supermarket makes them a bit more appealing.
Indulgence: Coles Pork Ribs, $17/kg. I have recently discovered how much better it is to cook pork belly and spare ribs in the air fryer and I am never going back to cooking them in the oven. My cheat marinade for the lazy, is equal parts red wine and hoisin sauce, mix up and leave overnight.
See the catalogue here.
Aldi
Sensible: Sandara Sparkling Sangria, $6.99. Surprisingly refreshing during the warmer months. Serve chilled with plenty of sliced oranges, or your choice of fruit and top it off with a few mint leaves. Bump up the alcohol level with a splash of brandy.
Indulgence: Turkey Breast Roast, $15.99. I like turkey but I hate cooking it. Too much stress on Christmas Day. This little log arrangement solves the problem for people who expect turkey. Easy to cook and carve. If it could wash the dishes it would be the perfect guest.
See the catalogue here.
Woolworths
Sensible: Truss Tomatoes, $3.90/kg. Truss tomatoes have recently been tracking cheaper than loose tomatoes for discernibly better taste. Top tip, keep them on the stem for as long as you can, they can lose moisture through the stem ‘scar’.
Indulgence: Australian prawns, from $25/kg. If you love a bit of prawn action at Christmas … a bumper season means there’s plenty in the supply chain and it has to go somewhere. We loved our local fishmonger’s prawns, but when they hit $80/kg I made the switch to supermarket prawns. No-one noticed.
See the catalogue here.
Do you think a senate inquiry will change supermarket pricing? What do you think the solution is? Why not share your thoughts in the comments section below?
Also read: What do Australians most regret about their finances?
It is not just the oligopoly power shared by Coles and Woolworths a concern, but their integrated line of supply of their brands in competition with the popular brands of products. Their outlets have the self-space power to give popular brands a run for their money. Their mark-ups are a concern with their declared profit, particularly when the short chain of supply was due to the Pandemic and climate change. From the customers’ perspective, the cost-cutting by these supermarkets to reduce the cashiers at the counters to serve customers is most annoying. Bring back the corner shops!
The answer is simple. Instead of pandering to the rich all the time, which this Labor government is guilty of by just following on the ScoMo government policies, make the tax system more progressive, both in corporate and private, including trusts etc.
That way the more obscene the profit, the higher the tax.
The megacorps. take from the every day person just trying to survive; and if they do the government can help those on low incomes, who are working full time but are going backwards.
If Rich is not a dirty word then Tax and Benefits shouldn’t be either.
Also scrap the stage 3 tax cuts
And in saying their first duty is to maximize profits for shareholders not to provide good value to customers there you have everything that is wrong with our economic system.
Same applies to aged care where profits come before providing proper care.
Or housing where investors subsidised by tax concessions push up prices to absurd levels.
But I think it’s too late to do much about the commercialization of everything and what government would be brave enough to try.
Hopefully this enquiry might achieve a few small things like exposing “half price specials” which are not really half price, or “price reduced” when it’s not. This price trickery is getting some exposure on Facebook etc lately with people posting pics of the fake reductions.