Coles executives have denied claims that their ownership of a vacant plot of land just 200 metres from one of their Perth supermarkets constitutes anti-competitive land banking. The Australian Competition and Consumer Commission (ACCC) has been investigating the issue, with Coles providing a second day of evidence as part of the inquiry.
The Land in Question
The land, located in the inner Perth suburb of Maylands, has been under Coles’ ownership since late 2008. Situated roughly 180 metres from Coles’ existing Maylands supermarket, the lot sits across the busy Guilford Road. The company initially intended to establish a large liquor store on the site, but the plan was thwarted when the courts rejected the liquor licence application. A subsequent attempt to sell the land in 2019 also fell through when a potential buyer withdrew.
Fiona Mackenzie, Coles’ general manager of property, stated that the land’s ownership had not stifled competition, noting the presence of an Aldi and an IGA nearby. Coles now plans to use the site to develop a “dark store” warehouse to fulfil online orders.
Land Banking Under Scrutiny
Land banking, a practice where companies acquire prime real estate without immediate plans to develop it, has been a focal point of the ACCC’s inquiry. Critics argue that it restricts competitors from accessing key sites, ultimately limiting consumer choice. Coles and Woolworths, holding approximately 28% and 37% of the Australian market respectively, have been accused of leveraging this strategy to consolidate their dominance.
Coles’ Chief Executive, Leah Weckert, defended the company’s approach, explaining that Coles operates within financial constraints and prioritises investments that promise future returns. “With a limited balance sheet, we aim to focus on properties that will generate long-term value,” she said.
The company disclosed that it currently owns 42 undeveloped sites, with active development applications submitted for 25 of them.
Flybuys and Subscription Services Under Fire
The inquiry also explored Coles’ loyalty programme, Flybuys, and its subscription services. ACCC lawyers questioned whether these schemes discourage consumers from shopping at competitors. Amanda McVay, Coles’ Chief Customer Officer, argued that Flybuys adds value for customers, fostering competition by offering benefits such as bonus points and discounts. She acknowledged, however, that the company is working to simplify the redemption process to enhance customer understanding of the scheme’s benefits.
Coles currently offers two subscription services that provide perks such as free delivery and monthly discounts. While declining to reveal subscriber numbers, McVay noted that customers are increasingly shopping around due to cost-of-living pressures.
Data Collection Practices Examined
Coles’ data collection methods also came under scrutiny. The company gathers customer data during online transactions, browsing sessions, and in-store checkouts. While video footage from self-service checkouts and staff body cameras remains de-identified, staff wear cameras due to rising incidents of aggression from customers, according to Weckert.
Coles shares customer email addresses with a third-party market research firm and anonymised behavioural data with suppliers to help them assess product performance. The company also uses de-identified data for marketing through its media division, Coles 360.
McVay noted that data analysis is not unique to Coles, highlighting Woolworths’ advanced systems, Aldi’s membership data, and Amazon’s industry-leading analytics.
Rising Competition and Future Plans
Despite Coles’ market dominance, Weckert acknowledged that shoppers are increasingly exploring alternatives due to economic pressures. The company is adapting by offering personalised recommendations to inactive customers and exploring future enhancements to its loyalty programmes, including potential member pricing schemes.
As the ACCC’s inquiry draws to a close, Coles continues to defend its practices, asserting that its strategies aim to benefit both the business and its customers while complying with competition laws. Whether these defences hold up under further scrutiny remains to be seen.
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