Coles, one of Australia’s leading supermarkets, has firmly denied allegations of penalising suppliers who decline to participate in its promotional activities. These claims surfaced during an Australian Competition and Consumer Commission (ACCC) inquiry into potential anti-competitive behaviour within the grocery industry.
The federal government initiated the inquiry in January to scrutinise supermarket pricing strategies and the dynamics between wholesale and retail pricing. The final report, anticipated in February, is expected to influence discussions ahead of the national election scheduled by May.
At the heart of the inquiry is the intricate relationship between supermarket heavyweights Coles and Woolworths and their extensive network of suppliers. These suppliers range from fresh produce and meat producers to providers of packaged goods.
Coles has come under the spotlight for encouraging suppliers to invest in promotional activities. However, Anna Croft, Coles’ commercial officer, assured the inquiry on Friday that there are no penalties for suppliers who choose not to participate.
“It’s completely voluntary for suppliers,” Ms Croft stated, addressing concerns raised during the inquiry.
Earlier, Coles’ chief executive, Leah Weckert, outlined a promotional option for suppliers dubbed a “one-stop media solution”. Coles 360, the supermarket’s marketing platform, leverages customer data to create targeted connections between brands and shoppers. In July, suppliers were informed about the platform’s potential to boost visibility and engagement. According to Ms Weckert, Coles 360 has contributed significantly to the company’s profitability by enhancing supplier margins.
The inquiry also heard from Woolworths executives, who dismissed allegations of exploiting their market dominance to exert pressure on fruit and vegetable suppliers. Woolworths’ chief executive, Amanda Bardwell, highlighted that suppliers have alternative options despite the supermarket’s considerable market share.
“We enable fruit and vegetable suppliers to access 20 per cent of the total supply chain, leaving 80 per cent available across other retailers and wholesale markets,” Ms Bardwell explained. She further noted that Woolworths faces competition from over 40 other retailers, including newsagents, meal kit services, and niche businesses like The Cheesecake Shop.
While Coles and Woolworths dominate approximately two-thirds of Australia’s grocery market, other players have also been called to account during the inquiry.
Metcash, a major supplier to independent grocers under the IGA brand, acknowledged that stores are often expected to adhere to promotional agreements. However, they emphasised that purchases from Metcash are conditional on competitive pricing.
Meanwhile, Aldi, known for its streamlined operations and competitive pricing, faces its own challenges. Representatives from the retailer revealed that the chain is prioritising increasing footfall in existing stores rather than expanding into new markets. Plans to enter regions like Darwin or Tasmania were deemed economically unfeasible.
The ACCC’s findings are expected to shed light on these complex industry dynamics, potentially reshaping the Australian grocery landscape in the months to come.
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