Australia’s supermarket industry would benefit from greater competition, though an ACCC executive stopped short of calling Woolworths and Coles a duopoly.
Speaking to the ABC, ACCC deputy chair Mick Keogh stressed that increased competition was the best way to keep profit margins in check. He noted that competition enables consumers to make informed pricing decisions and forces supermarkets to compete for business.
Keogh explained that the ACCC couldn’t set a standard margin due to the vast range of products supermarkets sell. When asked about price gouging, he avoided direct accusations but acknowledged that supermarkets had steadily increased their profit margins over the past five years due to their market power. He pointed out that supermarkets can pressure suppliers into funding promotions while keeping their own margins intact.
In response to the ACCC’s findings, Woolworths and Coles defended the level of competition in the industry. Woolworths Group CEO Amanda Bardwell stated that the Australian grocery sector remains highly competitive, with customers having more options than ever and frequently shopping across multiple retailers. She emphasised that if Woolworths fails to meet consumer expectations, customers simply take their business elsewhere.
Coles shared a similar perspective, highlighting that it competes not just with Woolworths and IGA but also with international retailers like Aldi, Costco, and Amazon, which continue to expand in Australia. Coles stated that it holds less than 30% of the market and that consumers now spread their grocery spending across various retailers, both in-store and online. This, the company argued, forces Coles to work harder to attract and retain customers.
Despite the significant influence of Woolworths and Coles, Keogh rejected the idea that the supermarket sector operates as a strict duopoly. He acknowledged Aldi’s presence, even with its limited product range and locations, and pointed out that specialist retailers such as butchers and greengrocers also contribute to market competition. Additionally, non-traditional retailers like Chemist Warehouse and Bunnings are beginning to offer supermarket-type products, further diversifying consumer choices.
Keogh concluded that while the major supermarket chains hold substantial power, consumer preference for convenience continues to shape the industry and sustain their dominance.
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