Coles Supermarkets has been found profiting from increased prices at the checkout, despite claiming to prioritise keeping grocery bills low. Leaked emails have shed light on Coles’ tactics with suppliers seeking price hikes and its exploitation of inflation.
This isn’t an isolated incident. Industry insiders reveal that Woolworths has also engaged in similar practices over the past 18 months. With Coles and Woolworths dominating 65% of the grocery market in Australia, there’s little competition on price.
Julian Hilliard, a retail veteran with 38 years of experience, explains that the difference in prices between the two giants is minimal, indicating a lack of true competition.
The leaked emails expose how supermarkets leverage their market dominance to pressure suppliers, leading to higher consumer prices. Coles, for instance, received a payment from a supplier seeking a price increase, subsequently passing on the cost to customers.
Despite initially dismissing the supplier’s request based on “customer needs” and the “competitive environment,” negotiations ensued. The supplier eventually agreed to a one-off payment of $25,000 for online promotions, and Coles approved the full price increase.
This demonstrates a clear focus on profit margin enhancement, rather than genuine customer concern. Coles CEO Leah Weckert denies claims of price gouging, emphasising their rigorous validation process for cost and price increases.
Similarly, Woolworths has been accused of seeking to increase profit margins under the guise of economy-wide inflation. They’ve requested suppliers to share in any price increases, ultimately leading to consumers paying more while Woolworths reaps higher profits.
Despite assertions from Woolworths CEO Mr Banducci that these practices are justified, the evidence suggests otherwise. Last year, Woolworths saw a significant increase in pre-tax profit margins from selling groceries, while their business costs remained stable.
These revelations highlight the need for transparency and accountability in the supermarket industry to ensure fair pricing for consumers and suppliers alike.
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