Senate Inquiry Raises Concerns for Independent Retailers

The Senate inquiry into the Australian grocery and hardware industry has heard concerns about creeping acquisitions by larger players including Coles, Woolworths, Endeavour, and Bunnings, which often buy out smaller independent stores in areas where they are looking for greater saturation and more growth. These acquisitions have resulted in the loss of 22 large-format high turnover grocery and hardware stores that had been snapped up by large corporates over the past nine years, impacting the wholesale supply network operated by Metcash and the independent network.

Independent retailers, according to Mr. Marshall, who spoke to the inquiry, form a core part of local communities and contribute to the national economy. He believes stronger competition laws are needed to help consumers facing rising costs of living because more competition helps to keep pricing power in check. This sentiment was echoed by the Metcash submission to the select committee, which found that independent grocery retailers in Australia employ more than 65,000 people directly and contribute $3.1 billion to gross domestic product (GDP).

Mr. Marshall also noted that Bunnings boss Mike Schneider had sent letters to at least seven Mitre 10 owners this year, asking about the possibility of acquiring these stores. Bunnings managing director Mr. Schneider said the retailer regularly sought out opportunities to expand its network through greenfield development and occasionally through business acquisition. He added that there was ample room for larger retailers, smaller retailers, and specialty providers alike in the regions and categories they operate in, and that choice and competition were great for consumers.

In addition to the acquisitions noted above, Mr. Marshall said that Metcash had sought to preclude what it considers to be anti-competitive acquisitions by acquiring an interest in the relevant retailer (in the grocery sector or otherwise), in circumstances where the retailer has been approached by a major retailer. Metcash also operates the Home Timber & Hardware brand and supports independent operators under the smaller banners Thrifty-Link Hardware and True Value Hardware. Bunnings and Metcash also go head-to-head in the commercial tools area with Metcash’s Total Tools chain and Bunnings Tool Kit Depot stores.

The inquiry has raised concerns about the impact of large corporate acquisitions on independent retailers and the need for stronger competition laws to ensure a level playing field. While larger retailers like Bunnings argue that competition and choice are great for consumers, independent retailers contribute significantly to the national economy and are an integral part of local communities. As such, the inquiry will need to carefully consider the balance between competition and the impact on independent retailers in their recommendations.

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