Woolworths has urged the competition regulator to undertake a “data-driven, fact-based” investigation into the supermarket industry. This call comes amid a political uproar filled with accusations of price gouging, abuse of market power, and even threats of jail for the Woolworths CEO during a Senate inquiry led by the Greens.
In its submission to the Australian Competition and Consumer Commission (ACCC) inquiry, Woolworths emphasised the slim profit margins under which it operates, disputing claims of profiteering. The company argued that even if it made no profits, the average Woolworths shopper would only save about $5 a week on groceries.
“Significantly reducing our profits would jeopardise our ability to invest in our operations sustainably,” Woolworths stated in its 103-page submission. “This includes improving service, quality, and efficiency, as well as enhancing our resilience to manage ongoing supply chain risks and uncertainties. These efforts benefit our customers and contribute significantly to the Australian economy and the communities we serve.”
The ACCC inquiry follows a controversial Senate inquiry led by Greens Senator Nick McKim, who threatened Woolworths CEO Brad Banducci with contempt and potential jail time for unsatisfactory answers. Additionally, state governments in Queensland and South Australia and a review of the Food and Grocery Code of Conduct have scrutinised the supermarket sector.
However, Woolworths and its main competitor, Coles, regard the ACCC inquiry as the most crucial examination of the $140 billion supermarket industry. The ACCC, a powerful and unbiased body, is seen as the most effective platform for a fair and comprehensive investigation, unlike the politically charged Senate inquiry.
“We anticipate the ACCC will take a rigorous, data-driven, fact-based approach,” Woolworths submitted. “We encourage engagement with industry stakeholders and consumers, including through well-designed, impartial consumer surveys.”
Woolworths argued that since the ACCC’s last supermarket inquiry in 2008, the landscape has dramatically changed with the entry and expansion of global retailers such as Aldi, Amazon, and Costco, intensifying competition.
“Three of the world’s largest and most competitive retailers—Aldi, Amazon, and Costco—are now established and growing in Australia, each offering unique value propositions that heighten competitive pressure,” the submission noted. “Aldi has tripled its stores since 2008, generating around $12 billion in annual revenue. Amazon Retail, entering the market in 2017, is projected to reach $5.5 billion in gross merchandise value in Australia for fiscal 2024. Costco, entering in 2009, has grown to $4.4 billion in annual revenue.”
Woolworths’ submission highlights the intense competitive environment and underscores the need for the ACCC to conduct a fair, thorough investigation to ensure a balanced and accurate understanding of the supermarket industry.
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