Supermarkets on notice as ACCC report released
The consumer watchdog has taken aim at “oligopolistic” supermarkets, saying customers are losing trust over sales practices and soaring prices.
The Australian Competition and Consumer Commission released its interim report on supermarkets on Friday, laying out issues in the sector as it looks to make the weekly shop fairer for consumers.
While the report did not detail recommendations, the commission’s deputy chair Mick Keogh said there was concern about how major supermarkets were abusing their powers.
“Oligopolistic market structures can limit incentives to compete vigorously on price,” he said.
“We see Woolworths and Coles providing a broadly similar experience to customers through largely undifferentiated product ranges, pricing at similar levels and similar non-price offerings including loyalty programs.”
The supermarket inquiry received information from more than 21,000 customers, the most for a consumer survey carried out by the commission.
The report found the majority of low-income households had to spend 20 per cent of their pay on groceries, while the cost of a typical basket of goods increased by 20 per cent in the past five years.
Keogh said customers across the board faced difficulty when trying to compare prices, and some felt forced to take part in loyalty programs and hand over personal information to access cheaper goods.
“Many consumers have told us that they are losing trust in the sale price claims by supermarkets,” he said.
“These difficulties reportedly arise from some of the pricing practices of some supermarkets, such as frequent specials, short-term lowered prices, bulk-buy promotions, member-only prices and bundled prices.”
The report’s release comes days after the commission said it would take Coles and Woolworths to court over claims of misleading specials, alleging the chains increased prices only to place them in a promotion at a reduced price that was still higher than the original cost.
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Coles and Woolworths make up 67 per cent of the supermarket sector, with the interim report also noting the considerable time it took the next largest chain, Aldi, to increase its market share – 20 years to get to nine per cent.
“Planning and zoning laws may slow a supermarket retailer’s ability to develop new stores by creating additional costs or adding significant delays,” Keogh said.
Prime Minister Anthony Albanese said the federal government would examine the report closely.
“Customers don’t deserve to be treated as fools by the supermarkets – they deserve better than that,” he said.
“My government is taking a range of actions to make sure Australians are paying a fair price at the checkout and Australian suppliers are getting a fair price for their goods.”
Public hearings are expected to be held as part of the inquiry in October and November before the final report is handed to the government by the end of February.
Aldi prevails in price comparison
Further analysis of grocery prices has reaffirmed Aldi as Australia’s cheapest supermarket, despite the company’s struggles to break into the local grocery scene.
Recent research from consumer group Choice found the German-owned grocer to be at least $16 cheaper than Coles and Woolworths across 14 common food items but was dismissed as a “very narrow basket” by the Australian Retailers Association.
But AAP analysis across a wider shop – including cleaning products, personal hygiene items and other family staples along with meat and vegetables – corroborated the Choice findings.
AAP’s 13-item basket cost $72.90 at Aldi, compared with $80.20 at Woolworths and $89.25 at Coles.
Items such as a 44-pack of nappies ($11.50), a can of tomato soup ($1.10) and Scotch Finger biscuits ($1.25) were priced identically across all three supermarkets.
But Aldi had cheaper steak, olive oil, lettuce and tampons to produce the most cost-effective shop.
Released on Thursday, Choice’s data found Aldi’s basket to cost $50.79, noticeably cheaper than Coles ($66.22) and Woolworths ($68.37).
Australian Retailers Association chief executive Paul Zahra called Choice’s analysis “not a fair or useful comparison” given it could be comparing premium brands with Aldi’s private label options.
But AAP’s analysis relied on the cheapest available price – including Coles’ and Woolworths’ own-brand items – across a wider range of products.
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The findings come in the same week the consumer watchdog announced it was taking Coles and Woolworths to court over allegations it lied to consumers with misleading specials.
The Australian Competition and Consumer Commission (ACCC) accused the major supermarkets of increasing prices for a brief period before lowering them and moving them to promotions on sale, but at a higher cost than the initial price.
The fresh basket analysis coincided with the ACCC releasing the interim report of its separate supermarkets inquiry.
That report found Australia’s supermarket scene to be an oligopoly, with Woolworths and Coles accounting for two-thirds of retail sales.
Aldi came in at just 9 per cent, despite 20 years of building its market share in Australia.
“Oligopolistic market structures can limit incentives to compete vigorously on price … we see Woolworths and Coles providing a broadly similar experience to customers through largely undifferentiated product ranges (and) pricing at similar levels,” ACCC deputy chair Mick Keogh said.
The ACCC also found half of the respondents to its consumer survey compared prices “always” or “most times” before shopping, way up from 17 per cent in 2008.
AAP’S SUPERMARKET COMPARISON
Aldi – $72.90
Woolworths – $80.20
Coles – $89.25
Items analysed – potatoes, lettuce, steak, chicken, olive oil, pasta sauce, instant coffee, soup, biscuits, nappies, shower gel, tampons, laundry liquid.
– TND with AAP
-AAP
