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Call to reign in rampant supermarket majors, losses hide in food & liquor reporting

Woolworths and Coles continue to open new supermarket and liquor stores unabated and move into country towns, high streets and suburbs, facilitated by compliant councils and state governments, taking more market share away from independent retailers.

While the two majors are signing a code of conduct for their trading relationships with suppliers, their capacity expansion goes unchecked.

CEO of independent grocer representation group Master Grocers Australia, Jos de Bruin, called this week for the introduction of an effects test into competition law. “The reason for big business opposition to an effects test is because it would allow for greater scrutiny of businesses that use their market power to damage their smaller competitors,” Mr de Bruin said.

He said that Coles and Woolworths have a voracious appetite for market power and are putting people out of business, while uncontrolled space growth through new stores that don’t need to be profitable initially is a misuse of market power.

“State and local government have to address this and developers are building theses boxes everywhere, while IGA independents are worried about their future,” Mr de Bruin said.

Another issue is non-transparent financial reporting for food and liquor, where sales and profits are not separated and loss making on new stores is hidden.

Woolworths full year 2014 Food & Liquor complementary sales growth was 3.0%, with a net gain of 34 supermarket openings to 931 stores.

Coles reported complementary food & liquor sales of 3.7%, with only six net store openings to 762 as it concentrates on Renewal format conversions.

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