COMPETITION: by John BallantyneNews Weekly
Small retailers challenge power of big supermarkets
, September 1, 2012
Supermarket giants Coles and Woolworths are undermining market competition to the detriment of small, independent retailers, according to a major report recently released by the Master Grocers Australia (MGA) and Liquor Retailers Australia (LRA).
However, this has been disputed by Margy Osmond, the CEO of the Australian National Retailers Association (ANRA), which represents the big supermarket chains. She attacked the report, saying it was “long on accusations and short on facts”.
“The Master Grocers Australia (MGA) report is designed to be as sensational as possible at the expense of two highly successful Australian companies, Coles and Woolworths,” Mrs Osmond said.
The MGA and LRA, in its 56-page report, Let’s Have Fair Competition! The risk of losing retail diversity, choice and true competition in the Australian supermarket industry, have chronicled the astonishing growth of the two supermarket giants over the last few decades and are calling on the federal government and competition watchdog, the ACCC, to ensure the survival of smaller retailers through changes to planning and competition laws.
In 1975, Woolworths and Coles jointly held only about 34 per cent of the Australian grocery market. Today, they account for about 80 per cent. The report says: “This is believed to be the most extreme example of grocery market domination in the developed world.”
The relentless expansion of the two supermarket giants, says the report, “is denying an outlet for local suppliers and manufacturers as their products are replaced by overseas sourced ones retailed as store brands. The impacts on local communities and local economies are often abrupt and severe.
“This report reveals a number of anti-competitive policies and practices that depend on enormous market power, including: anti-competitive price discrimination, shopper docket schemes, ‘store saturation’ strategies and over-sized store strategies.”
In his foreword to the report, economist John Wallace, who worked 10 years for the Industries Assistance Commission (now the Productivity Commission), said: “There is little public awareness of the adverse effects that the ‘competition’ between Australia’s major supermarket chains is having on the welfare of Australians.”
Associate Professor Robin Goodman, director of the Australian Housing and Urban Research Institute at Victoria’s RMIT University, in a separate foreword, warned that “the practices of the two corporations (which) overwhelmingly dominate the grocery market in Australia’s grocery market, are having a serious impact on existing town centres”.
He said: “Town centres are not only business and employment centres, they are the social hearts of local communities. Traditional main street retailing provides a reason for people to gather, a place to meet and socialise, and a chance to connect and maintain a sense of community.
“The large supermarket surrounded by its sea of car parking does not invite pedestrian traffic. Customers drive in and drive out, making isolated single destination visits.
“Planners are increasingly seeing a role for themselves in creating places which encourage walking and decrease car dependence. Main street shopping does this in a way that a large supermarket does not.”