Retail News Update

Consumers have rushed to back independent retailers in the war of words over grocery prices currently being played out before the national competition watchdog.

Almost half of the 109 submissions received by the Australian Competition and Consumer Commission inquiry into grocery prices have come from shoppers outraged at what they see as unjustified grocery price rises.

While the thrust of the consumer submissions varies, this comment from Gosford shopper Andrew Kfoury is typical: “I have been purchasing a three litre bottle of Dairy Farmers Skim Milk for $5.99 for three months from Coles supermarket, Gosford. The price increased overnight to $6.36, an increase of almost 6%. This is just one example of the supermarket chain’s unjustifiable increasing the cost of groceries on to the consumer.”

Southern Sydney Retailers Association head Craig Kelly says the support independent retailers have received from consumers is welcome, but not unexpected.

“Almost every family in the country has experienced these huge price hikes in the supermarket. Families are under pressure with rising pressure prices and they want to know why grocery prices are rising too,” Kelly says.

However, the view the ACCC forms on grocery prices may ultimately have more to do with the evidence put by business groups on the competitiveness of the retail grocery market.

And it will face a tough task in doing so, with almost diametrically opposing views being taken by independent retail groups and groups representing the large supermarket chains.

Kelly’s Southern Sydney Retailers Association, for example, argues that over the last 17 years Australia has led the world in price rises because “competition has collapsed at the retail level”.

This sentiment is echoed by groups such as the Master Grocers Australia, which argues in its submission that “the market dominance of the major chain stores is increasing, not because independent retailers cannot compete economically, but because of the anti-competitive elements of the market structure”.

In the other corner are groups such as the Australian National Retailers Association, which represents companies such as Coles and Woolworths. According to ANRA, the retail grocery sector is in a healthy state.

“The intensity of competition in the sector is obvious in the relatively low margins in the sector,” ANRA says. “The result has been more stable and lower prices for consumers.”

In the middle sits the ACCC, which will provide its report to Minister for Competition Policy and Consumer Affairs Chris Bowen by the end of July.

It will be under pressure to deliver a result that reflects widespread consumer concern about rising grocery prices, but independent retail groups such as Kelly’s are not confident that they will be pleased with the ACCC’s findings.

“The concern we have is that the ACCC in the past have been apologists for Woolies and Coles. They are on record as a saying all the evidence points to a vigorous competitive market; we don’t think they’ve done their homework in the past, but we’ll see,” Kelly says.