Suppliers and consumers have been invited to participate in an online survey to share their shopping experiences and habits as the Australian Competition and Consumer Commission (ACCC) continues its inquiry into competition in Australia’s grocery sector.
The survey aims to gather information about grocery shopping experiences that consumers believe are confusing or misleading, such as “was/now” pricing or “shrinkflation”, where a product is sold at a smaller size or volume for the same or a higher price.
On January 25, the Australian Government announced that it would direct the ACCC to investigate Australia’s supermarket sector. The ACCC received the formal direction from the Australian Government and the terms of the reference for the inquiry on February 1.
“We know that consumers and suppliers alike have a range of concerns about Australia’s major supermarkets, and this is their chance to have their say,” said ACCC Deputy Chair Mick Keogh.
“We will be using our legal powers to obtain data and documents from the supermarkets themselves compulsorily, but consultation with consumers and grocery sector participants is an important first step in our inquiry.”
The ACCC has also published a paper outlining the topics the supermarket inquiry will explore and is calling for submissions from farmers, wholesalers, retailers, and other interested parties.
A major focus will be the supermarkets’ approach to setting prices and “whether there is evidence to show that a lack of effective retail competition contributes to higher prices”.
The issues paper is divided into two sections: competition for consumer retail spending between the supermarkets; and grocery supply chains.
At the retail level, the ACCC will examine competition between supermarkets and the barriers new or emerging supermarkets face when entering or expanding.
Keogh said one of the major focus areas will be the supermarkets’ approach to setting prices and whether there is evidence that a lack of effective retail competition contributes to higher prices.
“We will conduct a detailed comparison of the price suppliers receive for their goods, the price consumers pay at the checkout, and the profits the supermarkets earn,” he continued.
“We will also look at other issues such as loyalty schemes, discounting practices, the shift to online shopping and the impact of home-brand products.”
With grocery supply chains, the ACCC wants to hear from industry participants about competition within supply chains, trading arrangements, margins, price transparency, and whether supermarket buyer power is impacting suppliers’ commercial viability.
“A lack of competition at any stage of a supply chain can result in inefficient or unsustainable prices across the supply chain,” Keogh concluded.
Commenting on ACCC’s inquiry, Melina Morrison, CEO of BCCM (Business Council of Cooperatives and Mutuals), said supermarket competition is not just about lower prices; it’s about national security, and the organisation welcomes ACCC’s inquiry.
“With the ACCC inquiry underway, there is no better time than now to rethink how consumers and producers can get the best outcomes from the supermarket sector,” said Morrisson.
“With such high concentration in ownership, supermarkets can influence the shape of domestic food production.”
Morrison added that supermarket cooperatives are a “major force” in overseas markets.
“In Germany, two of the three largest retailers are co-ops with a combined turnover of $US142 billion, while in France, the largest supermarket group, E LeClerc, is a co-op. Italy’s largest supermarket chain, Conad, is also a cooperative with a turnover of $US20.1 billion.
In the UK, The Cooperative is a well-known high-street chain of supermarkets. That’s solid evidence of the trust communities worldwide place in businesses structured as co-ops.”
With 134 co-ops now active in the Australian retail sector – with a combined gross revenue of $1.13 billion last year – Morrison said the BCCM believes there is considerable scope to expand the industry and provide greater competition and choice for consumers.
She explained that the inquiry represents an opportunity to support a shift in how the national supermarket sector is managed and how a ‘cooperative’ approach can ensure equity, diverse ownership, and community cohesion have an equal place alongside profit as major operational benchmarks,
“If we conclude that certain markets are too concentrated, then the answers might lie in how to encourage more players and different business models,” Morrison concluded.
“It is part of the DNA of cooperative businesses, and the growing discontent among Australian consumers should tell us there’s a need for more diversity of corporate form as well as more competition.”
Grocery supply chain participants and other interested parties are invited to make submissions in response to the issue paper via a guided submissions process on the ACCC’s consultation hub.
Consumers can complete the online survey at Supermarkets inquiry consumer survey.
The ACCC last conducted a comprehensive inquiry into the grocery sector in 2008.
