Australia’s Supermarket Giants Face Reform as ACCC Calls for Major Industry Overhaul

Shifting Power Dynamics in Australian Retail

Australia’s two largest supermarket chains, Woolworths Group Ltd. and Coles Group Ltd., currently dominate the market, with Woolworths holding 38% of supermarket grocery sales and Coles controlling 29%.

A recent ACCC investigation has concluded that these supermarket giants are among the most profitable globally, leading to 20 recommendations including clearer pricing practices, greater transparency for suppliers, and reforms to planning and zoning laws.

Current Market Challenges

The landscape is showing signs of change, with Coles currently experiencing strong performance and profits, while Woolworths faces challenges, including profit declines and increased shoplifting issues. Coles has been leveraging AI technology for cost-cutting and shelf decisions, with advanced analytics now informing various operations from rostering to product ranging.

Consumer Response and Alternative Options

Trust in both major supermarkets has hit an all-time low amid the ongoing cost of living crisis. Consumers are increasingly expressing frustration with limited stock availability and poor produce quality.

Government Action and Future Outlook

The Australian Prime Minister has pledged to implement severe penalties for supermarkets caught price gouging, with a dedicated taskforce being established to address these concerns. This initiative, involving the ACCC and Treasury, aims to implement new legislation by the end of 2025.

The ACCC is pushing for increased transparency, recommending that both Coles and Woolworths publish their prices online and make their pricing information available to third-party comparison tools. However, the commission acknowledges significant barriers for new or smaller supermarkets to enter and expand in Australia, noting that it took ALDI over two decades to achieve its current 9% market share.

Impact on Australian Consumers

According to Treasurer Jim Chalmers, the government’s supermarket crackdown aims to increase competition and ensure fairness for Australians both at the checkout and for farmers, stating that the reforms are about ensuring Australians aren’t ‘treated like mugs by the supermarkets’.