Supermarket Shopping In Australia: The Rise Of Woolworths And Coles

One of the most commonly voiced concerns about supermarkets is that Woolworths and Coles are so dominant that suppliers are forced to accept dubious and unprofitable terms if they want their products sold there. What does history tell us about who has dominated the Australian supermarket scene?

Picture by Marianna Massey and Ian Waldie/Getty Images

Data from consultancy Planet Retail (which I spotted in the subscriber-only Australian Financial Review) highlights the changing nature of the Australian supermarket space in the past four decades. (These figures have been rounded, which means some add up to over 100 per cent.)

In 1975, Woolworths had just 16 per cent of the market, Coles had 18 per cent, and other players had 67 per cent. By 1985, Woolworths and Coles each had 23 per cent, with other providers still accounting for 55 per cent.

It wasn't until 1995 that the 'other' share fell below half, accounting for 43 per cent. Woolworths took the lead with 32 per cent, while Coles had 26 per cent. Fast forward to 2005 and Woolworths had 42 per cent, Coles had 32 per cent, and other accounting for just 26 per cent. Planet Retail's most recent figures, for 2009, show Woolworths with 46 per cent, Coles with 32 per cent and other with 22 per cent. Those numbers predate the launch of Costco, but with only three Australian stores it won't make a major difference. Similarly, while ALDI has grown rapidly over that time, it's still a small fraction of that 22 per cent, which comprises independent stores (many branded as IGA) and smaller regional chains.

Bottom line? You can definitely see that Woolworths and Coles have grabbed share from the independent sector, which means there are fewer options for food producers to sell their products. It's worth pointing out that not all research supports the "two big bullies" thesis. When the ACCC investigated bargain milk pricing, for instance, it found no evidence that the pricing schemes had caused harm to farmers. And while consumers might feel sympathetic, we still end up buying bargain house brand goods in huge quantities.

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Comments

    You can paint it with whatever brush you like, the fact is that the big two have bullied themselves to a point where it is very hard for smaller businesses to make a profit. ACCC or no, they can, and do, dictate what they will pay for the products of suppliers. If CostCo or anyone else is to be taken seriously and help bring back a truly competitive environment they need to invest in a lot more stores. Small businesses unfortunately, are shit out of luck.!

      Give me a break. They were minority players who had the business acumen to gain market share and expand their business. Anyone else gets praised for that kind of thing. If you want to blame anyone, blame consumers for shopping there.

        They didn't get there with hard work and acumen, they got there by paying the right people, same as any business with friends in high places. They were given permission to rape and pillage and now there is no competition. Where the hell is the consumer choice? Gone, because the big two were allowed to kill off the local shops. They were minority players who colluded at the drop of a hat.

        Yeah mate, they got there by being pillars of the community... NOT

    Lets just hope the big two don't become the big one otherwise we are surely #$%%.

    How about you do some research into the deregulation supermarkets opening hours? I'm sure that had a large impact on smaller supermarkets who used to be able to operate on weekends and late at night when the larger supermarkets had to to close by 6pm and weren't open on Sunday's?

    Sounds like that would be in about 1995 when suddenly they overtook 50% of the market share.

    I go to wherever has the hottest checkout chicks, AND DUDES!

    The more disturbing trend is the proportion of imported goods on the shelves of supermarkets, be they Coles, Woolies, Franklins, IGA or whoever. No fish is canned in Australia. No fresh milk is available from any large Australian-owned dairy (Devondale and Bega are the last AFAIK, so all my milk these days is Devondale Longlife). SPC is the only Australian owned cannery for fruit and baked beans - and it's owned by Coca-Cola Amatil.

    I don't have a problem with international trade, and this is all just personal preference, but where there's an Australian-made item of equal quality It's worth it to me that my shopping costs 10% when I know that an Australian company employing Australians and paying taxes in Australia is going to get paid.

    Statistics are pretty boring without anything being drawn from them.

    Why not tell us why Woolies/Coles have risen?

    They got to the top by good business. And people want to shop there. One centre near me has Aldi, Woolworths, Coles, and Bilo(and yes I know Bilo is Coles sister company). Where do people shop - Woolies & Coles. Within 5km of me, there are 4 Woolies, 3 Aldi, 3 Coles, 3 IGA, 1 Bilo and an independent. It's not like Aldi & IGA aren't around. People want to shop at Coles/Woolies. It's the vocal minority who are opposed.

      Dude you can't compare the smaller guys with the big two, Woollies and Coles have massive buying power, the smaller guys aren't able to supply the sheer amount of choice and price cutting that the big two have. They didn't get there by being sweet to there customers!

    I'd happily shop at Aldi if they stocked decent products.
    However, the both Aldis in my area stock mostly rubbish and the stores themselves are a mess.

    There is a lot of support for IGA and Foodland by the industry - which is good for everyone. Their prices are competetive (and often) better than Coleworths. Definitely worth checking out.

    On a side note, the Coles milk is not very nice - but the Woolworths milk is .. and the Foodland IGA milk is also nice.

    Can we stop winging about big supermarkets they have worked hard and spent a lot of money on advertising and business strategies to stay fresh and focused so they can move with the times get over it if small business can't keep up they shouldn't be in business

    It should be pointed out that during recentish years, most Bi-Lo's have been rebranded "Coles", Franklins have mostly become other things, and Action supermarkets (which was the biggest chain in WA) are now Woolworths. So it's not all the big two pulling customers from the "independant" supermarkets, but also most of the medium sized chains being absorbed by the big two. Countering that somewhat is the continued existence of Foodland in SA and Richies in an increasing number of places.

    Where i live, woolworths have fresh good looking fruit and veges coles sucks amd the small supermarkets have brown old fruit...Sooooo yer

    Where I live Coles killed off the local supermarket and deli so I have no choice.
    The closest supermarkets other than here a 16 km away.. and guess what they are Coles and Woolies. Closest IGA is about 18 km away

    Check out FoodWorks. They're a local conglomerate. http://www.foodworks.com.au/
    Another point. Coles and Woolies USED local companies to draw customers. They then slowly pushed them off the shelves. That's not nice which ever way you look at it.

    It's not just supermarkets. Hotels, poker machines, petrol, food, booze , credit cards, electronics, haberdashery, optical - I don't think they are into funerals - YET!

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