Strong-arm tactics by the supermarket giants to push out smaller business is nothing new, but this could be the first time someone’s called them out on it. A new report from the Commonwealth Bank has raised into question Woolworths’ plans to build large stores at sites it believes are “marginal” or, to put it another way, of dubious profit-making value.
According to The Age, the CBA report mentions that “many of the Woolworths developments have been in areas with marginal medium-term economics for supermarkets” and that the bank is “concerned that in addition to the poor lending conditions, Woolworths is not helping itself by developing marginal sites.”
Master Grocers Australia, which represents smaller operations such as IGA and Foodworks, plans to use the report to get the attention of the ACCC and federal government. From The Age:
“Master Grocers Australia believes the strategy is conscious, deliberate and intended to bring about a substantial lessening of competition in those local markets where over-large stores are developed … The effect is the elimination of competition in these local markets.”
A Woolworths spokesperson didn’t bat an eyelid over the report’s findings; the stores are built in areas with “growth potential” and as such, are simply “long-term investment[s]”. Coles was less diplomatic, calling the whole thing a “nice conspiracy theory” with little “basis in fact”.
Small grocers target big two [The Age]