Woolworths, Coles Could Face ACCC Over Competition-Killing 'Marginal' Stores

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.

Image: littleyiye, licensed under Creative Commons 2.0

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]


Comments

    Best Option = Shop at Aldi

    I do my shopping at Aldi, Fruit & Veg Shop and then coles to get the crap these other places dont have.

      This.

      We shop around to get the best value possible, majority of meat & fruit & veg come from local businesses, aldi we get a fair bit of the core stuff & then whatever coles & woolies have that is an absolute bargain we get there.

    I come from a small town that didn't have Coles or Woolworth's. We had lots of little grocery shops and prices where much cheaper than the cities. Some of the little grocery shops where even 24 hours. Woolworth's was initially 24 hours and by magical coincedence had better savings on the same products that the 24 hour shops where selling a day after the little grocery shops started the specials. Eventually the 24 hour shops closed and then Woolworth's stopped doing 24 hours. Second was the fruit and vegetable shops. Again Woolworth's always had a better special the day after the fruit and vegetable shops announced a special they to shut down. As soon as all the little shops shut down Woolworth's raised it's prices again, and for some items we now pay more than the cities, where previously people moved to our town because the cost of living was less. Not anymore.

      Sounds like these little shops sucked at business. Sucked big time.

    This is just a fart in the wind, they should have done something about it when there were small shops left to compete. Too late now!!

    If anything I think Woolworths or Coles opening a store in a marginal area/holiday town could be more profitable than a local store because they can run minimal staff during slow periods (eg: winter) and have better buying power. Then when it gets busy they simply ship in staff from other stores rather than having a large amount of staff all year around or having to hire seasonal workers and have associated HR and training costs.

    So let's say Woolworths is banned from building stores in these areas because it denies competition. Are we going to apply the same logic to other supermarkets in those same locations? Are we going to prevent (smaller) supermarkets from being built where Woolworths is?

    The whole premise here seems ridiculous to me.

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