In a consumer survey that garnered nearly 21,500 responses, more than any other survey it has ever conducted, Australians raised concerns about prices they felt were excessive, and that they were being taken advantage of by supermarkets.
The majority (76 per cent) of respondents in the lowest household income bracket, earning less than $449 a week, said they were spending at least a fifth of their pay on groceries.
The regulator is also examining concerns that supermarket specials and promotions are making it harder to compare prices, “member-only” pricing introduced in the past year that makes some shoppers feel punished for not being part of a loyalty program, and concerns around shrinkflation.
“We are examining whether supermarkets are exercising market power to increase prices more than is necessary to accommodate these cost increases,” the ACCC said in its report. “We are also examining whether supermarkets are otherwise engaging in business practices that cause detriment to consumers.”
People in the lowest-earning income bracket reported feeling limited in their ability to buy in bulk or multipacks to save money because of short-term cash constraints, the report found.
More shoppers are starting their grocery trips at Aldi before moving to Coles or Woolworths for a broader range, stated the report. It has taken Aldi, which entered the market in 2001, two decades to grow its market share from 1 per cent to 8.1 per cent. Woolworths and Coles collectively hold market share of 67 per cent.
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“We’re keen on teasing out issues around barriers to further competition. And of course, land banking is an issue that is often raised with us about the extent to which, particularly the two majors, hold significant numbers of sites that they haven’t developed supermarkets on, but that could potentially be sites for competitors. So we want to get to the bottom of that as well,” said Keogh.
The power dynamic between supermarkets and their suppliers will also be examined, with fresh fruit and vegetable suppliers raising the greatest concerns, the ACCC report found.
“Many grocery suppliers to supermarkets have told us they consider that they are being exploited, receiving unsustainably low prices for the goods they supply and having little choice but to agree to highly unfavourable terms. We are considering these claims and are analysing whether supermarkets are contributing to, or taking advantage of, information asymmetries, resulting in suppliers lacking the information they need to make efficient business decisions,” it stated.
“There is an inherent tension between the claims of suppliers that they are receiving unsustainably low prices for their products and claims of consumers that they are paying excessively high prices for their groceries. In exploring these claims, we are taking into account cost increases in the economy broadly and, to the extent possible, distinguishing outcomes for grocery prices that are not explained by those cost increases.”
The ACCC inquiry’s final report is due at the end of February next year.
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