Add Category
Woolworths directly owns only 1-2 per cent of its sites but develops about 30-50 per cent of them, the inquiry heard.
Six Woolworths executives were called to appear before the ACCC inquiry, including recently departed chief executive Banducci and former managing director of Woolworths Supermarkets Natalie Davis.
While Woolworths counts retailers such as Bunnings, Chemist Warehouse, Amazon and Costco as competitors in certain categories, Aldi and Coles are being watched most closely as price setters, Banducci indicated.
Left to right: Chief executive Amanda Bardwell; former chief Brad Banducci; managing director of property Ralph Kemmler; Woolworths Food Company managing director Guy Brent; Everyday Rewards managing director Hannah Ross; Woolworths Supermarkets former managing director Natalie Davis.
On Monday morning, Sharp directed attention to a 2015 Woolworths investor strategy presentation that outlined goals to “neutralise Coles and contain Aldi on pricing.”
At that time, Banducci explained, Woolworths was not competitive on price and consumers were choosing to shop at Coles and Aldi instead.
Loading
“The big issue is you are trying to be competitive on price against everyone you compete with, and Aldi sets very, very competitive prices,” Banducci said. “So you want to be competitive against everyone. But in truth, you do start with Aldi and making sure you have competitive prices against them, given how important they are in the marketplace.”
Davis said she received weekly pricing reports every Friday that monitored a handful of supermarkets, including IGA and Chemist Warehouse. “The focus for us as a commercial team was really on Coles and Aldi because they were the price setters in the market,” Davis said.
Davis also denied assertions submitted by the Australian Food & Grocery Council that Woolworths’ buyers would regularly communicate margin expectations to suppliers.
Woolworths executives also confirmed some instances of shrinkflation among branded and Woolworths’ own-brand products, with current chief executive Amanda Bardwell and predecessor Banducci expressing support for changes in size or volume to be expressed on product packaging and for clearer unit pricing on tickets.
The inquiry continues on Tuesday, with the ACCC expected to ask further questions about trading terms with suppliers. Metcash and Aldi appeared before the inquiry last week.
With Hannah Hammoud
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.