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Aussie Supermarkets: The Discount That Never Was · What the Flux

• 0:05
  Speaker 1: This is what the flux.
• 0:06
  Speaker 2: I'm Larissa and it's Wednesday, the nineteenth of August. Here
• 0:09
  Speaker 2: are the three biggest news stories today. For our first story,
• 0:12
  Speaker 2: Jetstars making record profits, with the budget airline posting four
• 0:16
  Speaker 2: hundred and ninety two million in underlining earnings in the
• 0:19
  Speaker 2: six months to December. That's up fifteen percent on the
• 0:22
  Speaker 2: previous year and comes as nine hundred Jetstar workers fight
• 0:26
  Speaker 2: for better pay. For our next story, JB high Fi's
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  Speaker 2: same store sales fell one point four percent in July
• 0:32
  Speaker 2: compared to the same time last year. JB high Fi
• 0:35
  Speaker 2: shares fell eleven point five percent on the news and
• 0:38
  Speaker 2: for our final story, Wondermind, the mental health startup co
• 0:42
  Speaker 2: founded by pop star Selena Gomeas, is coming under heat
• 0:45
  Speaker 2: as investors zoue Selena Gomez and her business partners for fraud.
• 0:49
  Speaker 2: Wondermind investors allegedly put one point two million USD into
• 0:53
  Speaker 2: the startup and say they were misled. The claims haven't
• 0:56
  Speaker 2: been proven in court. In this series going deep with
• 1:00
  Speaker 2: calling back the curtain on the industries that shape everyday
• 1:03
  Speaker 2: life in Australia, We've watched Wilworths and Cole's Pocket billions
• 1:06
  Speaker 2: in profit during a cost of living crisis, seen a
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  Speaker 2: CEO walk out of the live TV interview rather than
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  Speaker 2: answer questions, and watched a federal court judge rule that
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  Speaker 2: hundreds of discounts at the checkout were never real in
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  Speaker 2: the first place. And this episode we'll explore how two
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  Speaker 2: supermarkets came to control two thirds of what Australians eat
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  Speaker 2: and whither the laws we're writing now will actually be
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  Speaker 2: enough to stop it from happening again.
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  Speaker 1: Over to you, Britt and Justin Man.
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  Speaker 3: I can only speak to myself, but I must say
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  Speaker 3: I am guilty of walking into a coal for milk
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  Speaker 3: and somehow leading with kettle chips, baking paper and a
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  Speaker 3: family sized bag of Maltesers. Because there was a giant
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  Speaker 3: yellow stickers screaming down down on it.
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  Speaker 1: You probably felt like you were getting a good deal,
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  Speaker 1: didn't you. I did, well.
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  Speaker 4: It turns out in a lot of cases you were not. Okay,
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  Speaker 4: go on, So a six step back. Australia's supermarket industry
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  Speaker 4: has been dominated by two players war decades.
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  Speaker 3: That's coals and woolies. Of course.
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  Speaker 4: Now, back in the nineteenth and early twentieth century, most
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  Speaker 4: Australian shopped at tiny local grocers.
• 2:01
  Speaker 3: The kind where the owner k new your name and
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  Speaker 3: judged your fruit choices.
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  Speaker 1: And literally lived upstairs from the store.
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  Speaker 3: But shortly came the supermarket era.
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  Speaker 4: Yeah, we're talking bigger stores, more products that painfully fluorescent lighting.
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  Speaker 3: Holes launched in nineteen fourteen in Melbourne and Woolies launching
• 2:15
  Speaker 3: nineteen twenty four in Sydney.
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  Speaker 4: And for most of the twentieth century they were just
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  Speaker 4: your local supermarket chains, growing store by store.
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  Speaker 3: But if we fast forward to the fifties, Holes and
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  Speaker 3: Woolies began to buy up the competition.
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  Speaker 4: Woolies bought Safeway, which had one hundred and twenty six stores.
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  Speaker 3: Coals bought a major chain called Matthews Thompson, which had
• 2:30
  Speaker 3: two hundred and forty eight stores.
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  Speaker 1: And the battle between the two began.
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  Speaker 3: Yeah, at that stage, the combined market share of Coles
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  Speaker 3: and Woolies was just over thirty percent.
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  Speaker 4: By the late nineties and early two thousands, we started
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  Speaker 4: to really see aggressive supermarket consolidation.
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  Speaker 3: Next minute, market share between the two jumped up to
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  Speaker 3: nearly eighty percent.
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  Speaker 4: Today, Woolies holds around thirty seven percent of the grocery market.
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  Speaker 3: Cole sits around twenty eight percent and growing.
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  Speaker 4: Which means together they own sixty five percent of every
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  Speaker 4: dollar Australian spend on groceries.
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  Speaker 3: And Audi's now ten percent, IJ at seven percent, and
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  Speaker 3: the top four players control over eight eighty percent of
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  Speaker 3: the market.
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  Speaker 1: DOESI way?
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  Speaker 4: For comparison, the two major players in the UK, Tesco
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  Speaker 4: and Sainsbury, control about forty four percent of their market together.
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  Speaker 3: So it's fair to say Australia's supermarket concentration is world leading,
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  Speaker 3: and not in a good way. So where are we
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  Speaker 3: at today, b Man with these huge Behaemens.
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  Speaker 4: Well, everyone kind of knew that these two were dominating.
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  Speaker 4: Things were really escalated once grocery prices started becoming so
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  Speaker 4: expensive like.
• 3:22
  Speaker 3: Why does coriander cost the same as a small car? Own?
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  Speaker 4: And the A Triple C, Australia's competition watchdog, started digging
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  Speaker 4: into the industry.
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  Speaker 3: And after a two year investigation, their conclusion was basically
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  Speaker 3: things need to change pronto.
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  Speaker 4: The A Triple C found that Woollies, Coals and Audi
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  Speaker 4: among the most profitable supermarket businesses among.
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  Speaker 1: Their global peers.
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  Speaker 3: Their average product margins are up over the past five
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  Speaker 3: financial years.
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  Speaker 1: Especially on household and packaged food categories.
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  Speaker 3: And the combined revenue of these two chains are enormous.
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  Speaker 4: Willie's clocked almost seventy billion dollars in sales for FI
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  Speaker 4: twenty five.
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  Speaker 3: And Coal's clocked in nearly forty five billion in revenue.
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  Speaker 4: And with all that research done by the A Triple C,
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  Speaker 4: it came to a pretty obvious conclusion that the market
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  Speaker 4: is not working well.
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  Speaker 3: But that's not all. B man'll See reckons that the
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  Speaker 3: concentration in the supermarket industry is producing poorer outcomes for
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  Speaker 3: consumers and suppliers than would be expected in a more
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  Speaker 3: competitive market.
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  Speaker 4: So, Jazi boy, here's where it gets really juicy, because
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  Speaker 4: we know that with less competition it means more ability
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  Speaker 4: to play games with pricing.
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  Speaker 3: The A Triple See alleged to both Woolworths and Coals
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  Speaker 3: were jacking up the price of products by at least
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  Speaker 3: fifteen percent for just a few weeks.
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  Speaker 4: Then they would drop the prices and slap on a
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  Speaker 4: giant promotional stick.
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  Speaker 3: Up to the shopper of the checkout. It looked like
• 4:25
  Speaker 3: a discount.
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  Speaker 1: In reality, the previous price was inflated.
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  Speaker 3: The sale price was often the same as or higher
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  Speaker 3: than the original long term price.
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  Speaker 4: In fact, around two hundred and forty five products were
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  Speaker 4: involved in the Coal's case alone.
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  Speaker 3: Which walking things like toothpaste, soft drinks, cheese, had.
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  Speaker 4: Food, and in May this year the federal court found
• 4:41
  Speaker 4: Coals guilty and this gout shoppers.
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  Speaker 3: Are really annoyed. Until twenty twenty two, it was found
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  Speaker 3: that Coals had an internal rule saying that products had
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  Speaker 3: to sit at a higher price for at least twelve
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  Speaker 3: weeks before being promoted as discounted. They cut it to
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  Speaker 3: four weeks because Woolies was doing But be man, that's
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  Speaker 3: not the only issue with pricing at the supermarkets right now.
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  Speaker 4: Yep, we can't discuss supermarkets without mentioning trinkflation.
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  Speaker 3: Choice found a heap of super market products shrinking in
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  Speaker 3: size while the price stays the same or even goes up.
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  Speaker 4: For example, Coles's Mighty Grain cereal went from five hundred
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  Speaker 4: and sixty grams to four hundred ninety five grams, but
• 5:11
  Speaker 4: the price was unchanged.
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  Speaker 3: Well, Wor's corn chips two hundred grams down to one
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  Speaker 3: hundred and seventy five grams the same price as well.
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  Speaker 1: So where does it all go from here?
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  Speaker 3: Josie Boy, Well, the federal court ruling against Coles was
• 5:20
  Speaker 3: the first major legal win for consumers, and.
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  Speaker 1: The Wooli's trial is still before the courts.
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  Speaker 3: There On top of this, a class action against the
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  Speaker 3: super markets that was filed in November twenty twenty five.
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  Speaker 4: Law firm running it is seeking compensation up to thirteen
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  Speaker 4: hundred dollars per household, depending on shopping habits.
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  Speaker 3: And the governments they're stepping into.
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  Speaker 4: I don't say, Josie boy, the biggest pressure might come
• 5:38
  Speaker 4: from the shoppers themselves.
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  Speaker 3: Yeah. Audi's purchase in ten score has risen from sixteen
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  Speaker 3: in twenty twenty three to twenty one by early twenty twenty.
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  Speaker 4: Five, and Woolli's consideration score dropped nine points in the
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  Speaker 4: same period.
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  Speaker 3: So be man. Let's put this into perspective. Australia spend
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  Speaker 3: more on groceries per capitat than almost any comparable country.
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  Speaker 4: And for years the pricing on the grocery shelves wasn't
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  Speaker 4: always what it seemed.
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  Speaker 3: A discount wasn't really a discount.
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  Speaker 1: The price drop that hadn't actually dropped.
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  Speaker 3: What's interesting is that the Ahrible c was careful to
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  Speaker 3: say this wasn't collusion between coals and Woolies.
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  Speaker 4: Coals and Woolies didn't sit in a secret underground bunker
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  Speaker 4: stroking cats and plotting against the shop.
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  Speaker 3: But when two companies dominate a market for this long,
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  Speaker 3: certain behaviors can become normalized.
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  Speaker 4: So until there's a genuine third or fourth competitor, things
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  Speaker 4: may not change.
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  Speaker 3: When people have alternatives, they can get angry, and when
• 6:20
  Speaker 3: they get angry enough to use them, it actually moves
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  Speaker 3: the needle.
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  Speaker 4: So it's hard to know whether these court rulings genuinely
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  Speaker 4: change the balance of power.
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  Speaker 3: Or whether we all just keep emotionally recovering in the
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  Speaker 3: snack aisle.
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  Speaker 1: Omit time will tell Fox Sam.
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  Speaker 3: We hope you enjoyed our deep dive into the growth
• 6:33
  Speaker 3: of two of the biggest companies in Australia, Coals and Woolies,
• 6:36
  Speaker 3: and how supermarket price gouging may impact their businesses and
• 6:39
  Speaker 3: the items on the shelves in the future. On Wednesday,
• 6:42
  Speaker 3: we're going to be looking at one of the biggest
• 6:43
  Speaker 3: missed opportunities in Australian media history. We're talking about ABC
• 6:47
  Speaker 3: and the lost commercial opportunities of some of the biggest
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  Speaker 3: TV shows like Louis. Of course looking forward to going
• 6:53
  Speaker 3: through the Deep Dive next week. Thanks for listening and
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  Speaker 3: we'll see you on Wednesday.