The Australian consumer watchdog has demanded that the largest supermarkets in Australia are clean at 'Shrinkflation' and the practice of bicycle prizes to give the illusion of discounts.
From the results of a 12 -month study by the Australian Competition & Consumer Commission (ACCC) it has been published this week that both supermarkets have increased their profit margins in recent years, in particular Woolworths.
The ACCC said that an important care that consumers put forward during the research was the lack of notification of price increases and, in particular, cases of 'shrinkflation', whereby the size of a product decreases but the price remains or increases.
The watchdog recommends supermarkets to be obliged to publish notifications when crossroads or price increases occur.
“This information should at least be published in the vicinity of the product ticket on the shelves and on the web page for the product,” said it.
“By giving consumers this transparency about what effective price increases are, consumers would be better able to vote with their feet and switch to cheaper alternatives if that is their preference.”
The research also showed that the specials that were often offered by the supermarkets were part of the 'high-layer' prize strategy that gave the illusion of larger discounts instead of a consistent lower price.
In some cases, the two large supermarkets also seemed to be talking with each other instead of competing – when a product in one store was discounted, it was a higher price for the other and then it would exchange.
Coles and Woolworths are among the most profitable supermarkets in the world, the consumer watchdog has found
The ACCC discovered that Coles and Woolworths seemed to work together, because at that time both supermarket brought certain products, the others had the price higher and vice versa
The ACCC said that the high-low prices were coordinated between the Big Two Supermarkets.
“Thanks to our analysis, we have observed a phenomenon of regular cyclical specials for certain products that alternately between Coles and Woolworths alternately.”
Coles and Woolworths are also among the most profitable supermarkets in the world, thought the consumer watchdog.
The average profit had risen to 43 percent for potatoes, 38 percent for cucumbers and 35 percent for bananas, with suppliers left in a weak negotiating position.
The report released on Friday showed that there is much less competition in Australia than abroad, making the supermarket sector 'oligopolistic'.
“Coles and Woolworths have a limited incentive to compete with each other strongly,” said it.
“We have not observed any coles and woolworths to significantly evidence of the prices among each other.”
It added that “Aldi, Coles and Woolworths seem to be one of the most profitable supermarket companies worldwide.”
The market shares of 'Coles' and Woolworths are increasing and are confronted with no rivals of comparable reach and scale. '
The report released on Friday showed that there is much less competition in Australia than abroad
The ACCC also showed how the supermarket prices exceeded regular inflation
But the ACCC did not state that Coles and Woolworths had a duop oil and stopped mentioning the supermarket prices 'excessively'.
It also did not blame the costs of living crisis at the feet of the supermarkets.
Politicians, including Anthony Albanese, lashed out to supermarkets during rising inflation after Covid.
But the ACCC found that although supermarket prices have risen by 24 percent in the last five years, other goods and services have also increased by 22 percent.
No smoking gun was found for accusations of price guts, in which the report suggested instead that there was room for more competition in the industry.
“If the market shares and the associated market power of Coles and Woolworths continue to increase in the future, their margins can also be expected to continue to grow as a percentage of supermarket prices.”
De Waakhond made 20 recommendations, including the disclosure of price data and more control of discount claims.
The supermarket trade in Australia is dominated by Woolworths with 38 percent of sales, Coles (20 percent), Aldi (9 percent) and Metcash-linked independents such as Foodland and Iga (7 percent).
