Woolworths, Coles, and ALDI rank among the world’s most profitable supermarkets, with rising product margins over the past five years, according to the Australian Competition and Consumer Commission’s (ACCC) final supermarkets inquiry report.
The ACCC made 20 recommendations to improve market conditions, including clearer pricing practices, increased supplier transparency, and reforms to planning and zoning laws to facilitate greater competition.
The inquiry highlighted that the current supermarket landscape, dominated by Coles and Woolworths, results in poorer outcomes for consumers and suppliers compared to a more competitive market.
A key proposal is requiring ALDI, Coles, and Woolworths to publish real-time pricing on their websites and provide third-party access to this data to enable price comparison tools.
The ACCC also called for supermarkets to disclose price changes due to ‘shrinkflation’—where product sizes decrease while prices remain unchanged or increase—so consumers can make informed decisions.
“By giving consumers this transparency over what are effectively price increases, consumers would be better able to ‘vote with their feet’ and switch to cheaper alternatives if that is their preference,” ACCC Deputy Chair Mick Keogh said.
In addition, the ACCC recommended governments to simplify planning and zoning laws to allow new competitors to establish supermarkets more easily.
Furthermore, the report called for stricter oversight of Coles and Woolworths’ acquisitions, citing their dominance in securing prime retail sites, which limits competition.
“Currently, the availability of suitable retail sites is limited by planning and zoning laws, which restrict overall supply and can lead to delays that deter entry or expansion for competitors,” Keogh said.
“To improve competition and enable greater entry and expansion, we are recommending that all levels of government simplify and harmonise planning and zoning requirements to make it easier to establish new supermarkets.”
For suppliers, the ACCC recommended greater transparency in fresh produce supply forecasting and weekly tendering processes, preventing major retailers from unilaterally adjusting agreed prices and volumes.
The Commission also pushed for stronger protections under the Food and Grocery Code to address the power imbalance between suppliers and supermarkets.
Peak retail body asserts grocery sector’s competitiveness
Despite the ACCC’s findings, the Australian Retailers Association (ARA) said that the domestic grocery sector remains competitive.
“We believe the Australian grocery sector remains highly competitive, with a growing number of physical and online shopping alternatives,” ARA Chief Industry Affairs Officer Fleur Brown said.
“New entrants are gaining market share, and cross-shopping behaviour among consumers is at an all-time high, ensuring strong competition within the industry.”
Brown further stressed that regulatory changes should not inadvertently increase supplier costs or introduce inefficiencies that could drive prices higher.
“Businesses across the country have faced increased costs during the past few years, from steep interest rates to supply chain delays. These operational costs cannot be overlooked when considering competition and pricing strategies,” said Brown.