The recent ACCC hearings have spotlighted the undeniable persistence of a duopoly within Australia’s grocery industry. The purpose of the hearings was to assess whether the dominance of Coles and Woolworths is stifling competition and ultimately harming consumers.

We have seen evidence of the supermarkets’ market power, supply chain influence and competitive strategy, yet their ongoing denial of market control persists. With growing concerns over the lack of competitive diversity, these investigations will be vital to push for much needed change in the industry which could reshape Australia’s retail landscape all together.

As price transparency becomes increasingly front of mind for consumers, there is growing pressure for retailers to level the playing field. This means adapting quickly to customer expectations, but also to regulatory intervention. The outcome of these investigations could significantly alter the competitive nature of the retail space and usher in more diverse players to influence the market.

Rethinking supermarket strategy

Coles’ CEO, Leah Weckert’s has admitted Coles is becoming the “top-up shop” for savvy Aussies doing the “big shop” at Aldi. What’s more, she conceded Amazon’s competitively priced goods and free delivery is something Coles is “paying attention to and worr[ies] about”. 

Despite only holding around 10% of the market, Aldi’s influence is gaining momentum quickly. Aldi’s focus on offering low-cost essentials has resonated with consumers. Its pricing strategies are changing consumers’ purchasing habits, encouraging Aussies to use the store as the primary grocery shop and cross-shop when needing to replenish their fridges.

Aldi’s entry hasn’t been a quiet one and we can see it is already forcing Coles and Woolworths to rethink their pricing strategies. But Aldi’s success is a clear indicator of market appetite, with customers voting with their feet for increased competition.

Profits over people

Despite pushing the narrative that they’re operating in a competitive market, Coles and Woolworths still boast a combined market share of 67%. With life becoming more expensive for Aussies, Coles and Woolworths have yet to prioritise consumers’ best interests over profit. Tactics like fake and yo-yo discounting continue to limit competition and leave the public with little choice but to pay more for everyday items. Woolworths’ own document claimed it aims to ‘neutralise’ Coles prices, not beat them.

You just need to look at basic household essentials in other countries, like the UK which has a more competitive and diverse range of supermarkets. According to recent economic indicators, 1L of milk, a dozen eggs and a loaf of white bread would cost you $12.56 here in Australia, while it would come to $10.54 (£5.43) in the UK.

Empowering shoppers, challenging giants

Price transparency is coming to groceries, just like it has to petrol, electricity, telco and other sectors. It’s coming via new technology, and almost certainly through upcoming regulations – whether the duopoly likes it or not. These advancements will not only have the potential to challenge the anti-competitive nature of the supermarket sector but also finally put the power back into the hands of shoppers.

Australia’s retail sector is at a turning point. It is fair to say that the dominance of Coles and Woolworths has created a grocery market that does not fully serve consumers. Aldi’s growing influence and the innovation of price comparison tools offer hope for change.

Aldi’s low-cost alternatives are forcing traditional retailers to rethink strategies, creating an opportunity for true competition. Empowering shoppers with better tools and more options will not only shift the focus away from profit-driven dominance and toward fairer prices, but it will also open up more choices for everyone – a change that could reshape the future of Australia’s retail landscape forever.

Joel Gibson is finance expert at Zyft.