VIDEO: Woolworths and Coles under scrutiny at the ACCC supermarket inquiry

WORKER:  How are you? 

CUSTOMER:  I’m really well. How are you today?

WORKER:  Good thank you. 

CUSTOMER:  Been busy?

WORKER:  I have been yeah. 

FRED HARRISON, RITCHIES IGA CEO:  Give me five. Love the glasses, you look very cool.

ALEXANDRA BLUCHER, REPORTER: After nearly 50 years in the industry, Fred Harrison knows a thing or two about competing against the giants in the supermarket sector.

FRED HARRISON:  Coles and Woollies, they’re almost on every corner. They surround the independents, and we have to fight and fight hard to maintain our market share.

ALEXANDRA BLUCHER: The CEO of Ritchies, which has 78 supermarkets on the country’s east coast, argues that one of the most cutthroat battles is over land. 

FRED HARRISON: There’s no question Woollies, Coles will come in and purchase land and then sit on that land. 

I mean we’re not going to be able to go into a location knowing that a big Woollies or Coles is potentially going to open down the road from us in one, two, five, six, seven years' time. 

Land banking should be absolutely stopped.

ALEXANDRA BLUCHER: Land banking has been a focus of an ongoing public inquiry into the conduct of the supermarkets held by the Australian Competition and Consumer Commission. 

NAOMI SHARP SC, COUNSEL ASSISTING: Do you agree that a new supermarket entrant would find that to be a barrier to entry?

AMANDA BARDWELL, WOOLWORTHS CEO:  Well, no I think Aldi has demonstrated they’ve been able to rapidly grow their network. 

ALEXANDRA BLUCHER: The ACCC describes land-banking as buying an interest in land without intending to develop or buying sites earlier than needed to lock competitors out. 

NAOMI SHARP:  How significant a problem is land banking practice on the part of the majors?

GRANT RAMAGE, METCASH FOOD CEO:  I would say it’s a material problem for us.

ALEXANDRA BLUCHER: Metcash Food is a major wholesaler that establishes and supplies smaller supermarkets like IGAs including Ritchies and the Friendly Grocer. 

GRANT RAMAGE:  There would be plenty of circumstances every year where there are sites that we may identify as being suitable for an IGA to open, and then when we investigate, we find that those sites are unavailable because they’ve been land-banked by one of the chains. 

ALEXANDRA BLUCHER: The inquiry heard that Woolworths owns 65 undeveloped sites across the country, and Coles, 42.

Earlier this week, Woolworth’s senior executive faced questions on the practice.

NAOMI SHARP: So, Mr Kemmler, is it your evidence that Woolworths has never, in the last 10 years, acquired an interest in land without an intention to develop that land?

RALPH KEMMLER, MANAGING DIRECTOR OF PROPERTY, WOOLWORTHS:  As far as I know, yes. 

ALEXANDRA BLUCHER: Counsel assisting interrogated Woolworths’ managing director of property, Ralph Kemmler, over an internal document that referred to sites held for strategic reasons.

NAOMI SHARP:  Isn’t this land banking?

RALPH KEMMLER:  I don’t believe so. I think you’ll see that they’re a combination of company homes, surplus land from developments that we’ve completed that are to be sold or land held pending other developments. 

ALEXANDRA BLUCHER: The last chair of the ACCC to hold a public inquiry into the supermarkets was Graeme Samuel, in 2008. 

Since then, he says the regulator has gained powers that allow it to act against land banking.

GRAEME SAMUEL, FORMER ACCC CHAIR:  There’s been introduced into the competition law a very important section, Section 46, which deals with abuse of market power, and it seems to me that that’s a section that should be tested by the ACCC if we’ve got instances of land banking, that is land being acquired for an anticompetitive purpose to keep a competitor out of a market.

ALEXANDRA BLUCHER: The interim report also outlined a practice of buying entire shopping centres and kicking out competitors including an example in Brisbane where Coles didn’t re-sign the lease of an IGA and there’s plans to replace it with their own store. 

GRANT RAMAGE:  They already had stores in the area. It was patently not about having a presence, they already had a presence, but they obviously wanted to remove the independent from that area.

ALEXANDRA BLUCHER:  A Coles spokeswoman told 7.30 it provided detailed information to the ACCC about the acquisition earlier this year. 

The company’s bosses appeared today for the first time at the inquiry.

In the 2024 financial year Coles made two-billion-dollars in earnings before tax, a significant increase on the year before.

NAOMI SHARP: Suppliers say they’re being squeezed, consumers say they’re being squeezed. How is it that Coles is profiting in these conditions?

LEAH WECKERT, COLES CEO: Our evidence would be that we’ve had quite a stable EBIT margin and the improvements between '23 and '24 were as a result of us taking actions within our business which drove efficiency and improved performance.

ROSIE THOMAS, CHOICE DIRECTOR OF CAMPAIGNS:  From a consumer perspective, this inquiry is really focusing on pricing, the way prices are presented, shrinkflation, membership pricing and loyalty schemes.

ALEXANDRA BLUCHER: Consumer group Choice is particularly concerned about supermarket membership schemes.

ROSIE THOMAS:  What that will mean is that there is a lower price for people that are members of the loyalty program and so if you are not a member of the loyalty program, you'll end up paying a higher price. 

We think that everyone should be able to access the cheapest prices for essential food and groceries at the supermarkets. So, we think membership pricing is unfair. 

ALEXANDRA BLUCHER: The inquiry also heard questions over privacy rights. 

NAOMI SHARP:  Is the price that members have to pay for their member only pricing, giving up their data to Woolworths?

HANNAH ROSS, WOOLWORTHS MANAGING DIRECTOR EVERYDAYX There is some personal information to sign up to the program which is relatively consistent across loyalty programs.

GRAEME SAMUEL: It just strikes me as savvy marketing and part of the tools of marketing to ensure loyalty and loyalty has its rewards. The rewards are in access to discounted goods and whatever might be the case.

ALEXANDRA BLUCHER: The ACCC is slated to provide its final report to the government in February next year. 

ROSIE THOMAS:  Consumers have many questions and they’re very sceptical but it is only the ACCC that can really get to the bottom of pricing by using its information gathering powers.