Coles and Woolworths, which control 67% of the grocery retail market, maintain their record profits — Coles posted $1.1 billion annual profit; Woolworths $1.7 billion — by underpaying workers and overcharging customers.
Despite so many struggling to meet rising household bills, Labor refuses to take decisive action to stop the supermarket duopoly from price gouging.
However, both corporations are facing legal action by the Australian Competition and Consumer Commission (ACCC) over alleged deceitful marketing tactics.
The ACCC claims the duopoly have been inflating prices on certain products for short periods of time, then lowering them to above the original price, while claiming prices have dropped.
A lengthy ACCC investigation that found that the promotions “Down, down prices are down”, and “Prices dropped” were deliberately misleading, and led to “significant revenue” for the corporations at the expense of customers.
It found that Woolworths charged $3.50 for a packet of biscuits for nearly two years. Then it raised that to $5 for 22 days, after which it was “dropped” to $4.50, with the ticket claiming a price reduction of 50 cents.
The “price dropped” price was 29% higher than the original price!
The ACCC found that Woolworths made similar false price drop claims on 266 products over 21 months. Coles is accused of making misleading price “drops” on 245 products over 13 months.
Another deceitful marketing tactic they deploy is to swap specials from week to week, which helps to shut smaller grocers out.
Coles and Woolworths will put different products on sale at the same time and swap the sales at the end of an allotted period.
The Australia Institute (TAI) said this tactic helps ensure that the duopoly is never undercut. The Greens, which are pushing for laws to break up the duopoly and to stop price gouging, accused Labor of allowing the two giant corporations to work as an oligopoly.
The other key way Coles and Woolworths boost their profits is by exploiting of their workers.
Despite employing more than 300,000 people — among the country’s biggest employers — food retail work remains one of the lowest paid industries: workers often only receive the award minimum, and more than half are employed part time.
TAI found that since the COVID-19 pandemic, food prices have risen significantly more than the average wage of a supermarket worker.
Many Coles and Woolworths workers struggle to afford groceries, with the measly 5% “employee benefit” discount making little difference.
TAI found that over a year, lower-income households spend 16.4% of their disposable income on groceries, compared to households on higher incomes that spent just 5.1%.
According to TAI’s Supermarkets or super mark-ups? February report, Coles and Woolworths have admitted to wage theft, stretching back years.
Woolworths acknowledged in 2019 it had underpaid at least 5700 of its workers by more than $300 million over several years. In April, it admitted to failing to pay leave entitlements of more than $1 million to about 1200 Victorian workers. Wage Inspectorate Victoria found it had underpaid workers on 3617 occasions, between January 2020 and July 2022.
Woolworths got off lightly, only being fined $1.2 million rather than the maximum penalty of $10 billion.
Workers, particularly in rural areas, often have no recourse against wage theft given the lack of jobs and little interest from the largest union covering supermarket workers.
The ACCC’s price gouging case came after its own lengthy investigation. It is separate from the new inquiry into the supermarket sector, which the Treasurer directed the ACCC to undertake in January.
This new year-long inquiry — which focuses on pricing practices, relationships between retailers and food suppliers and the state of competition within the sector — is the first government-directed inquiry into supermarkets since 2008, more than 15 years ago.
What recommendations will be put and whether Labor will implement them remains to be seen. Its refusal, so far, to support price gouging laws and divestiture powers does not inspire confidence.
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