Supermarket price wars will only get worse

We know food companies are too scared to criticise Coles and Woolworths at the Senate Inquiry into the anti-competitive practices by the major supermarkets.

We know that businesses and farmers are being pushed out of work by what is described as Australian food producer Dick Smith as “extreme capitalism.’

Now Coles is launching a program which many companies say is just another way it is wielding its power over them.

Adele Ferguson reports for The Sydney Morning Herald on how the new systems being put in place by the major supermarkets will continue to damage the sector.

If there is one message to come out of the fierce price war between Coles and Woolworths it is that life will get a lot tougher for their suppliers as the supermarket giants face the spectre of lower earnings growth and a potential de-rating of the sector.

Coles has introduced a program called ARC (Active Retailer Collaboration) to identify possible efficiency gains, potential cost reductions and data sharing for an upfront fee.

More than 200 suppliers have signed up to ARC agreements, but a number of them are complaining the program is anything but collaborative and is being used as a tactic to screw them further on prices. With Coles and Woolworths dominating the grocery industry with more than 70 per cent of market share, suppliers have little option but to put up or shut up.

The brutal reality is, in the past year, the food and liquor discounting between Coles and Woolworths – and more lately Metcash – has never been as ferocious and the cries from suppliers never louder.

It has refocused the debate on the concentration of Australia’s grocery industry and the long-term toll it is having on Australian suppliers.”

To read the full article, click here.

 

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