Supermarkets behaving badly

It seems as though all the big supermarkets have made the news this week and not necessarily for the right reasons.

The Australian Competition and Consumer Commission (ACCC) has declared eggs produced in intensive farms do not deserve the label ‘free range’. Coles’s new standard for free range eggs is 10,000 hens per hectare, almost seven times less space than is recommended in the voluntary guidelines. The ACCC believes that this redefinition of ‘free range’ has “the very real possibility of misleading consumers”.

Find out more about Coles redefining ‘free range’

Woolworths is under scrutiny by the consumer watchdog, which is investigating potential breaches of competition laws including “misuse of market power” and “unconscionable conduct”. In order to fight back, Woolworths has put together a report which states it does not, in fact, hold the market power the consumer watchdog claims. Woolworths has suggested that it is unfair to only compare it to other big retailers such as Coles and Aldi.

In 2008 the consumer watchdog estimated Woolworths market share at 45 per cent, with Coles at 33 per cent and, according to a Neilson report, Aldi at 7 per cent. In the new report, put together by Woolworths, the supermarket giant explains that when you include smaller businesses, such as green grocers and bakeries, it only holds 28 per cent of the market.

In an unrelated story, it has been claimed that a live frog was found in a sealed bag of Woolworths ‘washed and ready to eat’ salad mix over the weekend.

Get the facts on just how much of the market Woolworths owns, or read more about the frog story.  

A number of suppliers have come out and said that they prefer Aldi over Woolworths and Coles. They said that Aldi paid its invoices more quickly and was easier to deal with. One of the suppliers said that Coles and Woolworths reduced supplier prices and took an extra three per cent to cover marketing costs, where Aldi absorbs these costs into its own profit margin. Suppliers also say that Aldi pays a premium to buy Australian for its private label products and only asks suppliers to compete against other Australian supplier prices, unlike Coles and Woolworths who bring international suppliers into the mix.

Read what else suppliers have to say about Aldi

Opinion – Boycotting the big names

No wonder Woolworths is saying that it is under pressure from German chain Aldi. While Coles and Woolworths have to jump through hoops just to reign in the increasingly negative news reports, suppliers are coming out of their own volition to praise Aldi’s conduct.

Woolworths has 690 stores in the eastern states and Coles has 533, so when Woolworths claims that Aldi is planning to increase from its current 289 stores to 600 over the next seven years, it is difficult to be sympathetic.

This sort of competition is not only healthy, it is the only way to ensure that Australian prices stay down, produce quality stays up and suppliers have options so that they can’t be railroaded into increasingly poor deals. Coles and Woolworths are the ones who started the $1 milk debacle – I for one am very happy to see Aldi stepping up and offering the big supermarket chains a bit of competition.

Do you still shop at Woolworths or Coles? Would you shop somewhere else if you had the option, or are those big supermarkets just too convenient?