ABC 7.30 Report
Posted on Thursday 1st May 2014
Viedo
http://www.abc.net.au/7.30/content/2014/s3995432.htm
Transcript
SARAH FERGUSON, PRESENTER: More Australians shop at Woolworths and Coles than any other stores, but their dominance of the market has come at a cost to smaller businesses, unable to compete with their aggressive pricing regimes.
Unless there's a change, critics say smaller shopping outlets may cease to exist.
So are the big players deliberately killing off their smaller competitors?
Greg Hoy reports.
GREG HOY, REPORTER: Not so long ago, the scenic shire of Bright in Northern Victoria buzzed with busy local retailers selling lots of local produce. Then, three years ago, supermarket giant Woolworths came to town.
PETER RICARDI, BUTCHER: Well Woolworths were coming in and the other butchers, soon as they come in, he folded up and just went. We dropped probably about between 60 and 70 per cent. We had 10 staff - eight or 10 staff; now we're back to three.
GREG HOY: What does a big supermarket do for supply?
PETER RICARDI: I think it's brought out of Queensland, actually.
GREG HOY: No local produce at all?
PETER RICARDI: No local at all.
GREG HOY: Woolworths built its 2,500 square metre super store outside Bright's shopping strip, sending another supermarket, now an op shop, to the wall. Survivors and their suppliers are still reeling.
NICK COOK, IGA OWNER: We've seen a butcher close. The dairy is - it's lost probably 80 per cent of its business. We're 60 per cent down and struggling.
GREG HOY: Soon, the Foodworks supermarket in the nearby town of Myrtleford collapsed. Its ghostly shell is all that remains.
BRAD MUNROE, FORMER SUPERMARKET OWNER: 40 staff members ended up losing their jobs because the store had no other choice but to shut the doors because they could not stay in business.
GREG HOY: The former supermarket's proprietor, Brad Munroe, now managing a store in Melbourne, lost $500,000 he'd invested in the Myrtleford store. His partner lost even more, plus his house.
BRAD MUNROE: It's cost me a lot financially, but probably not so much as what it's cost a lot of the staff in the town emotionally. They would have to leave the town to look for work, which doesn't do a lot for the longevity of a small town like Myrtleford.
GREG HOY: The same thing is happening across Australia.
NICK COOK: They build a development which is really unsustainable, but they can support that on the turnover of a $50 billion-plus company until they drive the competition out.
JOS DE BRUIN, CEO, MASTER GROCERS AUSTRALIA: What we've seen is just a growth in market dominance between Coles and Woolworths. Their strength, their market power is unsurpassed. Nowhere else in the world have we seen such dominance.
MICHAEL SHERLOCK, BRUMBY'S FOUNDER: Fruit shops, butcher shops and delicatessens - they've virtually disappeared these days. Projecting forward over the next 10 years, I think this trend's going to continue and you'll see less and less of these specialty food retailers in the marketplace.
GREG HOY: So do supermarket giants feel any responsibility for causing financial hardship for others? Such big businesses have long argued they don't deliberately set out to kill competitors using predatory practices.
ALLAN FELS, FORMER CHAIRMAN, ACCC: They said, "I'm a big fish and if I waggle my tail, I may inadvertently kill small fish, so I shouldn't be guilty." Now, firstly, big business knows what it's doing, but you often can't prove it.
MARGY OSMOND, CEO, AUST. NATIONAL RETAILERS ASSOC.: We're very confident that there's a highly competitive marketplace out there and consumers are getting great prices as a result.
GREG HOY: Neither Coles nor Woolworths would be interviewed to respond to concerns they deliberately eliminate competition. Instead they deferred to their association, the National Retailers.
MARGY OSMOND: Coles and Woolworths are very large Australian companies. They employ hundreds of thousands of Australians and they're pivotal to the survival of a whole range of regional communities. And they do a great job and they're proud Australian companies.
GREG HOY: They're certainly large and getting larger, rapidly expanding into insurance and banking to cafes, pushing to move into pharmacies, growing liquor, petrol, office supplies, hardware, huge in hotels and pokies, general merchandise and clothing.
ALLAN FELS: The duo dominates retail across many fields and markets. They have enormous power.
GREG HOY: As in many other places, in Queensland's seaside city of Townsville, Coles and Woolworths dominate. Recently Woolworths bought out two independent rivals, triggering the closure of a string of smaller retailers. Michael Koppitke's bakery business was just one of the local shops driven out of business.
MICHAEL KOPPITKE, BAKERY OWNER: There was a baker, there was a butcher, there was a newsagent and some other tenants which I'm not sure will survive. The issue as we go is: what happens if Woolies and Coles dominance continues? Over time, surely, long term it can't be a benefit for the community.
GREG HOY: With more than 70 per cent of the supermarket market, last year the big two reaped revenues of $68 billion on food and liquor alone. There's 170 new stores in the pipeline.
MARGIE OSMOND: What you are actually seeing here is a hugely competitive marketplace here in Australia. Prices are lower than they've been for years.
GREG HOY: Some say in the long run, however, prices will rise.
MICHAEL SHERLOCK: They're just taking more and more market share and as their competitors, the small operator competitors disappear, the consumers will end up in the long run paying high prices.
GREG HOY: Citing that very argument, the Coalition government has recently introduced a competition policy review to appease small business and rural suppliers who argue that they too have borne the brunt of big supermarkets abusing their market power.
Small grocers and the former ACCC chairman Allan Fels are calling for an effects test, a tough, new law to stop big supermarket strategies that effectively eliminate small competition.
ALLAN FELS: When a powerful firm uses its power to harm competition and thereby harm the economy and maybe small business and farmers and consumers, that's against the law in just about every country except Australia and New Zealand.
GREG HOY: Now, all eyes will be on Competition Policy Review and the ACCC to see if both will recommend introduction of an effects test in competition law.
ALLAN FELS: I'd like to see the ACCC support an effects test. The time has come for this change.
BRAD MUNROE: We're looking at the bigger getting bigger and the smaller getting smaller. The be all and end all is that if there is only one supermarket in one town, that supermarket can charge what they want.
SARAH FERGUSON: Greg Hoy with that report.
