Coles boss Leah Weckert says the supermarket giant is a retailer of choice for suppliers, competition welcome

Coles boss Leah Weckert says prices for packaged groceries, which have experienced huge price increases over the past few years, should start to come down as key production expenses ease.

The supermarket giant has also committed to meetings with suppliers who believe Coles has treated them unfairly, with Ms Weckert saying she did not want supply partners to be afraid to speak out.

Ms Weckert, giving evidence on Tuesday to the Senate supermarket prices inquiry, said controversy over big supermarkets’ dealings with suppliers overlooked the fact Coles was a retailer of choice.

“Claims have been made about how we interact with our suppliers. We acknowledge that we don’t always get it right but all our procedures seek to ensure fair and sustainable relationships,” she said in her opening statement.

“We always work to build mutually beneficial relationships with our suppliers and I just don’t think our suppliers would stay with us for a long period of time, as much as 50 years, if that was not the case, if we were not working to build those long term relationships.”

Later, Coles government and industry relations manager Vicki Bon told the hearing that though suppliers that had publicly identified themselves during the Senate’s inquiry were not direct Coles suppliers, it wanted to hear from any who feared repercussions.

The inquiry has heard of a culture of fearing reprisals from the big two supermarkets for speaking out.

Ms Bon told the Senators: “If there are any suppliers that any of you know or that have come to you that claim that Coles has not treated them fairly, we would invite those suppliers and yourselves to meet with us ... and we can talk through any issue, because that is not consistent with the way we do business.”

Ms Weckert added: “We are certainly eager to understand what it is that we can do more (of), because high levels of fear of retribution are not something that benefits any of us.”

Ms Weckert said Coles had also acknowledged concerns in farming, particularly horticulture, around price transparency. The company was “very willing” to be part of a solution for greater transparency for fresh produce growers, she added.

Suppliers chose Coles and many had for generations, Ms Weckert said. They were local businesses that had benefitted from Coles’ Australia First sourcing policy. She emphasised about 96 per cent of all fresh produce was Australian, and all its own brand fresh beef, lamb, pork, poultry, duck, milk and eggs was sourced in Australia.

Elsewhere, Ms Weckert signalled some relief for shoppers struggling with high prices may soon see relief on the shelves as commodity prices eased.

“I’d like to believe that we as a food and grocery industry, which includes the manufacturers and the suppliers, can work together to bring prices down for customers as we go forward from here,” she said.

Ms Weckert added prices in fresh produce had been going down, year-on-year since July last year. This was particularly noticeable for red meat, and also in fruit and vegetables.

She said while household expenses had been surging, and Coles could not influence education, healthcare, insurance, energy and transport costs, what it could do “was give customers the best value possible on their grocery bill”. This was balanced with paying suppliers fairly and reinvesting in the business to keep it efficient.

“Our customers expect us to continue to provide a choice of quality products across a range of value propositions to suit their budget and the needs of their household, and we are committed to providing this,” Ms Weckert said.

“We are working every day to help customers find value in our stores, we’re doing that through thousands of specials that we provide every week.”

Ms Weckert also addressed concerns around competition, saying the sector was highly competitive with plenty of options. Coles has more than 850 supermarkets and 960 liquor stores nationally, employing 120,000 team members.

“At Coles we welcome competition and we encourage governments to invest in infrastructure and to minimise regulation to make Australia a more attractive market in which to do business,” she said.

The Food and Grocery Council, a lobby group focused on food manufacturers, has called for Federal Government intervention on competition, saying the barriers to entry into Australia needed to be lowered. Aldi testified to the inquiry last week it had spent $7 billion to establish nearly 600 stores since 2001.

Ms Weckert said the grocery sector was highly competitive, and Coles had to compete for customers, suppliers and staff.

“If you go to your local shopping centre, it is more than likely that you will have the choice of two or three supermarkets — potentially a Coles and Woolworths and Aldi, maybe an independent,” she said.

“You’ll also likely have access to a number of specialist retailers, a butcher, a bakery like a Baker’s Delight, probably a couple of greengrocers.”

“More than 100 years after opening its first store, Coles continues to be a successful Australian business contributing to the Australian economy.”

Ms Weckert said that since the last competition watchdog inquiry into supermarkets in 2008, Costco had entered the market — and its stores in terms of volume were equivalent to five or six Coles — while Aldi and IGA and the independent sector had enjoyed significant growth.

Concentration in supermarkets did not equal anti-competitive markets, she said, and consumers benefited from Coles’ reach.

“(If) you take the items like milk or pasta or rice, a lot of our core pantry items they are nationally priced,” she said. “That is a benefit that Australians get from having a large economies of scale over a country of this size.”

This broad base allowed Coles to have a fixed cost base, but Ms Weckert said a divestiture law could force prices up because there would be fewer stores for the same operating costs. Most at risk would be rural and regional stores.

“If you have grocery operators knowing that because of divestiture tries to cap on the size to which they can grow to what that potentially does is limit the investment that businesses are willing to make to continue to develop their supply chain capability to expand stores,” she said.

“When you look at the grocery industry in Australia is that customers have hugely benefited from the amount of capital investment that the large supermarket chains have put into Australia ... with the development of infrastructure and stores.”

She added there would be questions about who would buy divested stores.

The hearings continue. Ms Weckert’s testimony followed Woolworths boss Brad Banducci earlier on Tuesday.