Displaying ‘shrinkflation’ among competition watchdog’s recommendations for $120b supermarket sector

Australia’s major supermarkets should be forced to alert customers of “shrinkflation” as the competition watchdog concludes soaring grocery prices have resulted in additional profits for Coles, Woolworths and Aldi.

The Australian Competition and Consumer Commission’s final report into the $120 billion supermarket sector, to be released on Friday, also confirmed Coles and Woolworths’ dominance, which it expects will continue.

The duopoly’s promotions and loyalty programs made it harder for shoppers to judge whether they were getting a good deal and make informed decisions about whether to shop with them or a competitor, it found.

The 441-page report, commissioned by the Federal Government, said Australian grocery prices have been rapidly increasing over the past five financial years, most of which were attributable to soaring costs of doing business.

But the ACCC also said Coles, Woolworths and Aldi had increased their earnings in that time, which meant some grocery price rises have resulted in extra profits.

The ACCC has made 20 recommendations in a bid to increase competition in the sector, support consumers to make informed decisions and make supply chains more efficient.

Supermarkets should be required to inform customers when product sizes have changed, it said, and this information should be in close proximity to shelf tickets and on relevant websites.

Coles and Woolworths should also be required to provide loyalty program members information on the monetary value of points and other benefits earned and redeemed.

Coles and Woolworths, which account for 67 per cent of Australia’s supermarket sales, are facing hefty fines after the ACCC separately accused the pair of misleading customers by faking discounts.

The ACCC’s interim report in September highlighted customer concerns on soaring prices at the checkout, a lack of competition and a loss of trust about special or discount schemes.

Many suppliers and farmers also told the ACCC inquiry they had no choice but to accept unfavourable terms for fears of damaging relationships with the big supermarket chains.

The ACCC has now proposed greater transparency around wholesale fresh produce prices. It recommended Aldi, Coles and Woolworths should be required to provide weekly data about the prices they have paid to suppliers.

This should be provided to an independent body, which would process and publish the data.

The report did not support divestiture powers proposed by the Opposition or the claim that breaking up supermarkets would do help customers.

Treasurer Jim Chalmers said the Federal Government was taking action to get a fair go for families at the checkout and for farmers at the gate.

As part of its initial response, the Government said it would provide $2.9 million in the Budget over three years to help suppliers stand up to supermarkets.

“This is about ensuring Australians aren’t treated like mugs by the supermarkets,” Dr Chalmers said.

“Our ongoing supermarket crackdown means more competition, better prices and better deals for Australians.”

Assistant Minister for Competition Andrew Leigh said the ACCC report recommended stronger safeguards to stop big supermarkets from stacking the shelves in their favour.

“A healthy supermarket sector should be serving up competition to ensure the big players don’t put profits ahead of people,” he said.

Coles and Woolworths are not the only industry players in the sights of the Federal Government, which is also acting to rein in high cost of living in remote Indigenous communities.

A packet of Tim Tam biscuits were going for $11.70 in Kalumburu on the northern tip of WA last June.