How Supermarket Giants Are Taking Over Australians’ Lives?

Australia has the most concentrated supermarket industry of any country in the world.

Australia once saw a time where you strolled down the supermarket aisle to purchase your weekly groceries and you were done with the store for a week. Nowadays, supermarket giants Coles (who owns Coles?) and Woolworths (Who owns Woolworths?) hold an increased share of your money.

ALDI (see who owns ALDI?) is slowly catching up but still not there yet. Recent increase in ALDI ads on TV may have given you idea that they have bucked up against the big grocery giants in Australia. The monopolies have crept their way into every area of your finances that goes far beyond the weekly grocery shop.

It’s astonishing just how much Coles and Woolworths govern throughout Australia

Coles and Woolworths have been reputable Australian brands in the retail industry for around a century with Coles opening its first doors in 1914 and Woolworths 1924. Then well known for value products and discount prices, the pair form a duopoly with a market share of 72.5 per cent of the $82 billion grocery sector, according to a Roy Morgan analysis last year. Woolworths lead the game at 39 per cent and Coles at 35.5 per cent at the time of the study.

If you wish to save on groceries, checkout how to save money on groceries. Simple things as making a list before going for shopping, taking your own bag, looking out for sales etc. can go a long way. Following these simple tips, you can actually save a lot by the end of the year.

In the 1990s our roads were plagued with various independent petrol stations as well as giants such as Shell, Mobil, Caltex and BP. The late 90s saw the monopolies latch on to the fuel industry to include it in their grocery game. Woolworths entered the petrol business in 1996 and Coles 1997. With a combined 48% of Australian petrol sales in 2014, these super market giants own all Shell and Caltex outlets. The adoption of this new industry saw discounting as much as 45 cents off per litre in an addition to the Coles and Woolworths rivalry. With significant concern for the long-term health of the petrol market, the Australian Competition & Consumer Commission (ACCC) ruled the two could no longer offer more than 4 cents off when linked to a grocery purchase.

When it comes to the liquor sector, Woolworths are winning this round of the game. BWS, Cellarmasters, Dan Murphy’s and Langton’s are all owned by Woolworths. By 2013, Woolworths were operating 1355 outlets across Australia, accounting for almost 40 per cent of alcohol retail sales nationally. In addition to this, Woolworths holds a 75 per cent share in the Australian Leisure and Hospitality Group. Which in turn, controls 460 liquor outlets, and home to approximately 12, 000 pokie machines in Australian hotel venues, making it Australia’s biggest poker machine operator, a massive profit driver. Coles, although not as prevailing, still holds a 20 per cent share of the industry, operating over 630 Liquorland stores as well as shares of Vintage Cellars and First Choice.

The Insurance business is a fairly new level of the game with Coles buying in in 2010 and Woolworths 2011. What’s interesting about this sector of their game is that what you do in one area of your life (grocery shopping), could have a direct effect on your insurance policy. In other words, these giants are using data collected on their shoppers through loyalty programs to target them for insurance offers.
Woolworth’s executive Penny Winn told AdNews last year: “What we’ve been able to do is take our insurer’s car crash database and overlay it with our Woolworth’s Rewards database. Because, you see, customers who drink lots of milk and eat lots of red meat are very, very, very good car insurance risks versus those who eat lots of pasta and ice, fill up their petrol at night, and drink spirits. What that means is we’re able to tailor an insurance offer that targets those really good insurance risk customers and give them a good deal via direct channels instead of above-the-line [advertising]. And it helps to avoid the bad insurance risks.”

And you wonder why your insurance policy is so much more expensive than your friends.

If you thought they hadn’t already taken over enough aspects of your life, Coles have now pledged to be your bank, in a joint venture with GE Capital. You are now able to access a range of financial products such as loans, with the reward of additional incentives to those also signed up with Flybuys or other products.

So what is it? Why is this duopoly quickly dominating every industry nationally?
With such intense competition, they have made it very hard for anyone else to sneak in. With market share values of Coles at $47 billion and Woolworths $44 billion, this is plausible.

Coles and Woolworths had disposed of most of its competitors by the mid 2000s. With the introduction of International super market giants such as Aldi and Costco, the duopoly have had to consider new strategies to maintain their dominance. Aldi has its weaknesses, and Coles and Woolworths have been targeting them. The German retailer has a limited range, lack of service and absence of value-added meals. The limited range of Aldi helps reduce their operating costs but also means that consumers usually have to visit a major chain to complete their weekly grocery shop. Woolworths and Coles have sought to not only price match, but to do something better than them.

Woolworths has already identified semi-prepared meals as a growth opportunity by entering into a joint venture with Beak & Johnson, to open a fresh meals plant in Sydney’s west. The venture, labelled City Kitchen, is due to start shipping product to stores this month.

Woolworths has also vowed to invest in more than $500 million of cost savings, to reinvest into slashing prices and improving stores to “contain” Aldi and Costco.

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Haylee Forbes

Haylee Forbes

Haylee Forbes relocated from rural Queensland to the city to fulfil her sought out career of becoming a lifestyle writer. Her work provides an insight to the experience and understanding of the world through the lens of one who grew up out west. She plans to graduate from University in late 2016 with Bachelor’s degrees in Marketing and Journalism.