Coles has been equally vocal in their opposition to the government’s new plan to control grocery prices. They contend these measures will almost certainly increase consumer costs rather than decrease them. The grocery chain’s stance comes in response to a recent report from the consumer watchdog, which indicated that Coles, alongside Woolworths and Aldi, contributed to rising grocery prices between late 2022 and early 2023. This study has led the federal government to propose new rules aimed specifically at addressing excessive and predatory pricing practices in the industry.
The government has been cracking down to enforce these new rules. If these companies are truly Australian-owned like Coles and Woolworths and don’t meet the expectations, they would be liable for fines up to $10 million per breach. Coles argues that it does not price gouge, as the report seems to suggest. The supermarket chain insists that enforcing a ban on excessive pricing could backfire, leading to even higher prices for shoppers.
Coles’ Response to Price Regulation
Coles’ views would go beyond the proposed final regulations. Additionally, they argue the rules are redundant and could lead to harmful unintended consequences. A spokesperson for Coles said the law was problematic. They argue it is unfairly discriminatory that it targets only two Australian-owned companies, while larger foreign-owned retailers can function without such restrictions.
“The law is unprecedented by targeting only two Australian-owned companies,” – Woolworths spokesperson.
Instead of piling on more regulations, Coles contends the focus should be on relieving cost pressures that lie beneath supply chains. The company maintains that it has been delivering savings for consumers over several quarters, highlighting its commitment to providing affordable options.
“If Australia wants lower prices and better outcomes for consumers, we need to focus on reducing unnecessary regulation and addressing the underlying cost pressures across supply chains,” – Bran Black, CEO of the Business Council of Australia.
Concerns Over Market Dynamics
As Coles and Woolworths navigate this regulatory landscape, they confront the reality of a near-duopoly in the Australian supermarket sector. As the market dynamics shift, both companies are coming under increasing attack from regulators and consumer advocates for allegedly gouging customers.
Chris Rodwell, chief executive of the Australian Retailers Association, expressed similar worries. He discussed the impact of these and other measures on grocery prices. Yet, he warned, those regulations could worsen the very problems we’re trying to fix instead of addressing them.
“These measures seek to address a problem for which there is no evidence and risk having the opposite effect — pushing grocery prices higher for Australian families,” – Chris Rodwell.
Coles has been very clear on its razor-thin profit margin as a retort to accusations of price gouging. The company says that on average, it only makes $2.43 for each $100 customers pay. That’s just short of three cents on the dollar.
“For every $100 customers spend at Coles, we make around $2.43 in profit — less than 3 cents in the dollar,” – Coles spokesperson.
Government’s Perspective
From the government’s perspective, these regulations are supposed to give consumers some relief as grocery prices skyrocket. Australian Treasurer Jim Chalmers underscored the importance of producing fair prices for Australian families in difficult economic circumstances.
“One of the best ways to ease the cost of living for Australians is to help people get fairer prices at the checkout and that’s what this is all about,” – Treasurer Jim Chalmers.
In response, Coles rejects this explanation, arguing that the implementation of these new regulations is contrary to the professed intent of reducing cost-of-living pressures. For them, it’s about making sure the emphasis is on real solutions that truly help consumers, not creating new burdens.
“At a time when the focus should be on easing cost-of-living pressures, these regulations risk doing the opposite,” – Coles spokesperson.
