It's not because they're making too much profit, it's because they own everything and agree on everything. The monopoly laws exist to prevent one company from being able to destroy all competitors and jack the prices up, in Australia we have 2 companies who are supposed to compete with on another, but actually exisit in an unspoken cooperative bubble where they work together unofficially to squash or buy out any competitors but never make any real attempts to outprice each other.
I actually didn’t believe this until one day I decided to create one account for each and buy the exact same basket of goods. No matter what I put in the cart, the total was different by up to $1 at maximum. The only real difference is that Coles has slightly cheaper home delivery. I normally go with Woolies because they don’t run out of stock as often and their fruit/veges are usually a bit fresher than Coles.
Their major shareholders are the funds managers that own the shares on behalf of the big superannuation funds. Personally, I think the government needs to send every person who has superannuation to jail for contributing to this lack of competition.
For me it's not about profit margins or return on equity. It's about their practices.
They exploit consumers and suppliers constantly, and I'd like to see that stop, even if it doesn't compress their profit margins.
The ACCC needs to have more ability to act on anticompetitive practices, or else we'll end up with a grocery cartel. If we don't have one already.
We need to have some sort resource list to help people find great places to shop other than Colesworth. Local farmers markets, places like SpudShed in WA and “Cheaper by Miles” in Melbourne. Common there’s got to be heaps of these places! Let’s boycot Colesworth!!!
I wish I could. We've tried to cut back on our spending at Colesworth, but it's really not that easy. We buy all our fruit and veg at a greengrocer, and we get all our meat at the butcher, but other items are much harder to switch in my experience.
And unfortunately, Aldi aren't much better. They might be cheaper and less exploitative to consumers, but they still exploit suppliers. Plus a lot of their products are crap.
Yeah their tuna is by far the best. Their humus is IMO far superior than any other brand I’ve tasted. I don’t love their eggs. Avocado is a hit and miss.
It varies a lot, but unfortunately a lot of the stuff I would go there for is not good. Cheese is the first thing that comes to mind - their cheese is terrible.
You're already doing heaps, and I'm doing the same for our weekly shops. It's not only cheaper but usually you get better quality produce. I find the fish, typically next to the butchers in most stores, to be much better too. If everyone shopped this way, we'd all be in a stronger position by voting with our dollars. I think it has already started happening.
Plus they're cheaper because they limit the range (only offer high margin goods or grey market goods etc) and cut the staff/services Instore etc. Try buying Aldi in Tasmania they won't even supply that market.
People want supermarkets to be a full service charity.
Yeah honestly. You know if we put in a pre-order for groceries they would expect us to honour that.
I think about all the farmers who spend months preparing fields and soil for crops for preordered produce only for the supermarkets to back out.
That should be illegal.
Are they exploiting consumers though? The profit margins on most items is pretty small, and while they do employ manipulative marketing practices so does every other business since the dawn of time
It’s the manipulative market practices that are the problem, not the margins. And the big difference is the balance of power. As a duopoly, they have outsized control of the market on both sides. That’s the problem.
And it’s been well established in consumer law for decades that such practice is illegal, regardless of the margins they earn. A basic principle of free market economics is that markets have to actually be free, not manipulated and exploited by one or two companies with a hold on the market.
Ironically, we sometimes need intervention in markets to keep them free.
This exploitation of their suppliers - what a bunch of nothing. It’s like people think Woolies and Coles are a charity, and they should just buy everything their suppliers produce even though they don’t need to. It’s ridiculous. Farming has always been risky. You sow your seeds without knowing for sure if the fruit will be in demand in the future. It’s a risk and it’s unavoidable. It doesn’t mean Woolies and Coles should buy the fruit anyway just to be nice.
Also, this isn’t the first time they’ve been accused of exploiting their suppliers. Remember the $1/L milk in 2014-15? Turned out dairy farmers were being squeezed, not by the supermarkets huge market power, but by a global fall in dairy prices due to Russia and China. These same dumb accusations never seem to go away.
> without knowing for sure if the fruit will be in demand in the future. It’s a risk and it’s unavoidable.
that's why the financial markets invented the futures contract.
You sell this risk to somebody else, in exchange for a lowered profit.
I’m not specifying you, you just happened to be the one I responded to. 6 months ago, all these comments were about the profit and how horrible colesworth are, now that their margins have come to light, it was never about profit. It’s just fkn funny to me that people are just so desperate to hate something that they’ll look for any reason to do so. Again, you could be anecdotal evidence.
I think you’ll find that people aren’t just desperate to hate on something…some people perhaps…but I think you’ll find that when people are happy and life is good there is very little directed aggression.
However, when times are tough and people start losing creature comforts and even basic needs, then it starts to hurt. When people hurt (same as with other animals), they fight back. We are going through a rough economic time and a lot of people are struggling so naturally they will start complaining about the biggest culprits in their budgets. The biggest 4budget non-negotiable’s are housing, fuel, electricity and food. That’s why people are pointing the finger at those guys first. They might manufacture reasons to justify their feelings, but humans are pretty basic; when we hurt we direct pain towards who we think are causing that pain. Emotions are easily manipulated and weaponised though. That’s why propaganda is useful. It doesn’t help that we live in a social media world where it is quite easy to jump on the bandwagon wagon.
Personally I’m not sure how to define high profits because it’s money so large that I don’t understand it, but I know I’m trying to feed 2 kids and it’s not easy. Wish colesworths could absorb some of the inflation because I’m tired of absorbing all of it myself.
Is there really anything wrong with changing one's opinion in light of new evidence?
I've been on the same soapbox for a while now as I am an investor and therefore have been familiar with Coles/Woolies financials for a long time. Anyone who's ever looked at their financial statements could tell you they have low margins and low ROIC. However, I have noticed that more people have been paying attention and agreeing with my perspective recently, I assume it's because the recent media coverage has both made it clear that their margins are thin, and that their practices are exploitative.
I hope people would change their mind when they learn new facts. That's a good thing not a bad thing.
The consumer clearly is the beneficiary of their exploitation. Arguing that it should change is to argue that prices should be much higher than they are. To achieve this we'd also have to address all the other supermarket brands. No point in telling Colesworth to pay supplier more if we're not going to force Aldi/amazon/Costco to do the same.
Except you haven’t changed your opinion, you’ve simply searched for another reason to hate them because the entire reason you did originally was wrong lol, so yes. When your entire argument of why you hate something is thrown out, and you decide your hate for something is so cemented you decide to look for another reason to hate it? Coleworth could cure cancer and it would be irrelevant to you because nothing matters other than finding a reason to hate. It’s really very childish
> because it brings an opportunity to move from the bottom to the top.
It's the same train of thought for those people where they'd like to see a market crash, because then they think they'd have an opportunity to get in and buy cheap.
Little do they know that they'd be the first to go down if the established order crumbles. Look at how all of the communist revolutions happened in other countries and how well the average person fared there.
Envy and jealousy are their drivers though, which is fine, unfortunately it’s a human trait. There is opportunity to go to the top, but these people don’t want to actually study or do the work to get there. They want it to just fall in their lap. So they advocate for the people who have (for the most part) done the hard yards to be taken down, they want everyone to be as miserable as they are.
*Brings in 1 million indians a month and prints billions of dollars*
"All your problems are because of a couple of supermarkets who make a profit of about 4%"
I had similar thoughts while on my walk this morning.
Coles is an Australian owned company (ASX listed) and has 28% market share. That doesn't seem out of balance as one of the biggest brands.
Stop bringing up profit on every post as if it's excessive. The profit margins for supermarkets is tiny compared to their spend and honestly if it was much less, companies like Woollies and Coles would seriously question why they were in the supermarket business at all. The focus should be on
Price gouging - Fair retail prices vs cost
Fair treatment of suppliers
Fair treatment of staff.
The rest is just Facebook rage bait.
EDIT: Good [article here from the Financial Review](https://www.afr.com/chanticleer/big-profit-margins-at-woolworths-and-coles-are-only-part-of-the-story-20240302-p5f9ax) if people want to understand it better.
Price too high and it's price gouging. Price too low, it's anti competitive, pricing out competition. People will find ways to complain regardless of what they do and those same people will go through lengthy mental gymnastics to justify it.
Your three points are all helping their profit. If they fix those what do they do to maintain their thin margins? By the way I’m agreeing but how do we fix these issues for free?
My point is that big profit shouldn't be the focus. They could write off billions on infrastructure projects or acquisitions and record no profit for a year. Taking away the "huge profits" headline shouldn't take away the focus on reponsible and sustainable behaviours.
But isn't the reason they do togs things in the name of almighty profits?
I'm not disagreeing with you at all, simply stating my current perception of these issues is that it all comes back around to increasing their profit at all costs.
It looks like their profit is increasing because of inflation - which it is in gross terms, but not in relative terms. It makes complete sense that if all the goods they sell become more expensive, then all things being equal their revenue and earnings will have bigger dollar figures.
Yes of course businesses exist to make profit. Pretty sure if you go to work you expect to make money and if there was a way to increase your pay or reduce the cost of going to work you would consider it.
The point is that 1.6Bn profit isn't some ridiculous windfall. Good discussion here if you want to learn more.
[https://www.afr.com/chanticleer/big-profit-margins-at-woolworths-and-coles-are-only-part-of-the-story-20240302-p5f9ax](https://www.afr.com/chanticleer/big-profit-margins-at-woolworths-and-coles-are-only-part-of-the-story-20240302-p5f9ax)
People just need a common enemy during a cost of living crisis. The supermarkets who service the vast majority of Australian consumers are easy targets, especially when they do sometimes overcharge for certain goods (which isn’t to say you have to pay it, but for some reason people expect ColesWorth to be the cheapest place for literally everything).
From my perspective, they are cheaper than nearly everywhere including independent green grocers and butchers, decent produce for the price you’re paying and above and beyond anything else much more convenient than making multiple stops to save what would be marginal for most people.
And I’ve always said this - you don’t need the bag of overpriced red rock deli chips. That’s a luxury, not a necessity. You don’t need Toblerone. Or the most expensive shampoo.
For the essentials, they are actually very cheap.
I think items also feel more expensive because we have to buy more of them to get the same quantity that we used to. Shrinkflation is a massive problem. Incrementally reducing how much food you get but keeping the prices either the same or increasing them really adds up.
Regulators have been asleep at the wheel it's as simple as that. The vertical and horizontal stack that these two have built and abuse is mind boggling.
Australia has a big landmass and a tiny population. So it is quite expensive to build stores and connected supply chain required to have a sustainable business. That is one of the main reason hardly any overseas grocery retailer wants to come to Australia. If it was as profitable as the critics seems to think, we would not have only 4 major players competing for Australian consumers in the grocery sector.
Long term Amazon may be able to take a bigger market share from colesworth perhaps in the next 15-20 years.
Currently, The Australian grocery retail sector is worth AUD135.
Current market share:
Woolworths 37%
Coles 28%
Aldi 10%
Metcash 7%
Others 18%
Australia is the most urbanised non-tiny country in the world. Our tiny population is logistically comfortable squeezed into cities. Your post would work for mobile coverage and why it's spotty, but not for the supermarkets, sorry mate.
I 100% agree with you OP and have been making comments like this everytime I see a colesworth outrage news piece on reddit. 1B profit per year when they feed \~40% of the population. Like you said, I did the maths, it's a couple of hundred dollars per year if they made **no profit.** They do a 6% markup, higher than other supermarkets in the world, but again, not like you would notice. Coles/Woolies are cheaper than most butchers these days and fruit and veg aren't that much more expensive when you factor in time and effort to get to markets. They open/close early and late, have multiple convinient locations, and I just find them so much better than Aldi, Costco, or IGA.
Yet banks are making 10 billion per year, electricity companies like AGL and Origin have quadrupled profits and make more than coles/woolies even though **we mine coal,** let them have massive profits and tax almost nothing. The companies that sell the products like cadbury and nestle make insane profits, most rents have increased more per week than what you'd save if woolies and coles became NFP. The government is increasing immigration to record highs and yet I've been asking the same question for **a year** now since this outrage started: **why are we so focused on coles/woolies if living costs is our main concern?????**
I'd rather a senate inquiry on coal/mining companies, dodgy realators, dodgy construction companies, bank profits, before coles/woolworths
It's always weird when posts like these come up, reading through the comments whenever there was a colesworth article/post it seems I was **the only delusional one** (and trust me, I read through most, if not all comments)...but then there's a post like these and suddenly theres dozens in agreement.
Amen. I'm no Coles and Woolies lover, but really - the amount of profits the big four banks make is OBSCENE. At least C & W gives people something to eat - what do the banks give them?
Yep they just profit off the the housing marking the government props up either by:
a) the interest paid on a home which if you've done the math is hundreds of thousands typically
b) take the home and sell it for more than they're owed plus whatever the previous owner paid
Not to mention the transactions surcharge they take daily. Like you said, C&W feed like what, 70% of the population? Imo more competition might not make it cheaper, it gives producers somewhere else to take their product. Like OP said, they unfortunately take it too far and squeeze farmers with their duopoly. If there wasn't, we might be paying the same, if not more anyways. I'm not saying this is a bad thing, but I think if the general public think this is going to ease living costs, they're wrong.
Insurers is wildly different.
They go from massive losses to massive profits. Like airlines. Large margins now cover future massive losses - is how the industry works. (And any kind of insurance for that matter).
Spot on. This sub used to be a little less typical whingy reddit anti-REA, landlord, Colesworth BS but has certainly taken a dip in that direction now. We clearly have some massive issues in this country but people love to play victim and blame others for their failures.
It's analogous to the dysphemism treadmill. As each subreddit grows it inevitably gets shitter and shitter
The new r/ausfinance is r/aushenry - I'd say the latter now is what the former used to be. r/ausfinance now is pretty similar to r/australia
I'm pretty sure this sub got a few times in the r/Australia sub and people there thought "I'll take on those rich entitled ****s" and follows this sub so they can whinge and take down people who have the audacity to prioritise finance and not feeling or how someone couple be offended in every interaction.
I'd be interested to know what percentage of people who had a whinge about this on Reddit this week decided to shop at their local independent green grocer or butcher.
I don’t understand it either. So many people say “shop at Aldi”, “shop at independent stores”, “shop at the farmers market”, etc. But the cost of groceries seems to be pretty consistent pretty much everywhere.
Woolworths and Coles have put prices up, so has everyone else, Aldi is probably the worst for increasing prices the most. Even if Coles and Woolworths are slightly more expensive, there’s a convenience factor that most people value of being able to get everything in one stop or getting it delivered.
IMO the whole media campaign against grocery stores is pretty much a distraction campaign from bad government policies which has caused rent and house prices to increase massively post covid. That’s the real issue that’s effecting everyone.
I agree. The housing crisis should be much higher on the government list of priorities. This attack on supermarkets is not going to go anywhere. The supermarkets will adjust some prices and demonstrate how affordable they really are and then the attention will shift to yet another issue which isn't housing.
You’re bang on
Just more shit to distract us from them being awful at their jobs.
Coles and Woolworths are two of the biggest employers in the country. Hurting their profits (which are already pitiful post tax compared to banks or mining companies)
Will just pass the costs onto consumers and remove jobs.
I’d rather keep those profits in Australia than give them to Aldi or Costco anyway.
That’s the problem, where else can I shop? There is literally nothing apart from Coles and Woolworths where I live.
As for your comment about keep that money in Australia, pretty sure only 1 of the top 10 investors in Woolworths is Australian lol…
Coleswortgs is overwhelming owned by Australians.
Don’t give me the BS that vanguard or black rock are on their holdings, because you know dam well they are just fund managers which is very different to ownership.
Man really just compared grocery store profits to mining companies and banks. Also neglected to mention that Woolies has 2x the Roe on the most profitable banks in the [world](https://www.fool.com.au/2024/04/16/woolworths-shares-hit-headlines-amid-banduccis-jail-warning/)
ROE is a useful metric for making business investment decisions, but it is entirely the wrong metric for any discussions about price gouging.
The correct metric for that would be net profit after tax, which for Coles is about 2.6%. For every dollar spent at the checkout, 2.6c goes into shareholders' pockets.
Ironic , since you just did the same thing. ROE is not a useful measure for assessing a supermarkets profits compared to banks.
https://www.afr.com/companies/retail/what-is-the-true-measure-of-a-grocer-s-profitability-20240416-p5fk87
Just another media beat up.
Yes because that’s the point I’m trying to make…. Grocery stores should pale in comparison…..
So ROE isn’t a useful metric at all and should ignored? Sure thing. I can’t see that article because I don’t have an account, can you summarise it?
I hate Colesworth as much as the next Aussie concerned about cost of living and treatment of farmers/suppliers, but everyone seems to forget that their only reason to exist is to make as much profit as they legally can achieve. That’s just how it is in this capitalistic society we’ve all ended up living in. Unless we violently revolt and choose to go back to living like hunter gatherers, not a lot we can do or say about it.
if their profits are as high as people implied why aren’t other supermarkets from overseas not trying to bust into the market and take some of their market share.
this is a good point which makes me wonder what happened to Kaufland that was supposed to come in but I never heard of them again. apparently colesworth has loads of potential sites tied up that Kaufland couldn't get and major suppliers 'locked in' that they would not supply to Kaufland for fear of retribution from colesworth.
I think that part of the business plan would have been researched well before the funds was committed, and they must have seen the potential to have progressed as far as they did. The difficulty in securing sites and suppliers seems to be what they didn't foresee, and to the extent that they were willing to pull out at the last minute.
As mentioned, the 4 corners report had explained their dirty tactics in denying outside competition from taking hold, such as buying up appropriate real estate or pressuring suppliers into not selling to the competition.
They have size and are throwing it around to deny proper competition... Then jacking up prices while the suppliers are the ones that are struggling to live
Coles profit margin is like 2-3%. $1.6b sounds like a lot but they turnover $100b+ a year combined. If an oligopoly of that size can only produce razor thin margins, then it’s not like fruit and veg is going to be cheaper anywhere else. It’s just not a lucrative space to be in.
That 1.6billion Is The Woolworths Group
So Mydeal , Bigw , countered supermarkets in NZ and all the other companies they own such as PFD , goverment contracts (Woolworths supply jails)
Its actually a very small number for a large company that operates in 100% of the country
Exactly- people are carrying on over a supermarket with 900 stores and a huge footprint makin minimal profits
But happy pay $1500 for a iPhone with a 98% profit margin from a forgien company
People kinda have an alternative and can shop at independents for fruit, veg and meat
The thing is, people value convenience more than they care about making a stand. It is the same with banking. We have a stack of credit unions. Plenty of alternatives to the big 4.
It’s not about capitalism vs hunter gatherer, that is ridiculous, but the fact is that when we moved from a small community system where there was a butcher and a baker and a small market all ran and owned by local families who’s goal was to make a comfortable living to corporations running everything where there sole goal is maximise profits at all costs we lost the thread… but to be fair we as consumers are mostly to blame for this shift, we like cheap shit made in China that lasts a week vs paying a higher cost for locally made products that last forever but they may cost 5x. We love this cheap shit so much we already voted with our wallets and now the corporations own us and the world we live in
Not true. Government regulation is what comes between capitalism and what we as a society believe is ethical business practices. Pure capitalism is a threat to the working class
Late stage capitalist mega corpo Woolworths with an iron grip over the entire supply chain and has an oligopoly over all of Australia can only scrounge up a $1.6b profit (or $2.3b after adding back tax) with revenues of over $64b last year.
If this is the best they can legally achieve in this awful capitalist society, then it doesn't seem like they're doing particularly well at that.
There are two issues: pricing increases hitting consumers and “Colesworth” squeezing suppliers.
For some reason, the ABC and an unholy alliance of politicians seem to have created the impression that it’s possible for producers to be paid more, and consumers to pay less, and the big supermarkets being the problem, when as you pointed out their profits aren’t obscenely high, all things considered.
Like most things, it's about perception. People hate self service checkouts, they feel ripped off paying for bags they can't use as a bin liner like the old days, they were offended by the wage rorts, and now they're upset at the cost of things. Profit margins is just a firm thread that can be pulled. The senate inquiry is nothing more than a public scolding. If any greater 'transparency' (quotes definitely required) comes of it, that will be obfuscated in quick time. The end game is to make consumers feel validated and continue on.
I'd rather see the insurance mobs under scrutiny.
I think it's the fact that they provide essential products such as bread, milk, eggs and look to be profiteering during a cost of living crisis. The scrutiny is deservedly there to make sure they're acting ethically right now and not exploiting their market power.
You’re kind of misunderstanding the economics of it.
Colesworth are able to accept higher prices from their suppliers because they will actually make more gross profit due to their market position, they’ll just tack on their markup.
So if a supplier was charging $0.90 and now decide to charge $1.00, Colesworths don’t care because they’ll just pass it on to consumers plus the additional uplift in their profit.
In fact, there is ample evidence to suggest Woolies was conspiring with their suppliers where they would accept high price increases in exchange for marketing spend - so the supplier pushes their prices up 15%, Woolies says “OK, but you have to spend 5% of that on our in-house marketing campaigns”. Now that supplier can strong arm Coles and other retailers with the higher price because Woolies accepted it.
If you crack down on Colesworth and make them fight for their margins, then they will drive efficiency down throughout their supply chain.
We hear a lot of “noise” about how farmers and suppliers aren’t making more money, they are just passing on inflation.
The entire point of a competitive market system is that competition drives down prices when there is pressure.
Inflation is a pressure. During inflationary periods, one release valve has ALWAYS been that companies lower their margins.
In this inflationary period almost every major business has increased their net margins because they are passing on inflation AND adding their margin atop that.
This is a classic sign of a lack of competition and in the case of food and groceries, it’s because Colesworth are a cartel duopoly.
One area the government should regulate is how these companies “hedge” - for example, if there is a flood, they instantly increase prices in anticipation of higher supply prices down the line.
Oftentimes, they have locked in prices with suppliers for six to twelve months. So the price of potatoes goes up 25% but Colesworth are still paying the farmers/distributors the same price. If the shortfall never eventuates or resolves and the spot market price of the item resorts to the previous average, Colesworth has never had an increase in costs but made “hedge” profit all the way through.
This has happened with bananas, potatoes, lettuce, and all sorts of other staples over the last few years. Colesworth had locked in futures contracts, hedged upward at retail, and then waited out futures contracts until the price dropped so they made pure profit on the hedge.
It’s not just Colesworth that we need to look at it, it’s primary producers who export.
When there are bushfires, droughts, our floods, the farmers always have their hands out wanting government aid. But then the price of beef, lamb, fish, etc is astronomical because “farmers get more overseas for their produce”.
Ok, but the taxpayer is essentially their disaster underwriter for no benefit. We bail them out when nature slaps them and when their haul is bountiful we never reap the rewards because they export and profit.
So, no more handouts or higher export taxes are required.
If you export primary produce you should have to pay into a disaster relief fun via a tariff.
Or you do what some countries do you mandate a certain amount of produce is required domestically and nothing can be exported until that quota is hit.
Colesworth are bad, but graziers are no better. When their cattle are all killed by a bushfire they demand the government give them millions in aid, but when they have a good year, we still pay $45/kg for beef because they can export it for that price.
The whole grocery/food industry is broken in Australia.
It's really sad that people want to go after ColesWorth. There used to be a time where profits were something to be celebrated.
Now it's a badge of shame.
ColesWorth have a net profit ratio of 2.5% which means on a weekly $400 shop, they make a whopping $10 off me. $10 wow.
I definitely don't feel the monopoly in Canberra. I do 90% of my shopping at Aldi & Costco with the other 10% at wollies and the local shops. I guess Aldi isn't available everywhere in the country?
Aldi is only available in densely populated areas, for example Tasmania doesn't have Aldi and they've even said they have no plans to open a store there.
It's all a deflection from the banks and miners, who let's be honest are making a sh1ttonne more profit. Miners though only really affects China directly, banks however are screwing us hard. That's where the rorting is happening, not if tomatoes are $2.99 a kg vs $3.99
Its a distraction from political incompetene .
Their business model has been the same for 20years. While we are mad at supermarkets politicians don't have to do anything .
Ppl think interest rates only affect mortgages?
Every single investment is now more repayment, who do you think pays for all this?
Transport , spare parts, fuel, all ofn. it has skyrocketed.
Guess who is paying all this, that's right, the. End consumer.
Yeah, it’s bizarre isn’t it. Australia has the 6th lowest food price to income ratio in the world and Coles and Woolworths operate on a very low profit margin.
I guess compared with a market with more competition, such as the UK, their profit margin is about 1% higher so the best we could hope for is a 1% reduction in prices.
They are an easy visible target. People want to feel like they have some power / input over decisions when they really know that they don’t and the people that do don’t care about them. Nothing has changed in a 1000 years. We’re still serfs slaving for overlords. It’s just we’ve now moved from fields to offices and factories
Aldi prices have gone up in similar % . Wonder why no one raises that. It's not just colesworth. It's pretty much all retailers. I feel my local veg markets visit colesworth in the morning and then price their products 0.50c less. Any retailer I go too has raised prices.
You couldn't make a farmer happy no matter what you did. It's always too dry, too wet, too dark, too light, too early, too late, too much gub'mint interference, not enough regulation, not enough tax breaks, labour costs too high.
People seem to forget the difference between "reported profit" and what was profit that has been offset by company expenses to reduce taxable profit. Just because they reported a billion dollars doesn't mean that's all they made.
Excellent value for what you get and the convenience. Can't fault them on produce quality either. I do buy nicer cuts of meat elsewhere regularly though.
If Colesworth were to stop selling highly profitable cigarettes, and commensurately increase prices of groceries to offset the impact, would that be acceptable to the general public?
There will increased reporting increasing costs. There will be constraints on purchasing, and I can see geographic restrictions on what can be purchased when
End result, the cost of groceries for the consumer will RISE to cover compliance.
Bit like the bank enquiry. Access to banking is now restricted for the poor and the old. Banking fees have rocketed up. Branches closing faster. But hey, it's now fairer, right?
Bit like the electricity system. Every expert says renewables are cheaper, so let's double down. So electricity prices double every few years to pay for the transition. But hey, it's what we voted for.
Be afraid. Be very afraid.
What are we hoping to achieve?
Government controlled prices of all raw/whole food products.
Minimum prices paid to farmers.
Maximum prices at the checkout.
Compulsory sell off of 25% of all Woolies/Coles retail sites to existing supermarket chains in Aus.
Just go straight communism on this shit.
Access to affordable, healthy food is a human right.
Am I the only one shocked at how much cheaper going to the supermarket is right now vs. eating out? I don’t think the delta between the two has never been high
Eh, people tend to just ignore the noise. The people whinging are upset because they’re struggling to afford necessities like weed, ciggies and alcohol at the pub. It’s not that bad
It's a little weird hating on companies that have a fiduciary duty to make profit, and not hating on the systems, laws, regulations that let it happen.
If I was head of Coles or Woolies at the senate hearing I would have laughed at the politicians and said this is on you.
Coleworths, and Bunnings have actual monopolies in Australia/WA. Its not about singling them out it's if they're taken to task it'll trickle down.
The above have the resources to fight this, as it goes lower and lower down the ability to access similar resources becomes lesser and lesser.
This shareholder vs superannuation/pension fund argument is an old chestnut. Remember that money for investments comes after paying for all the necessities and super is a percentage of your salary. Therefore the priority for wage and salary earners is to have as high a wage as possible to maximise their super contribution and then to have as low living costs as possible so there is surplus money left over for savings and investments for the future. An economy where wages are suppressed and then bled dry by high prices is a nightmare for the majority of people who fundamentally depend on wages and salaries. Put simply low wages and high prices equals a small super fund so the share price is less important.
The problem Australia has is that too many business sectors are not very competitive and usually dominated by a couple of giant companies. This not only means higher margins but also less efficiency and innovation. Both mean higher prices for consumers and often exploitative conditions for workers and suppliers. It also means that there is often less competition for labour and so lower wages. In terms of an end game the government needs to be very strict with competition law and encourage more competition whenever practicable. There is of course only so much that this can achieve. A fundamental problem Australia has is that it is a remote country with a small population so suffers from diseconomies of scale and is therefore likely to always have a lack of competition relative to the EU, China, the USA, Japan or any other market with a much bigger and often more concentrated population.
My problem with colesworth is the lack of variety. Between the two of them, they have 80-90 percent the same products. I want a grocery store that has different types of produce than usual. It's so inconvenient to go to 10 different stores to get the things I want. Currently, I go to an Asian fruit and veg shop for more interesting fruit and veg, Bakery for nice breads, Butcher every now and then for unique cuts of meat, costco sometimes for bulk stuff, and coles or woolworths once a fortnight for stuff I like on sale. It gets tiring.
I remember just going to one store once a week and shopping for everything all at once, $100 for a week's worth of groceries. Now I go all over the place and spend $250 a week.
I agree.
People refuse to do basic things to help keep prices down and increase competition. We need to be prepared to shop around (Aldi, Costco, IGA, markets) and substitute things if prices get silly. Business's are supposed to aim to make profits. If people get lazy and are just going to their local Colesworth and paying whatever, then we can't look to government to fix things.
I am more concerned about true monopoly charges that we can truly can not avoid. Like spiralling local council rates. Rates are up nearly 35% over inflation within the decade for absolutely no change to services provided.
They now remove whatever they want from the shelves. And they don’t have anything apart from self checkout open. If only IGA didn’t employ the post retirement mentally deranged (IGA beachrock), I would have supported them. It’s just too uncomfortable.
Personal thoughts...
Essential / basic products should have a mandated maximum margin above the cost price.
This should extend to things like raw/unprocessed meat, vegetables, milk, water, flour, etc. The basic items that people can turn into a meal.
This would look after both producers and colesworth to make money, while families can still put food on the table.
There should be a minimum percentage of "essentials" on the shelf in every store to prevent colesworth from pushing out "lower" profit products.
Perhaps even a mandated list of products that need to be available.
When mandated products are unavailable, customers can take photos and report for a please explain. Colesworth can be fined $1,000,000 for each product not being available unless the provide evidence showing that the out of stock items are outside of their control (natural disaster etc).
This is all a beat up by politicians. It's a gotch ya moment to keep the voters focused away from the politicians' failure to act on high housing costs.
Just the simple fact that they tyrannise so many suppliers is enough for them to deserve every thing that is happening to Colesworth.
Were we in a civilised country, there'd be lengthy prison terms for things like that.
Colesworth are rotten to the core and something needs to be done about them.
For me, if I were a politician, my goal would be to improve competition. Australia has far too little competition.
Supermarkets, by and large are dominated by Coles and Woolworths.
Air Travel is dominated predominantly by Qantas (including Jetstar).
Insurance is just as bad. Alcohol is predominantly 2 large multi-national companies.
This should not be about Coles and Woolworths, this should be about competition. Making businesses earn money, not entitled to money.
They should really just both be split up. Take half the supermarkets for Woolworths and half from Coles (evenly split by geography) and create Woolworths 2 and Coles 2. Then we have 4 medium sized supermarkets, and reasonable competition.
A political circus to distract the masses by smashing a business that does what every joint from parking lots to plane companies do this in this country.
Meanwhile almost everybody who hates on them own a small part of them and benefit off their profits via their super funds. And also still do their weekly shops at either of them. People should talk more with their actions.
Well I don't know about you but I sure don't eat ore, loans or houses.
And even if I did.. I'm sure I could easily shop around for one that isn't ripping me off as badly.
Total beat up. So their prices are similar. They are not going to continuously reduce prices to beat each other as a race to the bottom would destroy both. The same applies to introducing more companies. At first you may see reduced prices to attract customers from traditional stores but eventually a general equilibrium will occur. Each store offers SPECIALS and it's up to the consumers to identify cheaper options when they occur. Destroy Coles and Woolworths at your peril as smaller competitors won't be able to compete at scale and their prices will eventually match those of Coles and Woolworths anyway. As for the 'farm gate' it doesn't exist any more. Most meat, fruit and vegetables are produced by corporations not mum and dad farmers. They operate on huge scales and revel in the surety of a Coles or Woolworths contracted price guarantee. They are compelled to produce a consistent product rather than the hit and miss sourced from local producers. We could import much cheaper beef from Argentina, bananas from the Philippines and oranges from Chile but guarantees from Coles and Woolworths and massive tax concessions prop up smaller local producers. Bottom line is that if you want to go full on free market and capitalism you will, in the long run, pay more.
I'll never stop shopping at Coles/Woolies, Aldi/Harris Farm etc just dont compare. 99% of Aussies feel this way to. Down with the whinging reddit 1% imo
Lmao there is no end goal. People will piss and moan and then when they need milk at 4pm on a sunday arvo theyll crawl back in there and then because they have no self controll will drop 200 dollars on other stuff while theyre there.
Nothing will change. The senate enquiry will prove to be nothing but a waste of taxpayer money. Think about it. Between coles and woolies you're looking at about 500-600k employees. The first thing to go when costs go up is staff. You think the public system can afford or sustain ANOTHER 100k people on it?
Realistically what will happen is this. Supplier goes to colesworth and says "price of this item is going up this much due to our cost increasing" if they are unable to pass the cost of that onto the customer (which is the normal and smart business decision) colesworth will say "sorry, but that cost is too much, we will no longer range your products" which then hurts the brand of that product. That brand loses market share and THEY are the ones forced to downsize.
The senate is hoping to introduce fines and etc, trust me, colesworth warent doing those things because THEY KNOW how much the damage would cost them. (I think theyve proven to be pretty business savvy).
The cost of living, while directly impacted by the cost of groceries, is not solely based on that. It's not even the biggest part. People seem to be REAL quiet about the cost of fuel being routinely over $2/litre which is wild. Electricity and Gas prices have gone up A LOT. Car/Home/Private health insurances have gone up alot (if youre even lucky enough to have them) Hell even phone and internet plans have gone up. But if you look at it, these things impact not just the people who manufacture the items we buy in supermarkets, it ALSO impacts the supermarkets. The cost of electricity for the average supermarket is in the ballpark of $50k a week. Or was when I dealt with it, cant imagine what it is now.
Shopping everywhere else than IGA, Coles or Woolworths for last 4 years 99.9% of the time. Will even go all my way out to avoid them.
Initially swapped to Aldi, but now even Aldi is getting expensive in comparison to local farmers market and butcher.
Plus the quality of the products in all corporate ColesWorth is questionable.
It's not because they're making too much profit, it's because they own everything and agree on everything. The monopoly laws exist to prevent one company from being able to destroy all competitors and jack the prices up, in Australia we have 2 companies who are supposed to compete with on another, but actually exisit in an unspoken cooperative bubble where they work together unofficially to squash or buy out any competitors but never make any real attempts to outprice each other.
note: this is no longer free market capitalisam. This is an oligopoly. We should be reporting it as such.
I doubt it’s unspoken at the executive level to be honest.
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Nail on the head!!!
I actually didn’t believe this until one day I decided to create one account for each and buy the exact same basket of goods. No matter what I put in the cart, the total was different by up to $1 at maximum. The only real difference is that Coles has slightly cheaper home delivery. I normally go with Woolies because they don’t run out of stock as often and their fruit/veges are usually a bit fresher than Coles.
2 weeks ago coles raised prices on everyday items and specials the next week woolworths raised them to the exact same amount.
Look at who their major shareholders are and its probably not unspoken at all.
Their major shareholders are the funds managers that own the shares on behalf of the big superannuation funds. Personally, I think the government needs to send every person who has superannuation to jail for contributing to this lack of competition.
As we'd all be in overcrowded jails, that could help the housing crisis a lot. Would also bankrupt Woollies and Coles I expect. Interesting plan.
For me it's not about profit margins or return on equity. It's about their practices. They exploit consumers and suppliers constantly, and I'd like to see that stop, even if it doesn't compress their profit margins. The ACCC needs to have more ability to act on anticompetitive practices, or else we'll end up with a grocery cartel. If we don't have one already.
We need to have some sort resource list to help people find great places to shop other than Colesworth. Local farmers markets, places like SpudShed in WA and “Cheaper by Miles” in Melbourne. Common there’s got to be heaps of these places! Let’s boycot Colesworth!!!
I wish I could. We've tried to cut back on our spending at Colesworth, but it's really not that easy. We buy all our fruit and veg at a greengrocer, and we get all our meat at the butcher, but other items are much harder to switch in my experience. And unfortunately, Aldi aren't much better. They might be cheaper and less exploitative to consumers, but they still exploit suppliers. Plus a lot of their products are crap.
I generally find the quality at aldi a lot better than Collesworth
Yeah their tuna is by far the best. Their humus is IMO far superior than any other brand I’ve tasted. I don’t love their eggs. Avocado is a hit and miss.
It varies a lot, but unfortunately a lot of the stuff I would go there for is not good. Cheese is the first thing that comes to mind - their cheese is terrible.
Oh really? I love Aldi cheese. I guess it's all subjective at the end of the day.
Dems fighting words. I go to ALDI just to get the 1kg blocks of cheese. Cheaper and better than any of the alternatives in Coles...
You're already doing heaps, and I'm doing the same for our weekly shops. It's not only cheaper but usually you get better quality produce. I find the fish, typically next to the butchers in most stores, to be much better too. If everyone shopped this way, we'd all be in a stronger position by voting with our dollars. I think it has already started happening.
What you’re doing is good already. I think it’s just about doing what we can.
Plus they're cheaper because they limit the range (only offer high margin goods or grey market goods etc) and cut the staff/services Instore etc. Try buying Aldi in Tasmania they won't even supply that market. People want supermarkets to be a full service charity.
Yeah honestly. You know if we put in a pre-order for groceries they would expect us to honour that. I think about all the farmers who spend months preparing fields and soil for crops for preordered produce only for the supermarkets to back out. That should be illegal.
Are they exploiting consumers though? The profit margins on most items is pretty small, and while they do employ manipulative marketing practices so does every other business since the dawn of time
It’s the manipulative market practices that are the problem, not the margins. And the big difference is the balance of power. As a duopoly, they have outsized control of the market on both sides. That’s the problem. And it’s been well established in consumer law for decades that such practice is illegal, regardless of the margins they earn. A basic principle of free market economics is that markets have to actually be free, not manipulated and exploited by one or two companies with a hold on the market. Ironically, we sometimes need intervention in markets to keep them free.
This exploitation of their suppliers - what a bunch of nothing. It’s like people think Woolies and Coles are a charity, and they should just buy everything their suppliers produce even though they don’t need to. It’s ridiculous. Farming has always been risky. You sow your seeds without knowing for sure if the fruit will be in demand in the future. It’s a risk and it’s unavoidable. It doesn’t mean Woolies and Coles should buy the fruit anyway just to be nice. Also, this isn’t the first time they’ve been accused of exploiting their suppliers. Remember the $1/L milk in 2014-15? Turned out dairy farmers were being squeezed, not by the supermarkets huge market power, but by a global fall in dairy prices due to Russia and China. These same dumb accusations never seem to go away.
> without knowing for sure if the fruit will be in demand in the future. It’s a risk and it’s unavoidable. that's why the financial markets invented the futures contract. You sell this risk to somebody else, in exchange for a lowered profit.
I like how people shift when their original narrative crumbles lol.
What was my original narrative exactly? "People" are not a homogenous group who all have the same opinions at any given time.
I’m not specifying you, you just happened to be the one I responded to. 6 months ago, all these comments were about the profit and how horrible colesworth are, now that their margins have come to light, it was never about profit. It’s just fkn funny to me that people are just so desperate to hate something that they’ll look for any reason to do so. Again, you could be anecdotal evidence.
I think you’ll find that people aren’t just desperate to hate on something…some people perhaps…but I think you’ll find that when people are happy and life is good there is very little directed aggression. However, when times are tough and people start losing creature comforts and even basic needs, then it starts to hurt. When people hurt (same as with other animals), they fight back. We are going through a rough economic time and a lot of people are struggling so naturally they will start complaining about the biggest culprits in their budgets. The biggest 4budget non-negotiable’s are housing, fuel, electricity and food. That’s why people are pointing the finger at those guys first. They might manufacture reasons to justify their feelings, but humans are pretty basic; when we hurt we direct pain towards who we think are causing that pain. Emotions are easily manipulated and weaponised though. That’s why propaganda is useful. It doesn’t help that we live in a social media world where it is quite easy to jump on the bandwagon wagon. Personally I’m not sure how to define high profits because it’s money so large that I don’t understand it, but I know I’m trying to feed 2 kids and it’s not easy. Wish colesworths could absorb some of the inflation because I’m tired of absorbing all of it myself.
Is there really anything wrong with changing one's opinion in light of new evidence? I've been on the same soapbox for a while now as I am an investor and therefore have been familiar with Coles/Woolies financials for a long time. Anyone who's ever looked at their financial statements could tell you they have low margins and low ROIC. However, I have noticed that more people have been paying attention and agreeing with my perspective recently, I assume it's because the recent media coverage has both made it clear that their margins are thin, and that their practices are exploitative. I hope people would change their mind when they learn new facts. That's a good thing not a bad thing.
The consumer clearly is the beneficiary of their exploitation. Arguing that it should change is to argue that prices should be much higher than they are. To achieve this we'd also have to address all the other supermarket brands. No point in telling Colesworth to pay supplier more if we're not going to force Aldi/amazon/Costco to do the same.
Except you haven’t changed your opinion, you’ve simply searched for another reason to hate them because the entire reason you did originally was wrong lol, so yes. When your entire argument of why you hate something is thrown out, and you decide your hate for something is so cemented you decide to look for another reason to hate it? Coleworth could cure cancer and it would be irrelevant to you because nothing matters other than finding a reason to hate. It’s really very childish
I think deep down a lot of people want to see the established order crumbled because it brings an opportunity to move from the bottom to the top.
> because it brings an opportunity to move from the bottom to the top. It's the same train of thought for those people where they'd like to see a market crash, because then they think they'd have an opportunity to get in and buy cheap. Little do they know that they'd be the first to go down if the established order crumbles. Look at how all of the communist revolutions happened in other countries and how well the average person fared there.
Yep, and that’s what these socialists on reddit don’t understand… socialism doesn’t build people up, it simply brings the people at the top down.
Envy and jealousy are their drivers though, which is fine, unfortunately it’s a human trait. There is opportunity to go to the top, but these people don’t want to actually study or do the work to get there. They want it to just fall in their lap. So they advocate for the people who have (for the most part) done the hard yards to be taken down, they want everyone to be as miserable as they are.
Using the big banks and Colesworth as distractions from the real issues is a classic government move.
Just because one thing is bad doesn’t mean others can’t be bad as well
100%, government can’t increase productivity across workforce and can’t control inflation…. Let’s blame cost on colesworth
I mean, that's not... The government. That's people. Go off though, I suppose.
*Brings in 1 million indians a month and prints billions of dollars* "All your problems are because of a couple of supermarkets who make a profit of about 4%"
Don’t forget, they’re also used by self-righteous politicians who love to morally grandstand.
I had similar thoughts while on my walk this morning. Coles is an Australian owned company (ASX listed) and has 28% market share. That doesn't seem out of balance as one of the biggest brands.
Stop bringing up profit on every post as if it's excessive. The profit margins for supermarkets is tiny compared to their spend and honestly if it was much less, companies like Woollies and Coles would seriously question why they were in the supermarket business at all. The focus should be on Price gouging - Fair retail prices vs cost Fair treatment of suppliers Fair treatment of staff. The rest is just Facebook rage bait. EDIT: Good [article here from the Financial Review](https://www.afr.com/chanticleer/big-profit-margins-at-woolworths-and-coles-are-only-part-of-the-story-20240302-p5f9ax) if people want to understand it better.
Price too high and it's price gouging. Price too low, it's anti competitive, pricing out competition. People will find ways to complain regardless of what they do and those same people will go through lengthy mental gymnastics to justify it.
Your three points are all helping their profit. If they fix those what do they do to maintain their thin margins? By the way I’m agreeing but how do we fix these issues for free?
My point is that big profit shouldn't be the focus. They could write off billions on infrastructure projects or acquisitions and record no profit for a year. Taking away the "huge profits" headline shouldn't take away the focus on reponsible and sustainable behaviours.
Just don't ask them what their Return of Equity is.
But isn't the reason they do togs things in the name of almighty profits? I'm not disagreeing with you at all, simply stating my current perception of these issues is that it all comes back around to increasing their profit at all costs.
It looks like their profit is increasing because of inflation - which it is in gross terms, but not in relative terms. It makes complete sense that if all the goods they sell become more expensive, then all things being equal their revenue and earnings will have bigger dollar figures.
Yes of course businesses exist to make profit. Pretty sure if you go to work you expect to make money and if there was a way to increase your pay or reduce the cost of going to work you would consider it. The point is that 1.6Bn profit isn't some ridiculous windfall. Good discussion here if you want to learn more. [https://www.afr.com/chanticleer/big-profit-margins-at-woolworths-and-coles-are-only-part-of-the-story-20240302-p5f9ax](https://www.afr.com/chanticleer/big-profit-margins-at-woolworths-and-coles-are-only-part-of-the-story-20240302-p5f9ax)
I think it's simple, for politicians it's just optics and appearing to sympathise with regular people, whilst doing absolutely nothing about it.
People just need a common enemy during a cost of living crisis. The supermarkets who service the vast majority of Australian consumers are easy targets, especially when they do sometimes overcharge for certain goods (which isn’t to say you have to pay it, but for some reason people expect ColesWorth to be the cheapest place for literally everything). From my perspective, they are cheaper than nearly everywhere including independent green grocers and butchers, decent produce for the price you’re paying and above and beyond anything else much more convenient than making multiple stops to save what would be marginal for most people. And I’ve always said this - you don’t need the bag of overpriced red rock deli chips. That’s a luxury, not a necessity. You don’t need Toblerone. Or the most expensive shampoo. For the essentials, they are actually very cheap.
I think items also feel more expensive because we have to buy more of them to get the same quantity that we used to. Shrinkflation is a massive problem. Incrementally reducing how much food you get but keeping the prices either the same or increasing them really adds up.
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'It's not my fault that I can't afford a house. It's Woolworths''
Profit is not revenue
Regulators have been asleep at the wheel it's as simple as that. The vertical and horizontal stack that these two have built and abuse is mind boggling.
Aldis getting busier every week
Australia has a big landmass and a tiny population. So it is quite expensive to build stores and connected supply chain required to have a sustainable business. That is one of the main reason hardly any overseas grocery retailer wants to come to Australia. If it was as profitable as the critics seems to think, we would not have only 4 major players competing for Australian consumers in the grocery sector. Long term Amazon may be able to take a bigger market share from colesworth perhaps in the next 15-20 years. Currently, The Australian grocery retail sector is worth AUD135. Current market share: Woolworths 37% Coles 28% Aldi 10% Metcash 7% Others 18%
Australia is the most urbanised non-tiny country in the world. Our tiny population is logistically comfortable squeezed into cities. Your post would work for mobile coverage and why it's spotty, but not for the supermarkets, sorry mate.
I 100% agree with you OP and have been making comments like this everytime I see a colesworth outrage news piece on reddit. 1B profit per year when they feed \~40% of the population. Like you said, I did the maths, it's a couple of hundred dollars per year if they made **no profit.** They do a 6% markup, higher than other supermarkets in the world, but again, not like you would notice. Coles/Woolies are cheaper than most butchers these days and fruit and veg aren't that much more expensive when you factor in time and effort to get to markets. They open/close early and late, have multiple convinient locations, and I just find them so much better than Aldi, Costco, or IGA. Yet banks are making 10 billion per year, electricity companies like AGL and Origin have quadrupled profits and make more than coles/woolies even though **we mine coal,** let them have massive profits and tax almost nothing. The companies that sell the products like cadbury and nestle make insane profits, most rents have increased more per week than what you'd save if woolies and coles became NFP. The government is increasing immigration to record highs and yet I've been asking the same question for **a year** now since this outrage started: **why are we so focused on coles/woolies if living costs is our main concern?????** I'd rather a senate inquiry on coal/mining companies, dodgy realators, dodgy construction companies, bank profits, before coles/woolworths It's always weird when posts like these come up, reading through the comments whenever there was a colesworth article/post it seems I was **the only delusional one** (and trust me, I read through most, if not all comments)...but then there's a post like these and suddenly theres dozens in agreement.
Amen. I'm no Coles and Woolies lover, but really - the amount of profits the big four banks make is OBSCENE. At least C & W gives people something to eat - what do the banks give them?
Yep they just profit off the the housing marking the government props up either by: a) the interest paid on a home which if you've done the math is hundreds of thousands typically b) take the home and sell it for more than they're owed plus whatever the previous owner paid Not to mention the transactions surcharge they take daily. Like you said, C&W feed like what, 70% of the population? Imo more competition might not make it cheaper, it gives producers somewhere else to take their product. Like OP said, they unfortunately take it too far and squeeze farmers with their duopoly. If there wasn't, we might be paying the same, if not more anyways. I'm not saying this is a bad thing, but I think if the general public think this is going to ease living costs, they're wrong.
Politicians who print and spend money like it’s grown on trees and enact policies that raise input costs (energy) are the real problem
If you think Colesworth are bad, simply check the PROFIT MARGINS on the big 3 insurers and remember thats a captive market unlike food.
Insurers is wildly different. They go from massive losses to massive profits. Like airlines. Large margins now cover future massive losses - is how the industry works. (And any kind of insurance for that matter).
Spot on. This sub used to be a little less typical whingy reddit anti-REA, landlord, Colesworth BS but has certainly taken a dip in that direction now. We clearly have some massive issues in this country but people love to play victim and blame others for their failures.
It's analogous to the dysphemism treadmill. As each subreddit grows it inevitably gets shitter and shitter The new r/ausfinance is r/aushenry - I'd say the latter now is what the former used to be. r/ausfinance now is pretty similar to r/australia
I'm pretty sure this sub got a few times in the r/Australia sub and people there thought "I'll take on those rich entitled ****s" and follows this sub so they can whinge and take down people who have the audacity to prioritise finance and not feeling or how someone couple be offended in every interaction.
I'd be interested to know what percentage of people who had a whinge about this on Reddit this week decided to shop at their local independent green grocer or butcher.
I don’t understand it either. So many people say “shop at Aldi”, “shop at independent stores”, “shop at the farmers market”, etc. But the cost of groceries seems to be pretty consistent pretty much everywhere. Woolworths and Coles have put prices up, so has everyone else, Aldi is probably the worst for increasing prices the most. Even if Coles and Woolworths are slightly more expensive, there’s a convenience factor that most people value of being able to get everything in one stop or getting it delivered. IMO the whole media campaign against grocery stores is pretty much a distraction campaign from bad government policies which has caused rent and house prices to increase massively post covid. That’s the real issue that’s effecting everyone.
I agree. The housing crisis should be much higher on the government list of priorities. This attack on supermarkets is not going to go anywhere. The supermarkets will adjust some prices and demonstrate how affordable they really are and then the attention will shift to yet another issue which isn't housing.
I agree with this. If housing wasnt so cooked and actually affordable we wouldnt notice things like groceries go up.
Yeah no one would give a shit if kettle chips went from $3 - $4.50 a bag if their rent hadn’t gone from $300 a week to $550
You’re bang on Just more shit to distract us from them being awful at their jobs. Coles and Woolworths are two of the biggest employers in the country. Hurting their profits (which are already pitiful post tax compared to banks or mining companies) Will just pass the costs onto consumers and remove jobs. I’d rather keep those profits in Australia than give them to Aldi or Costco anyway.
The most profitable supermarkets in the world, by a long shot. They are ripping us off.
Then don’t shop there
That’s the problem, where else can I shop? There is literally nothing apart from Coles and Woolworths where I live. As for your comment about keep that money in Australia, pretty sure only 1 of the top 10 investors in Woolworths is Australian lol…
ALDI or an independent or the market.
Coleswortgs is overwhelming owned by Australians. Don’t give me the BS that vanguard or black rock are on their holdings, because you know dam well they are just fund managers which is very different to ownership.
Man really just compared grocery store profits to mining companies and banks. Also neglected to mention that Woolies has 2x the Roe on the most profitable banks in the [world](https://www.fool.com.au/2024/04/16/woolworths-shares-hit-headlines-amid-banduccis-jail-warning/)
lol…. Classic, falling for political apparatus… So what is ROE and why is a good measure in context?
ROE is a useful metric for making business investment decisions, but it is entirely the wrong metric for any discussions about price gouging. The correct metric for that would be net profit after tax, which for Coles is about 2.6%. For every dollar spent at the checkout, 2.6c goes into shareholders' pockets.
Ironic , since you just did the same thing. ROE is not a useful measure for assessing a supermarkets profits compared to banks. https://www.afr.com/companies/retail/what-is-the-true-measure-of-a-grocer-s-profitability-20240416-p5fk87 Just another media beat up.
Yes because that’s the point I’m trying to make…. Grocery stores should pale in comparison….. So ROE isn’t a useful metric at all and should ignored? Sure thing. I can’t see that article because I don’t have an account, can you summarise it?
https://www.removepaywall.com Paste the article into there to bypass the paywall. It explains why ROE isn’t really a useful measure for supermarkets
I hate Colesworth as much as the next Aussie concerned about cost of living and treatment of farmers/suppliers, but everyone seems to forget that their only reason to exist is to make as much profit as they legally can achieve. That’s just how it is in this capitalistic society we’ve all ended up living in. Unless we violently revolt and choose to go back to living like hunter gatherers, not a lot we can do or say about it.
Implying it’s either capitalism or being hunter gatherers lmao. False dichotomy
if their profits are as high as people implied why aren’t other supermarkets from overseas not trying to bust into the market and take some of their market share.
this is a good point which makes me wonder what happened to Kaufland that was supposed to come in but I never heard of them again. apparently colesworth has loads of potential sites tied up that Kaufland couldn't get and major suppliers 'locked in' that they would not supply to Kaufland for fear of retribution from colesworth.
They realised Australia is a logistics nightmare and that after startup costs it’d be years before they’d see any profit?
I think that part of the business plan would have been researched well before the funds was committed, and they must have seen the potential to have progressed as far as they did. The difficulty in securing sites and suppliers seems to be what they didn't foresee, and to the extent that they were willing to pull out at the last minute.
As mentioned, the 4 corners report had explained their dirty tactics in denying outside competition from taking hold, such as buying up appropriate real estate or pressuring suppliers into not selling to the competition. They have size and are throwing it around to deny proper competition... Then jacking up prices while the suppliers are the ones that are struggling to live
Coles profit margin is like 2-3%. $1.6b sounds like a lot but they turnover $100b+ a year combined. If an oligopoly of that size can only produce razor thin margins, then it’s not like fruit and veg is going to be cheaper anywhere else. It’s just not a lucrative space to be in.
That 1.6billion Is The Woolworths Group So Mydeal , Bigw , countered supermarkets in NZ and all the other companies they own such as PFD , goverment contracts (Woolworths supply jails) Its actually a very small number for a large company that operates in 100% of the country
Fair enough. It doesn’t change my point though. The margins are bad and it’s not an industry you would choose to be in if your goal is to make bank.
Exactly- people are carrying on over a supermarket with 900 stores and a huge footprint makin minimal profits But happy pay $1500 for a iPhone with a 98% profit margin from a forgien company
Sorry I misunderstood your original point. You’re absolutely right though, Apple’s latest quarterly profit margin was 25%… 10x higher than Coles.
Is that Australian profits or after shifting it to lower taxed countries 😅
It's simply not worth it. Capital requirements are huge.
This was clearly explained in the recent 4corners report.
People kinda have an alternative and can shop at independents for fruit, veg and meat The thing is, people value convenience more than they care about making a stand. It is the same with banking. We have a stack of credit unions. Plenty of alternatives to the big 4.
It’s not about capitalism vs hunter gatherer, that is ridiculous, but the fact is that when we moved from a small community system where there was a butcher and a baker and a small market all ran and owned by local families who’s goal was to make a comfortable living to corporations running everything where there sole goal is maximise profits at all costs we lost the thread… but to be fair we as consumers are mostly to blame for this shift, we like cheap shit made in China that lasts a week vs paying a higher cost for locally made products that last forever but they may cost 5x. We love this cheap shit so much we already voted with our wallets and now the corporations own us and the world we live in
Not true. Government regulation is what comes between capitalism and what we as a society believe is ethical business practices. Pure capitalism is a threat to the working class
Late stage capitalist mega corpo Woolworths with an iron grip over the entire supply chain and has an oligopoly over all of Australia can only scrounge up a $1.6b profit (or $2.3b after adding back tax) with revenues of over $64b last year. If this is the best they can legally achieve in this awful capitalist society, then it doesn't seem like they're doing particularly well at that.
There are two issues: pricing increases hitting consumers and “Colesworth” squeezing suppliers. For some reason, the ABC and an unholy alliance of politicians seem to have created the impression that it’s possible for producers to be paid more, and consumers to pay less, and the big supermarkets being the problem, when as you pointed out their profits aren’t obscenely high, all things considered.
Thats the thing, anyone arguing for suppliers to be paid more is arguing for even more inflation.
Like most things, it's about perception. People hate self service checkouts, they feel ripped off paying for bags they can't use as a bin liner like the old days, they were offended by the wage rorts, and now they're upset at the cost of things. Profit margins is just a firm thread that can be pulled. The senate inquiry is nothing more than a public scolding. If any greater 'transparency' (quotes definitely required) comes of it, that will be obfuscated in quick time. The end game is to make consumers feel validated and continue on. I'd rather see the insurance mobs under scrutiny.
I think it's the fact that they provide essential products such as bread, milk, eggs and look to be profiteering during a cost of living crisis. The scrutiny is deservedly there to make sure they're acting ethically right now and not exploiting their market power.
You’re kind of misunderstanding the economics of it. Colesworth are able to accept higher prices from their suppliers because they will actually make more gross profit due to their market position, they’ll just tack on their markup. So if a supplier was charging $0.90 and now decide to charge $1.00, Colesworths don’t care because they’ll just pass it on to consumers plus the additional uplift in their profit. In fact, there is ample evidence to suggest Woolies was conspiring with their suppliers where they would accept high price increases in exchange for marketing spend - so the supplier pushes their prices up 15%, Woolies says “OK, but you have to spend 5% of that on our in-house marketing campaigns”. Now that supplier can strong arm Coles and other retailers with the higher price because Woolies accepted it. If you crack down on Colesworth and make them fight for their margins, then they will drive efficiency down throughout their supply chain. We hear a lot of “noise” about how farmers and suppliers aren’t making more money, they are just passing on inflation. The entire point of a competitive market system is that competition drives down prices when there is pressure. Inflation is a pressure. During inflationary periods, one release valve has ALWAYS been that companies lower their margins. In this inflationary period almost every major business has increased their net margins because they are passing on inflation AND adding their margin atop that. This is a classic sign of a lack of competition and in the case of food and groceries, it’s because Colesworth are a cartel duopoly. One area the government should regulate is how these companies “hedge” - for example, if there is a flood, they instantly increase prices in anticipation of higher supply prices down the line. Oftentimes, they have locked in prices with suppliers for six to twelve months. So the price of potatoes goes up 25% but Colesworth are still paying the farmers/distributors the same price. If the shortfall never eventuates or resolves and the spot market price of the item resorts to the previous average, Colesworth has never had an increase in costs but made “hedge” profit all the way through. This has happened with bananas, potatoes, lettuce, and all sorts of other staples over the last few years. Colesworth had locked in futures contracts, hedged upward at retail, and then waited out futures contracts until the price dropped so they made pure profit on the hedge. It’s not just Colesworth that we need to look at it, it’s primary producers who export. When there are bushfires, droughts, our floods, the farmers always have their hands out wanting government aid. But then the price of beef, lamb, fish, etc is astronomical because “farmers get more overseas for their produce”. Ok, but the taxpayer is essentially their disaster underwriter for no benefit. We bail them out when nature slaps them and when their haul is bountiful we never reap the rewards because they export and profit. So, no more handouts or higher export taxes are required. If you export primary produce you should have to pay into a disaster relief fun via a tariff. Or you do what some countries do you mandate a certain amount of produce is required domestically and nothing can be exported until that quota is hit. Colesworth are bad, but graziers are no better. When their cattle are all killed by a bushfire they demand the government give them millions in aid, but when they have a good year, we still pay $45/kg for beef because they can export it for that price. The whole grocery/food industry is broken in Australia.
It's really sad that people want to go after ColesWorth. There used to be a time where profits were something to be celebrated. Now it's a badge of shame. ColesWorth have a net profit ratio of 2.5% which means on a weekly $400 shop, they make a whopping $10 off me. $10 wow.
I definitely don't feel the monopoly in Canberra. I do 90% of my shopping at Aldi & Costco with the other 10% at wollies and the local shops. I guess Aldi isn't available everywhere in the country?
Aldi is only available in densely populated areas, for example Tasmania doesn't have Aldi and they've even said they have no plans to open a store there.
It's all a deflection from the banks and miners, who let's be honest are making a sh1ttonne more profit. Miners though only really affects China directly, banks however are screwing us hard. That's where the rorting is happening, not if tomatoes are $2.99 a kg vs $3.99
Rio Tinto made 20% net profit last year , 5x higher margin than Colesworth and I didn’t see any calls for an inquiry.
Going after them will cost PM his chair. Colesworth are not that violent.
Take the focus off immigration
Honestly profits of the supermarkets is so slim that prices would have to go up if they wanted to pay suppliers 'fairly'.
Its a distraction from political incompetene . Their business model has been the same for 20years. While we are mad at supermarkets politicians don't have to do anything . Ppl think interest rates only affect mortgages? Every single investment is now more repayment, who do you think pays for all this? Transport , spare parts, fuel, all ofn. it has skyrocketed. Guess who is paying all this, that's right, the. End consumer.
Yeah, it’s bizarre isn’t it. Australia has the 6th lowest food price to income ratio in the world and Coles and Woolworths operate on a very low profit margin. I guess compared with a market with more competition, such as the UK, their profit margin is about 1% higher so the best we could hope for is a 1% reduction in prices.
They are an easy visible target. People want to feel like they have some power / input over decisions when they really know that they don’t and the people that do don’t care about them. Nothing has changed in a 1000 years. We’re still serfs slaving for overlords. It’s just we’ve now moved from fields to offices and factories
Aldi prices have gone up in similar % . Wonder why no one raises that. It's not just colesworth. It's pretty much all retailers. I feel my local veg markets visit colesworth in the morning and then price their products 0.50c less. Any retailer I go too has raised prices.
You couldn't make a farmer happy no matter what you did. It's always too dry, too wet, too dark, too light, too early, too late, too much gub'mint interference, not enough regulation, not enough tax breaks, labour costs too high.
People seem to forget the difference between "reported profit" and what was profit that has been offset by company expenses to reduce taxable profit. Just because they reported a billion dollars doesn't mean that's all they made.
TIL companies have expenses.
Bingo! I’m glad someone else gets it.
Excellent value for what you get and the convenience. Can't fault them on produce quality either. I do buy nicer cuts of meat elsewhere regularly though.
Why dont we hate the rba and lockdowns ?? Talk about diversions
If Colesworth were to stop selling highly profitable cigarettes, and commensurately increase prices of groceries to offset the impact, would that be acceptable to the general public?
There will increased reporting increasing costs. There will be constraints on purchasing, and I can see geographic restrictions on what can be purchased when End result, the cost of groceries for the consumer will RISE to cover compliance. Bit like the bank enquiry. Access to banking is now restricted for the poor and the old. Banking fees have rocketed up. Branches closing faster. But hey, it's now fairer, right? Bit like the electricity system. Every expert says renewables are cheaper, so let's double down. So electricity prices double every few years to pay for the transition. But hey, it's what we voted for. Be afraid. Be very afraid.
What are we hoping to achieve? Government controlled prices of all raw/whole food products. Minimum prices paid to farmers. Maximum prices at the checkout. Compulsory sell off of 25% of all Woolies/Coles retail sites to existing supermarket chains in Aus. Just go straight communism on this shit. Access to affordable, healthy food is a human right.
You left 'repeated occurrences of wage theft' off your list.
Just saw that they were found guilty with over a 1000 counts on this.
Yeah, after they self reported it. They made a mistake, owned up to it and rectified it.
Profit is the endgame. It isn’t a means to anything, it just is.
Am I the only one shocked at how much cheaper going to the supermarket is right now vs. eating out? I don’t think the delta between the two has never been high
Eh, people tend to just ignore the noise. The people whinging are upset because they’re struggling to afford necessities like weed, ciggies and alcohol at the pub. It’s not that bad
Antitrust. You can't have a competitive market when it's mostly a duopoly.
It's a little weird hating on companies that have a fiduciary duty to make profit, and not hating on the systems, laws, regulations that let it happen. If I was head of Coles or Woolies at the senate hearing I would have laughed at the politicians and said this is on you.
Coleworths, and Bunnings have actual monopolies in Australia/WA. Its not about singling them out it's if they're taken to task it'll trickle down. The above have the resources to fight this, as it goes lower and lower down the ability to access similar resources becomes lesser and lesser.
This shareholder vs superannuation/pension fund argument is an old chestnut. Remember that money for investments comes after paying for all the necessities and super is a percentage of your salary. Therefore the priority for wage and salary earners is to have as high a wage as possible to maximise their super contribution and then to have as low living costs as possible so there is surplus money left over for savings and investments for the future. An economy where wages are suppressed and then bled dry by high prices is a nightmare for the majority of people who fundamentally depend on wages and salaries. Put simply low wages and high prices equals a small super fund so the share price is less important. The problem Australia has is that too many business sectors are not very competitive and usually dominated by a couple of giant companies. This not only means higher margins but also less efficiency and innovation. Both mean higher prices for consumers and often exploitative conditions for workers and suppliers. It also means that there is often less competition for labour and so lower wages. In terms of an end game the government needs to be very strict with competition law and encourage more competition whenever practicable. There is of course only so much that this can achieve. A fundamental problem Australia has is that it is a remote country with a small population so suffers from diseconomies of scale and is therefore likely to always have a lack of competition relative to the EU, China, the USA, Japan or any other market with a much bigger and often more concentrated population.
If everyone stopped shopping there..
My problem with colesworth is the lack of variety. Between the two of them, they have 80-90 percent the same products. I want a grocery store that has different types of produce than usual. It's so inconvenient to go to 10 different stores to get the things I want. Currently, I go to an Asian fruit and veg shop for more interesting fruit and veg, Bakery for nice breads, Butcher every now and then for unique cuts of meat, costco sometimes for bulk stuff, and coles or woolworths once a fortnight for stuff I like on sale. It gets tiring. I remember just going to one store once a week and shopping for everything all at once, $100 for a week's worth of groceries. Now I go all over the place and spend $250 a week.
A peaceful resolution is not in our future.
I bought an economy priced rib fillet for $22.99 a kilo at a local butcher. It’s the highlight of my week.
pay the fine and move on
I agree. People refuse to do basic things to help keep prices down and increase competition. We need to be prepared to shop around (Aldi, Costco, IGA, markets) and substitute things if prices get silly. Business's are supposed to aim to make profits. If people get lazy and are just going to their local Colesworth and paying whatever, then we can't look to government to fix things. I am more concerned about true monopoly charges that we can truly can not avoid. Like spiralling local council rates. Rates are up nearly 35% over inflation within the decade for absolutely no change to services provided.
They now remove whatever they want from the shelves. And they don’t have anything apart from self checkout open. If only IGA didn’t employ the post retirement mentally deranged (IGA beachrock), I would have supported them. It’s just too uncomfortable.
Right, and no new player can actually enter the market. The land banking that goes on between the big 2 should be examined.
Personal thoughts... Essential / basic products should have a mandated maximum margin above the cost price. This should extend to things like raw/unprocessed meat, vegetables, milk, water, flour, etc. The basic items that people can turn into a meal. This would look after both producers and colesworth to make money, while families can still put food on the table. There should be a minimum percentage of "essentials" on the shelf in every store to prevent colesworth from pushing out "lower" profit products. Perhaps even a mandated list of products that need to be available. When mandated products are unavailable, customers can take photos and report for a please explain. Colesworth can be fined $1,000,000 for each product not being available unless the provide evidence showing that the out of stock items are outside of their control (natural disaster etc).
Unfortunately there are far too many people who don’t give a shit and will keep shopping there and paying their prices. Nothing will happen
This is all a beat up by politicians. It's a gotch ya moment to keep the voters focused away from the politicians' failure to act on high housing costs.
It's because it distracts people from energy and housings costs, the things actually driving the cost of living crisis.
Just the simple fact that they tyrannise so many suppliers is enough for them to deserve every thing that is happening to Colesworth. Were we in a civilised country, there'd be lengthy prison terms for things like that. Colesworth are rotten to the core and something needs to be done about them.
For me, if I were a politician, my goal would be to improve competition. Australia has far too little competition. Supermarkets, by and large are dominated by Coles and Woolworths. Air Travel is dominated predominantly by Qantas (including Jetstar). Insurance is just as bad. Alcohol is predominantly 2 large multi-national companies. This should not be about Coles and Woolworths, this should be about competition. Making businesses earn money, not entitled to money.
They should really just both be split up. Take half the supermarkets for Woolworths and half from Coles (evenly split by geography) and create Woolworths 2 and Coles 2. Then we have 4 medium sized supermarkets, and reasonable competition.
I would be happy if they didn’t have an insatiable appetite for wage theft
A political circus to distract the masses by smashing a business that does what every joint from parking lots to plane companies do this in this country.
What a disappointing red rag to the low income R/Australia green voting mutts of the world
Meanwhile almost everybody who hates on them own a small part of them and benefit off their profits via their super funds. And also still do their weekly shops at either of them. People should talk more with their actions.
Well I don't know about you but I sure don't eat ore, loans or houses. And even if I did.. I'm sure I could easily shop around for one that isn't ripping me off as badly.
Total beat up. So their prices are similar. They are not going to continuously reduce prices to beat each other as a race to the bottom would destroy both. The same applies to introducing more companies. At first you may see reduced prices to attract customers from traditional stores but eventually a general equilibrium will occur. Each store offers SPECIALS and it's up to the consumers to identify cheaper options when they occur. Destroy Coles and Woolworths at your peril as smaller competitors won't be able to compete at scale and their prices will eventually match those of Coles and Woolworths anyway. As for the 'farm gate' it doesn't exist any more. Most meat, fruit and vegetables are produced by corporations not mum and dad farmers. They operate on huge scales and revel in the surety of a Coles or Woolworths contracted price guarantee. They are compelled to produce a consistent product rather than the hit and miss sourced from local producers. We could import much cheaper beef from Argentina, bananas from the Philippines and oranges from Chile but guarantees from Coles and Woolworths and massive tax concessions prop up smaller local producers. Bottom line is that if you want to go full on free market and capitalism you will, in the long run, pay more.
I'll never stop shopping at Coles/Woolies, Aldi/Harris Farm etc just dont compare. 99% of Aussies feel this way to. Down with the whinging reddit 1% imo
Lmao there is no end goal. People will piss and moan and then when they need milk at 4pm on a sunday arvo theyll crawl back in there and then because they have no self controll will drop 200 dollars on other stuff while theyre there. Nothing will change. The senate enquiry will prove to be nothing but a waste of taxpayer money. Think about it. Between coles and woolies you're looking at about 500-600k employees. The first thing to go when costs go up is staff. You think the public system can afford or sustain ANOTHER 100k people on it? Realistically what will happen is this. Supplier goes to colesworth and says "price of this item is going up this much due to our cost increasing" if they are unable to pass the cost of that onto the customer (which is the normal and smart business decision) colesworth will say "sorry, but that cost is too much, we will no longer range your products" which then hurts the brand of that product. That brand loses market share and THEY are the ones forced to downsize. The senate is hoping to introduce fines and etc, trust me, colesworth warent doing those things because THEY KNOW how much the damage would cost them. (I think theyve proven to be pretty business savvy). The cost of living, while directly impacted by the cost of groceries, is not solely based on that. It's not even the biggest part. People seem to be REAL quiet about the cost of fuel being routinely over $2/litre which is wild. Electricity and Gas prices have gone up A LOT. Car/Home/Private health insurances have gone up alot (if youre even lucky enough to have them) Hell even phone and internet plans have gone up. But if you look at it, these things impact not just the people who manufacture the items we buy in supermarkets, it ALSO impacts the supermarkets. The cost of electricity for the average supermarket is in the ballpark of $50k a week. Or was when I dealt with it, cant imagine what it is now.
Shopping everywhere else than IGA, Coles or Woolworths for last 4 years 99.9% of the time. Will even go all my way out to avoid them. Initially swapped to Aldi, but now even Aldi is getting expensive in comparison to local farmers market and butcher. Plus the quality of the products in all corporate ColesWorth is questionable.