(THEME MUSIC PLAYS)
CUSTOMER: Have a go at this.
It's one of the smaller trolleys CUSTOMER: Have a go at this.
It's one of the smaller trolleys too.
This just cost me almost $400.
This is absolute joke.
ANGUS GRIGG: Coles and Woolworths - Australia's big two under fire.
There's no doubt we are paying higher prices than we should.
They've just become bigger and bigger.
MICHAEL CUNIAL: It's like they've got their hand on your throat
MICHAEL CUNIAL: It's like they've and JUST letting you breathe.
Insiders are speaking out.
INDUSTRY INSIDER: If you're not willing to play their game,
INDUSTRY INSIDER: If you're not it's a lot of intimidation.
So, how would you categorise it's a lot of intimidation.
So, how would you categorise a special?
So, how would you categorise Oh...a little bit like a drug.
Their million-dollar CEOs on the defensive.
He says that's the definition of price gouging.
I think I'm done, guys.
Uh...no... You're walking out? Really?
Successive Australian governments
have allowed Coles and Woolworths to increase their market power.
Now we expose the tactics they use to keep prices high and competitors out. have allowed Coles and Woolworths to increase their market power.
Now we expose the tactics they use to keep prices high and competitors out.
First it was the farmers who felt the pinch...
PROTESTER: What do we want?! ..then supermarket workers...
PROTESTERS: Now!
..and finally it's you, the consumer,
being squeezed by this powerful duopoly.
From the city to the suburbs,
in country towns,
they are part of our landscape -
Coles and Woolworths.
We're told they are the 'fresh food people',
We're told the 'home of everyday low prices'.
VOICEOVER: Teenagers...
They are family dinners VOICEOVER: Teenagers...
They are family dinners and back-to-school snacks.
They are family dinners ..eating machines.
Our most trusted brands,
who have always sold themselves
as being firmly who have always sold themselves
as being firmly on the consumer's side.
as being firmly Value the Australian way.
But over the last year this narrative has fractured,
But over the last year and consumers are angry.
CUSTOMER: and consumers are angry.
CUSTOMER: Two packets of chips for $11.
CUSTOMER: I thought, "Maybe it's wrong."
I just spent $46 on making a lasagne, like, lasagne ingredients,
and I already had fucking half the ingredients.
CUSTOMER: Half price. "Was $19."
No, it wasn't. $16.10.
You absolute arseholes.
The Australian supermarket sector is stunningly concentrated.
When you get this much concentration, The Australian supermarket sector is stunningly concentrated.
When you get this much concentration,
When you get you're going to get higher prices.
It's just a straight causal you're going to get higher prices.
It's just a straight causal relationship proved everywhere.
So, I think that's quite clear.
As head of the ACCC, Rod Sims spent 11 years battling the big two.
Competition policy
is a bit like trying to walk up the down escalator.
If you're not really moving forward and pressing ahead,
If you're not really moving forward you're going to go backwards.
And we stopped moving ahead you're going to go backwards.
And we stopped moving ahead 20-odd years ago.
It wasn't always this way.
Coles and Woolworths started out as variety stores.
Coles and Woolworths In the late 1950s,
when they moved into groceries and fresh produce,
there were 21 other retailers vying for customer dollars,
but within just a few years,
with their new self-serve supermarket model,
they had cornered around 20% of the market.
they had cornered And this concentration
already had suppliers, And this concentration
already had suppliers, especially farmers, worried.
ARCHIVE REPORTER: Some of them, of course, are very frightened
that this is being done at the cost of their independence,
that you, in fact, will tell them what to grow and when and how. that this is being done at the cost of their independence,
that you, in fact, will tell them what to grow and when and how.
that you, in fact, will tell them No, that is certainly not the case.
The grower is completely independent.
He is able to deal with us if he chooses and if it suits him.
On the other hand, if you're the only people to deal with,
On the other hand, if you're he hasn't got much choice, has he?
No, that would be true,
but it is most unlikely
that we will ever be the only people to deal with.
By the late 1970s
Coles's and Woolworths's market share By the late 1970s
Coles's and Woolworths's market share had doubled to nearly 40%,
with a rise in shopping malls built around a central supermarket.
Most of this market share
was acquired even before Most of this market share
was acquired even before Australia had competition laws.
They went on to buy out competitors
like Bi-Lo, Safeway, Action and dozens of Franklins stores.
As the new millennium approached,
they'd cemented their position as the purveyors of convenience.
they'd cemented their position A duopoly was born.
We have allowed
these corporations We have allowed
these corporations
turned a blind eye,
over a very long period of time,
almost like boiling the frog over a very long time,
that they've just become bigger and bigger.
Coles and Woolworths now control
65% of the grocery market.
Aldi has just 10%,
with independents like IGA
making up the rest.
That means, on average, for every $10 Australians pay for groceries,
$6.50 of that is spent at Coles and Woolworths
$6.50 of that and just $1 at Aldi.
By contrast, in the UK,
there are five major players vying for a cut of that $10,
and in the US there are multiple supermarket chains in the mix.
Together Coles and Woolworths have almost 2,000 stores across Australia,
Together Coles and Woolworths have generating $84 billion in revenue.
This market power has led to accusations of profiteering,
exploiting suppliers and taking advantage of consumers
at a time when the cost of living is spiralling.
at a time when the cost of living NEWSREADER: As prices rise
the big two supermarkets NEWSREADER: As prices rise
the big two supermarkets have revealed record profits.
NEWSREADER: Coles and Woolworths both reported profits
of more than $1 billion this year
and increased their gross profit margins.
After years of inaction
politicians from all sides are now talking about taking on the duopoly.
When you have this much market power,
you need a big stick over the top of them,
and it's time now.
How're you going, mate? Welcome back.
There are six inquiries and reviews targeting the duopoly.
Today I announced that the treasurer will be directing the ACCC There are six inquiries and reviews targeting the duopoly.
Today I announced that the treasurer will be directing the ACCC
Today I announced that the treasurer to conduct a 12-month price inquiry
into the supermarket industry.
It is time that...
Greens Senator Nick McKim is leading a Senate inquiry
Greens Senator Nick McKim into supermarket pricing.
And it's time that we hauled the CEOs in
and ensured that those CEOs
are called to account for their pricing practices.
are called to account Just watch your head there, Leah.
The CEOs are quick to argue
they're not profiteering at the expense of customers.
Do you think your profits are excessive?
No, I think they are fair in the context of the investment Do you think your profits are excessive?
No, I think they are fair in the context of the investment
that goes into the business every year
and the performance of our team.
When you look at our return on investment,
it's sort of in the middle of the ASX.
So, you know, is the question did we drive profit by jacking up prices?
So, you know, is the question did we The answer is no.
It's really important that businesses like Coles The answer is no.
It's really important that businesses like Coles
are profitable enterprises.
We employ over 120,000 team members,
we support over 8,000 suppliers,
and we also need to invest in the business
to keep it growing over time.
(TRAFFIC DRONES)
ROD SIMS: The evidence over time
is that Coles and Woolworths
had some of the highest margins is that Coles and Woolworths
had some of the highest margins in the world for supermarkets.
Historically, they've been very profitable supermarkets had some of the highest margins in the world for supermarkets.
Historically, they've been very profitable supermarkets
Historically, they've been in comparison to overseas.
Woolworths's latest annual report
shows its cost of doing business was flat,
but its profit margin from selling groceries rose from 5.3% to 6%.
That may sound like a small increase,
but it was worth an extra $318 million in profits
but it was worth last year alone.
There are many things that go and drive the delivery of that result.
It's a lot of hard work and productivity and investment.
It's hard to see how you haven't used the cover of inflation
It's hard to see how you haven't used to drive price increases above that,
and that's what most people to drive price increases above that,
and that's what most people would see as price gouging.
and that's what most people We certainly haven't done it.
I personally have...
I've reviewed the supplier-cost increases,
which you would have to agree
in many cases would have been legitimate.
If you look at the price of fertiliser,
what happened with international freight,
their own wage issues, their own disruption issues,
their own wage issues, and our prices on the shelf -
that's the question you're really asking.
To be precise, between the price on the shelf
and the cost increase from the supplier -
and the cost increase those have been in lockstep.
Coles saw a small increase in its cost of doing business last year,
pushing its profit margin down slightly to 4.8%.
But that margin is still higher than its peers in the UK.
But that margin is still higher (BARKS)
So, there are quite often comparisons that are made
between the UK and Australia.
But Australia has about a third of the population of the UK,
But Australia has about a third but we operate stores
on a geographic footprint which is 30 times the size,
and, so, those considerations need to be taken into account
and, so, those considerations when those margins are compared.
There has always been a lot of debate around the numbers,
and it's difficult to compare across countries.
But it's harder to argue about the market power of the big two.
I'm in the New South Wales town of Orange
to meet cherry farmer Michael Cunial.
Hey, Michael.
Angus, hi. Hey. Nice to meet you.
Good to meet you. Yeah. Thanks for having us.
(INDISTINCT CHATTER)
Good morning!
I've come on a busy day.
He's preparing to pick and pack I've come on a busy day.
He's preparing to pick and pack this year's cherry crop.
We had a little lull with weather as well,
We had a little lull with weather and now we're ramping back into it.
Could I get you to roll the stickers?
And I'll just print one more batch off, if you don't mind.
This orchard has been in the Cunial family for three generations.
My grandfather came over from Italy after the Second World War,
and they got enough money to put a deposit down on a place.
You know, they would work hard
for, um...from sunup to sundown or even more.
for, um...from sunup to sundown There was profit there.
Michael Cunial is one of the few growers willing to speak with us.
He's getting out of the industry.
This year's crop will be the family's last.
Why is the profit not there?
We're reliant now on two major supermarkets, really,
We're reliant now to buy all of our fruit.
We're at the mercy of them.
We're price takers,
so, the profit just isn't there anymore.
so, the profit It gets to you a little bit
because these are beautiful young trees
and they're just coming to perfect production.
You know, this is five or six years after planting.
So, yeah, it's going to be a huge shame
to see such fantastic trees and, you know, all that effort
just getting pushed into a pile.
It's like they've got their hand on your throat
It's like they've got their hand and JUST letting you breathe.
Cunial stopped selling into Coles two years ago.
Cunial stopped selling into Coles He's opened his books for us.
Well, there's a huge power imbalance.
You know, you've got hundreds and hundreds of growers
trying to sell to two main supermarkets.
trying to sell So, they're dictating the price.
They're controlling So, they're dictating the price.
They're controlling what's being bought for how much.
They're controlling So, it's a tricky situation.
His books show
that in the 2022 growing season
he sent 11 shipments to Coles via a third party.
He made a small profit on four deliveries early in the season.
For his next seven deliveries
Michael Cunial went from just breaking even
Michael Cunial to losing substantial money.
And on one of those occasions his cherries were rejected outright.
Would they ever tell you why it was rejected?
There's multiple things to reject fruit,
and, you know, they can pick something out of the air
and say, "No, we don't like it because of this."
And did you have any power to say, "I disagree with that"?
And did you have any power to say, Absolutely no power at all. No.
No.
We just have to cop it unless you No.
We just have to cop it unless you wanted to be sort of black-banded.
One example stands out.
Towards the end of that season,
Cunial sent 15 tonnes of cherries Towards the end of that season,
Cunial sent 15 tonnes of cherries to be sold at Coles -
Cunial sent 15 tonnes of cherries an entire semitrailer load.
He hoped to receive around $90,000 for his biggest shipment of the year,
He hoped to receive around $90,000 which had been carefully graded
to meet Coles's specifications.
Instead, he was told the fruit was not up to standard,
and he was only able to get $5,800 on the seconds market.
When you're dealing with thousands and thousands of pieces of fruit,
you can pick 10 pieces out and say, "This is no good."
So, that is power, that's market power
when you can simply reject something for no great reason.
Would you acknowledge that there is a lack of transparency
Would you acknowledge in how fresh produce is purchased?
We enter into seasonal commitments with our supplier,
and I don't know if this is a supplier to Coles,
but with our suppliers, our fresh-produce suppliers,
we will enter into a seasonal contract.
Isn't there a huge power imbalance there,
Isn't there that, once the fruit is sent off,
they have very little choice
other than to take the price that they're given?
So, as I said earlier,
we work closely with our suppliers
because we know our suppliers have to be successful
for us to be successful.
Fruit and vegetables are crucial for the big two.
They're the first thing you see when you enter a store.
JEREMY GRIFFITH: The retailers need to be able to offer apples and pears
JEREMY GRIFFITH: The retailers need and all the horticultural products
at a very, very good price
to get customers through the door.
And that means that they will put
an extraordinary level of pressure on the growers And that means that they will put
an extraordinary level of pressure on the growers
an extraordinary level of pressure to buy at super-super-low prices.
Can I give you a run-through of how the weekly buying process...
Jeremy Griffith sits on the Horticulture Council
at the National Farmers' Federation.
He says Coles's and Woolworths's market power
is having a profound impact on the industry.
We have estimated in the last 12 months alone
that we've taken the bulldozers to 15% of the Australian pear orchards.
that we've taken the bulldozers to That's a remarkable number.
34% of vegetable growers interviewed
said that they wanted to get out of the sector in the next 12 months.
said that they wanted to get out The average age of growers -
and you would've seen this in your travels -
and you would've seen this you know, it's way too old
because no young person you know, it's way too old
because no young person sees a future in this industry.
because no young person It's a massive, massive issue.
We just need change, you know?
That's the ultimate... That's where we are at this point in time.
We can't keep doing this.
While fresh food is the bait to get people through the door,
your typical Coles or Woolworths store has more than 20,000 items.
And if you really want to understand how the big retailers operate
you need to speak with someone like Julian Hilliard.
you need to speak with someone He spent 38 years in retail,
including working as a buyer
and what's known as a category manager
for both Coles and Woolworths.
He's bought everything from cereal to nappies to laundry detergent.
JULIAN HILLIARD: It's your job to pick that right assortment,
JULIAN HILLIARD: It's your job that right mix of products
that's going to maintain that right mix of products
that's going to maintain the customer satisfaction,
that's going to maintain suit all their needs
and obviously assist you in achieving your targets.
Is there pressure to hit those targets?
There's always pressure to hit targets.
There's sales targets. There's margin targets.
There's sales targets. There's market-share targets.
Then there's profit-dollar targets.
So, definitely lots of ways
that your performance would be assessed.
This might give you the impression
that Coles and Woolworths are in a fierce price war.
that Coles and Woolworths But that's not how the duopoly works.
There's a term called 'Colesworth'.
Mm-hm.
What does that mean to you?
I think it's a generic term people use What does that mean to you?
I think it's a generic term people use
to describe the fact that there's not a lot of difference
to describe the fact between Coles and Woolworths.
How closely
do Coles and Woolworths track each other on price?
They're more or less identical in many respects.
Both organisations would have teams of people
that would be checking prices
to ensure that you were not exceeding
what was, I guess, deemed to be the acceptable price in the marketplace.
So, are you saying when you worked for Woolworths
and Coles put a price up
you'd follow pretty quickly afterwards?
That would normally be the case.
I would probably say that, you know,
if you did five shops in Woolworths and five shops in Coles
if you did five shops in Woolworths and you spent $100,
you'd be a few cents difference, and you spent $100,
you'd be a few cents difference, maybe, depending on the specials.
The fact there's little difference on price
is something that even Coles CEO, Leah Weckert, concedes.
You do price match with Woolworths, do you?
We certainly have as one of our considerations when we set price You do price match with Woolworths, do you?
We certainly have as one of our considerations when we set price
is what is the price of the other retailers, not just Woolworths,
but all other retailers in the market
that compete in the category that we're looking at.
Are you familiar with the term 'Colesworth'?
Are you familiar I'm not.
Without the distraction of a price war,
the big two can instead focus on pumping up their profit margins
the big two can instead focus to satisfy the share market.
And it's suppliers who bear the brunt of this.
They say Coles and Woolworths play the game ruthlessly.
INDUSTRY INSIDER: It's absolutely ridiculous,
the margins that they make, the tactics that they deploy.
One industry insider has had enough and is now speaking out.
One industry insider has had enough You're essentially at their mercy
in terms of how they want to deal with you,
what kind of money they want,
and they can make brands overnight
and they can destroy brands overnight.
That's the reality because of their market power and concentration.
He's asked not to be identified
because he works for a company
currently supplying into Coles and Woolworths.
If you're not willing to play their game,
If you're not willing it's a lot of intimidation,
jacking up prices
or deleting it from the shelf
and forcing customers to essentially go buy your competitor's product.
and forcing customers to essentially He says Coles and Woolworths
are always looking to increase their profit margins.
He cites a recent email exchange with a Coles buyer
He cites a recent email exchange where he asked for a price increase.
Initially, he rejected, or said, "I can't accept this cost increase
"based on the current climate and the impact on consumers."
The Coles buyer argued the increase of around 5% wasn't justified.
That's where the negotiations started,
and we ended up giving a lump sum of money
and we ended up to get the price increase through,
which was accepted in full.
So, you're saying that they will validate your price increase
if you give them either more margin or a lump sum of money?
if you give them either more margin Correct.
That lump sum Correct.
That lump sum was $25,000 towards promotions.
The Coles buyer's initial concern for the consumer
The Coles buyer's had been quickly forgotten.
There are other costs for suppliers
wanting to do business with the big two,
wanting to do business including in-house advertising.
A full-page ad in Woolworths Fresh magazine will cost $30,000.
A four-week spot on Coles Radio - $28,000.
And these all contribute to higher prices for customers at the checkout.
They're the ones that are getting screwed.
It just means higher prices at the shelf
because the supermarkets are extremely greedy.
because the supermarkets Why do you want to speak out?
I honestly think it's the right thing to do.
I think the current situation has gotten extremely out of hand.
You go to the supermarket, you buy a few items,
you're already talking $75 to $100.
A lot of Aussies are struggling out there.
So, you have an email from one supplier. A lot of Aussies are struggling out there.
So, you have an email from one supplier.
So, you have an email We have over 8,000 suppliers
that we work with.
We have a team of people
whose job it is to look to validate We have a team of people
whose job it is to look to validate cost-price increases,
whose job it is to look to validate and we take that job very seriously.
He says that's the definition of price gouging.
Is that the case?
We don't engage in practices like that.
We're working... So, you're saying absolutely
that this is not a practice that you engage in -
to use a price increase
to increase your margin or your bottom line in another way?
I would need to see the specifics of any particular scenario
to judge whether it's reasonable or not.
What we have certainly seen
is that there has been inflation in cost basis.
is that there has been inflation Coles has not been immune to that.
The increases have been substantial Coles has not been immune to that.
The increases have been substantial over the last couple of years.
And, so, some of that does flow through to the consumer.
Woolworths denies using similar tactics against its suppliers.
BRAD BANDUCCI: When a supplier asks for a price increase,
BRAD BANDUCCI: When a supplier we would like to engage
to make sure it's based on true cost increases, we would like to engage
to make sure it's based on true cost increases,
and we do that in the context of complying with the code.
And, so, you know, we're very keen
to make sure we don't pass on anything more to our customers
to make sure we don't pass on than is required.
As a buyer,
Julian Hilliard says it was his job to put pressure on suppliers.
JULIAN HILLIARD: Certainly there would be
uncomfortable conversations. JULIAN HILLIARD: Certainly there would be
uncomfortable conversations.
There's no question of that.
Now, some people might classify that as robust business...
..um...discussion.
I guess if I felt
that someone had already given me
everything they could possibly give me,
everything and I had to ask for more,
then, personally, and I had to ask for more,
then, personally, I felt that that was probably
then, personally, a little...a little bit, um...
..a little bit of a stretch.
The establishment in 2015 of a Food and Grocery Code of Conduct
was supposed to take some of this friction
out of the supermarket-supplier relationship.
Under the code, each supermarket appoints and pays for an arbiter
Under the code, each supermarket to handle its complaints.
ROD SIMS: The Grocery Code of Conduct
ROD SIMS: is, quite frankly, a disgrace.
You have a code with no penalties. is, quite frankly, a disgrace.
You have a code with no penalties.
Now, let me just emphasise that.
That is like having a speed limit
throughout one of our cities
of 60 kilometres an hour,
that's the speed limit,
then someone says, that's the speed limit,
then someone says, "What happens if I go 80?"
then someone says, "Nothing. There's no penalty."
So, the law is a joke.
The code of conduct is a joke.
Why do you think it is
that Woolworths has never had a single complaint
that Woolworths under the Grocery Code of Conduct?
I mean, you know, you would under the Grocery Code of Conduct?
I mean, you know, you would have to go and ask suppliers
why that's the case. Well, let me tell you.
Sure. Your own arbiter, Helen McKenzie...
Sure. OK. Helen. Yep.
..has said that suppliers OK. Helen. Yep.
..has said that suppliers are frightened to complain
..has said that suppliers and that they fear retribution.
Look, I think it's just the nature of any relationship
that there's going to be that anxiety.
It's a lot stronger word than 'anxiety'.
So, we engage with our suppliers every week.
We have robust conversations every week.
We resolve issues every week.
It's only if you can't do that
that you go to a...to a code arbiter or anything else.
Coles had no complaints under the code last financial year
and just five in the previous two years.
and just five On three of those occasions
it agreed to compensate the suppliers.
So, they say they fear retribution
and, so, they would not make a formal complaint.
Well, that is not in line and, so, they would not make a formal complaint.
Well, that is not in line
with the culture that we have at Coles.
And that is why
I think most issues are actually resolved in the first instance
I think most issues are actually by our suppliers and our farmers
having a conversation with our category teams.
So, you think it's working well?
I'm not saying that anyone is not complaining.
I'm saying that a lot of these issues
are getting raised with our category teams and being worked through.
The Food and Grocery Code of Conduct is now under review,
The Food and Grocery Code of Conduct with a push to make it mandatory
and to impose fines on those who breach it.
The federal government is also reviewing
The federal government Australia's competition laws.
Brad Banducci is adamant competition is fierce,
even going as far as talking up rivals like Aldi.
They've got 590 stores. Aldi - they're an amazing business.
Uh... They drive incredible value.
They have 10% of the market, though.
It's not the percentage they have.
They're in every community,
and it makes customers have a choice
between a Woolworths, a Coles and an Aldi at minimum.
And, by the way, just up the road is a Costco warehouse.
Sorry, you're saying that actually there is really robust competition?
Yeah...
Rod Sims, the former head of the ACCC,
Rod Sims, says that we have one of the most
concentrated supermarkets in the world.
Is he lying? It's not true. It's not true.
Is he lying? And it's... It is not true.
This community over here,
there will be three Coles stores within two kilometres of it,
at least one Aldi store,
a series of independents,
ability to within 24 hours
have a quarter of our store delivered to you by Amazon.
It is an incredibly competitive market.
The risk people have is... I'm sorry,
the former ahead of the Competition Commission says...
You know that... ..his words are...
Retired.
By the way.
I don't think you would impugn his integrity
and his understanding of competition law.
I'm just saying the world has got much more competitive.
I'm just saying the world He retired 18 months ago. He's not...
OK, let's... Well, can we take that out? Is that OK?
I should... I mean, he IS retired,
but I shouldn't have said that, Angus.
Are we going to leave it in there? If we are...
Well, I mean, we're on the record. You said it. I mean, you know...
Let's move on. But... Yeah. (WOMAN SPEAKS INDISTINCTLY)
Let's move on. But... Yeah. Yeah, no, I think I'm done, guys.
Uh... You know, I do this with good intent.
You know, I don't do this with bad intent.
You know, You're walking out? Really?
No, no, no. Can we just talk to Brad for a sec?
Let me just... We'll just have a minute.
We'll just pause. We'll be finished in a sec.
We'll just pause. Come here for a...
Let's keep going.
AD VOICEOVER: Australia, we've never been more excited
AD VOICEOVER: Australia, because whenever...
The supermarkets are feeling the pressure.
It means you're getting great value hands down.
One tactic they've been using to get the public back on side
is the lure of specials, as seen in their slick ads.
AD VOICEOVER: At Woolworths, we can help you spend less...
In recent months the big two have both announced store-wide price cuts.
In recent months the big two have That's today's fresh food people.
I'm on my way to see Rosie Thomas, the campaigns director at CHOICE.
I've brought some groceries with me.
So, what can you tell us about these ones?
So, what can you tell us Ah. I recognise these products.
So, these barbecue briquettes,
this is the product where we caught So, these barbecue briquettes,
this is the product where we caught Coles out raising locked prices.
It was not just one item where Coles had misled consumers.
Band-Aids? Yes.
Again, there was a locked-price promise,
but then they put up prices before they should have.
After CHOICE complained to the ACCC about the briquettes
After CHOICE complained Coles conceded there were 20 items
where prices had not been locked
for as long where prices had not been locked
for as long as the retailer had promised.
I'm surprised by this one. Cornflakes?
Yeah, Cornflakes, a staple in so many households,
and people were paying more than they should have.
So, Coles was caught red-handed.
They've started refunding the amounts
to any consumers who have Flybuys accounts or shopped online, They've started refunding the amounts
to any consumers who have Flybuys accounts or shopped online,
but there will still be a large number of consumers
who bought these products in store,
and, unless they show up with receipts,
and, unless they show up they're not going to get refunds.
And, so, we really want to know what Coles is doing
with that extra money that it's held on to unfairly.
So, despite having misled the consumers on 20 occasions,
there has been no tangible punishment for Coles?
Not yet, other than refunding the money,
which they really shouldn't have kept to begin with.
which they really Do you know how much you've refunded?
We have refunded substantially more Do you know how much you've refunded?
We have refunded substantially more
than what the benefit was to Coles
from the increase in price.
And I think what's important to me
is that we have worked hard
to understand is that we have worked hard
to understand what went wrong with the processes
so that they don't happen going forward.
Can you give us the figures of how much
customers spent and what you refunded?
I don't think that's appropriate
that we get into that level of detail.
Cheap! Cheap!
SONG: # Really, really cheap
# Really, really cheap SONG: # Really, really cheap
# Really, really cheap Really, really cheap... #
Here's the thing you need to know about specials -
Here's the thing you need to know they're not really that special.
Grocery suppliers and brands
are often expected to fund these Grocery suppliers and brands
are often expected to fund these promotions, not the supermarkets.
are often expected to fund these # The word on the street... #
That means suppliers need to set their recommended retail price
That means suppliers need to set at a higher level
knowing they will have to offer at a higher level
knowing they will have to offer deep discounts for much of the year.
(WHISTLING OF WOOLWORTHS THEME MUSIC)
I'm guessing that the normal price of this is probably over $30.
I'm guessing that the normal price In fact, yes, it is. $31.
It's on special for $14.50.
Who would ever pay over $30 for that item?
So, why do they even have the recommended retail price?
I guess they have to set a price and then they'll promote off it. So, why do they even have the recommended retail price?
I guess they have to set a price and then they'll promote off it.
You might ask yourself, or I would ask myself, you know,
would it be better to have that sweet-spot price around about $22
and just sell it for $22 every day?
The trouble with that is it would then just blend into everything else
because it wouldn't have the nice, big, flashy ticket on it.
You are attracted to those tickets.
It helps to drive people into the supermarkets.
It helps everyone feel that they're getting a better deal.
So, how would you categorise a special?
So, how would you categorise Oh...a little bit like a drug.
Behind the success of Coles and Woolworths
is a workforce of more than 300,000 people.
They are two of Australia's largest private-sector employers.
But the announcement of record profits
has caused friction on the shop floor.
So, I've decided to get a few groceries on the way home
So, I've decided to get through Coles Click&Collect.
Yep, here we are. through Coles Click&Collect.
Yep, here we are. OK, going in here now.
That was super easy.
Drive in, two minutes later - groceries in the back of the car.
But now I'm going to meet someone
who quite possibly helped pick and pack my order.
Hey! How are you? Hi. Good. How are you?
How was your shift? Oh! Long.
Yeah? Yeah, long.
It's a stifling day, typical for this time of year.
Ana tells me it's just as hot inside her store as it is out here.
So, how hot did it get in there?
It got up to 34, 35 degrees. Yeah. So, how hot did it get in there?
It got up to 34, 35 degrees. Yeah.
It was 34 degrees in there?!
Yeah. 34. Yeah. At least. It was 34 degrees in there?!
Yeah. 34. Yeah. At least. Wow. That must be uncomfortable.
Yeah, it was. It was very uncomfortable.
Yeah, it was. It makes your job harder to do.
Where Ana works isn't any ordinary Coles supermarket.
Where Ana works It's what's known as a 'dark store'.
While it looks like a supermarket with aisles, a deli and bakery,
While it looks like a supermarket there are no customers.
Inside, dozens of staff fill orders for delivery or click and collect.
These photos show just how hot it can get.
Coles wouldn't expect its customers
to endure temperatures of 34 degrees while they shop,
but for staff this is just part of the job.
I catch up with Ana again at home.
Every summer there's people who feel dizzy.
Every summer there's people whose sweat's just dripping off them
and they want to sit down.
But you get a 15-minute break in a five-hour shift,
so, I think it's not really enough for...
One 15-minute break doesn't really allow you time to recover
and then go back to work and still keep up the same pace.
The pace Ana's talking about is quick.
Workers gathering items for online orders are timed
Workers gathering items and there are targets set.
There is a industry standard of a pick rate
There is a industry standard of about 180 items per hour.
Our warehouse, particularly during busy periods,
will push you to go above and beyond that, which might be 210, 220.
In the past, they have displayed the names of pickers, um...
..where the ones who are falling behind the official pick rate
..where the ones who are falling will be displayed in red.
How does it make you feel will be displayed in red.
How does it make you feel being, effectively, publicly shamed
How does it make you feel for not working hard enough?
It's not fair to people with different abilities,
different capabilities, different reasons
for what speed they can maintain.
We prioritise,
um...team-member safety We prioritise,
um...team-member safety
as something that is absolutely crucial, uh...in our business.
And, so, ensuring that there is an environment, um...
..including temperature, that is safe for our team member
..including temperature, would be something that, um...
..we would definitely want to have a look at
and understand why that has happened.
and understand Is it acceptable
that your team members have to work in 35-degree heat?
And what I've said is I will take away that issue
and we will have a look at it because it doesn't sound right.
After the interview with Four Corners,
Coles said it had put measures in place
to help employees on hot days,
including providing them with chilled neckties.
Oh, nice! Yeah, cool, I'm here for support.
Oh, nice! Oh, yeah! That's great.
Ana is part of the first national Oh, yeah! That's great.
Ana is part of the first national strike by supermarket workers
Ana is part of the first national in Australian history.
PROTESTER: What do we want?! PROTESTERS: A living wage!
When do we want it?! Now!
They walked off the job several times last year
asking for better wages and conditions.
When do we want it?! Now!
Coles is not just putting pressure on staff and suppliers.
Coles is not just putting pressure There's a whole other area
where the supermarket giant is taking There's a whole other area
where the supermarket giant is taking advantage of its market power.
It's using this power to push its own products
It's using this power without being upfront with consumers.
You may not realise it,
but Coles is a big player in wine.
I've come to the Coles-owned Vintage Cellars to pick up a bottle of red.
There's no shortage of choice,
but, like many consumers, I go for a mid-price wine at eye level.
but, like many consumers, I go Just that one, thanks.
So, I decided on this one -
the Two Churches Preacher Shiraz.
I really like the label,
but what really got me was the story on the back.
(DRAMATIC MUSIC PLAYS)
It tells a tale of German immigrants coming to South Australia,
It tells a tale of German immigrants of two Lutheran priests who fell out
and built rival churches at opposite ends of the same village.
Online it's promoted as a tale from the Barossa Valley,
where the priests disagreed on almost everything
except the quality of grapes grown in the now-famous wine region.
So, I'm here in the Barossa to find out where these grapes are grown.
So, I'm here in the Barossa to find There it is.
So, this is it, the Light Pass Immanuel Church,
So, this is it, just like on the bottle here,
and over there - that's the rival church.
and over there - It's just such a great story.
(BIRDS TWITTER)
Is this the home of Two Churches?
I couldn't tell you that from this bottle.
Adrian Hoffmann is a fifth-generation grape grower from the Barossa
and says there's no Two Churches vineyard around here.
I think they're sort of misleading the consumer to a certain degree.
I think they're sort of misleading It sounds like a Barossa story,
but, um...yeah, It sounds like a Barossa story,
but, um...yeah, you can't be guaranteed
it's Barossa fruit, unfortunately, so...
So, where is the home of Two Churches wine?
And what about the address on the back? What does that tell me?
Well, that's the first thing I'd sort of go to.
Well, that's the first thing You look at where it's produced.
And this says it's Hawthorn East, Victoria.
So, here I am in suburban Melbourne.
Turns out this is the closest there is
to a home for the Two Churches Shiraz.
Not that it says Coles anywhere on the bottle.
Coles says it has around 260 private label wines
Coles says it has available through its liquor stores.
ROD SIMS: I mean, the test under law is
would a reasonable consumer be misled? ROD SIMS: I mean, the test under law is
would a reasonable consumer be misled?
would a reasonable consumer Now, if on the label of the bottle
you're telling a story
that's unrelated to the product,
then I think that runs a serious risk of being misleading.
then I think that runs Why not put your name on it?
Why not say it's Coles Chardy or Supermarket Shiraz?
Why are you hiding the fact that you own this brand?
So, in terms of communicating with customers, Why are you hiding the fact that you own this brand?
So, in terms of communicating with customers,
there are practices across many retailers and many industries
where brand... Take that point -
shouldn't you say...shouldn't you be honest with the consumer
shouldn't you say...shouldn't and say, "This is a Coles wine"?
But WHY do it?
We're very comfortable that the branding approach
that we have in our liquor brands
is one that resonates with customers.
is one that resonates After our interview,
Coles removed any reference to the Barossa
from its online promotion of Two Churches.
From prime shelf space to prime real estate,
From prime shelf space there's a more fundamental issue
stifling competition there's a more fundamental issue
stifling competition in this country -
stifling competition access to land.
An industry insider has told Four Corners
about a tactic used to keep competitors out.
It involves buying up so-called spoiler sites
It involves buying up right across the country.
A prime example is on Sydney's Upper North Shore.
Woolworths has spent almost a decade
trying to redevelop this council car park
into a shopping centre and supermarket.
In exchange for access to the land
Woolworths is offering to build a new library and community hall.
Woolworths is offering to build It's already purchased three shops.
If Woolworths gets the green light,
they'll be part If Woolworths gets the green light,
they'll be part of the new shopping complex.
But they also have the added benefit of keeping rivals out.
ROD SIMS: Oh, look, it's a huge problem,
but you can understand why it's happened.
but you can understand Coles and Woolworths
want to maintain as concentrated a market as possible.
There's no doubt it's aimed at reducing competition.
So, therefore you can say it's anti-competitive in that sense.
So, therefore you can say Proving that is tricky.
Does Woolworths use land acquisition or land banking
as a way to reduce competition?
BRAD BANDUCCI: So, that's not something that we actively do.
BRAD BANDUCCI: So, that's not We do, in some cases buy land.
This is one of the pieces of land we've bought and developed. We do, in some cases buy land.
This is one of the pieces of land we've bought and developed.
Uh... But it's not a way of trying to drive competition.
Uh... But it's not a way It'll be through,
"We need a store in a new area,"
and, so, you'll buy some land
and wait for the community and, so, you'll buy some land
and wait for the community to start moving into the area.
German supermarket giant Kaufland would likely disagree.
It halted plans to open supermarkets here in 2020.
A lack of suitable locations was cited as one of the reasons.
A lack of suitable locations (ENGINES ROAR)
The government is making all the right noises
about tackling the power of Coles and Woolworths.
Our government is prepared to take action
to make sure that Australians
are not paying $1 more than they should
are not paying $1 more for the things that they need.
All of these processes are about one thing, for the things that they need.
All of these processes are about one thing,
and that's about seeing if we can exert more competition.
But, to actually bring down prices,
it will need to implement reform
that previous governments it will need to implement reform
that previous governments have ignored.
Former Competition boss, Rod Sims,
says the ACCC needs greater powers to block mergers,
making it harder for the big two
to gobble up rivals, buy land and move into other industries.
I think there's no doubt if you want lower supermarket prices,
if you want consumers to pay less for goods in supermarkets,
change the merger laws.
The Greens, who are chairing the upcoming Senate inquiry,
The Greens, who are chairing are exploring more radical change,
including breaking up are exploring more radical change,
including breaking up Coles and Woolworths.
including breaking up The acid test on the Prime Minister
is not going to be what reviews or what processes The acid test on the Prime Minister
is not going to be what reviews or what processes
is not going to be he's prepared to put in place.
It'll be what action he is prepared to take.
Whatever happens,
it's already too late for cherry grower Michael Cunial.
So, what do you do? Do you literally put the bulldozer through here?
We just get our bulldozer and start pushing.
We just get our bulldozer Yeah.
Just push them up into piles.
I don't mind people making money.
Everyone's got to make a little bit of money on the way through.
But they're just making so much.
It's getting to the point, you know,
the industry can't absorb their greed.
I don't know what the answer is.
I'd like to know it because we would keep reinvesting in our orchards.
I'd like to know it because we would But...
..I can't see a huge silver lining,
so, we're out.
We're just getting out. Yep.
(THEME MUSIC PLAYS)
Captions by Red Bee Media
Copyright Australian Broadcasting Corporation Captions by Red Bee Media
Copyright Australian Broadcasting Corporation