Election battle in aisle nine. Albanese goes retail in fight for votes

Anthony Albanese is in the midst of a huge political clean-up – in the aisles of the nation’s supermarkets.

Commentators often talk about “good retail politicians”. They’re MPs who can explain a complex issue in a simple and understandable manner.

But for weeks, the prime minister has taken retail politics to a new level with a rollout of policies that stretch from the shrinking size of our favourite chocolate bars to how much the local cafe is slugging us in surcharges on a cup of coffee.

Anthony Albanese with Coles chairman James Graham and Coles CEO Leah Weckert in August. The prime minister’s views on supermarkets has changed sharply since then.Credit: Kate Geraghty

The average Australian household spends about $10,000 a year on groceries. Food and non-alcoholic drinks account for 17 per cent of total household expenditure. Only mortgages and rent eat up more of our collective spending.

And much of that spending is with two companies – Coles and Woolworths. In the just-completed financial year, Woolworths reported food sales through its outlets of almost $51 billion.

The surge in inflation that has forced the Reserve Bank to lift official interest rates has been front and centre for every Australian every time they’ve passed through the doors of the supermarket giants.

Since mid-2021, the price of coffee and tea has climbed by 18 per cent. Milk is 24 per cent more expensive while bread is 26 per cent dearer. And oils – from avocado to olive – have surged by 46 per cent.

Throw in higher prices for items not found in the aisles (the cost of insurance, which both companies offer, is up by 34 per cent) and combine those with higher mortgage rates and rents, and you have all the ingredients for a full-blown cost-of-living crisis.

So on September 23, when the Australian Competition and Consumer Commission launched action against Coles and Woolworths, accusing them of misleading shoppers with their “Down Down” and “Prices Dropped” campaigns, the groundwork for a prime ministerial push into supermarket politics had been done.

Albanese, who announced an extra $30 million for the commission so it could amp up its supermarket monitoring, was quick to argue that the retail giants had added to the inflation pain felt by all shoppers.

“When you’re charging more for products than you should, it, of course, has an inflationary impact by definition,” he declared.

Within days, the government had announced it would target planning laws around shopping centres. An ACCC draft investigation had the previous week revealed Coles and Woolies sitting on prime real estate that competitor supermarket chains might have an interest in developing.

Not finished with the land on which supermarkets might be situated, Albanese turned his attention to the size of chip packets and chocolate bars as he targeted “shrinkflation”.

“People expect a 500-gram product, all of a sudden becomes 400 grams, but it’s at the same price. It’s called shrinkflation, and it needs to be addressed,” Albanese noted.

Since then, he literally can’t stop talking about supermarkets.

Some nations, such as France, require consumers to be told of shrinkflation.Credit: Reuters

Between June and December 2022, during his first six months as PM, Albanese referenced supermarkets in speeches or media interviews on just three occasions.

In July of that year, he told the ABC’s 7.30 program he understood that cost-of-living pressures were front of mind for most Australians.

“They’re going to the supermarket and they get hit with a bill that’s a lot higher than what they got hit with a year ago,” he said.

Through 2023, Albanese engaged with the supermarket aisles on 12 occasions.

So far this year, he’s been asked or talked about supermarkets on more than 90 occasions. And there’s still 10 weeks left of the year, including the Christmas shopping period.

Treasurer Jim Chalmers revealed that as part of an overhaul of company merger laws, every supermarket acquisition would be subject to investigation by the competition watchdog.

This week, the focus on supermarkets spread to the nation’s shopping malls and beyond.

Big retailers such as Coles and Woolworths don’t surcharge their customers when using a debit card. But smaller retailers, from the local baker to the car mechanic, do as they pass on the cost of the electronic payment system to their customers.

Pre-empting the Reserve Bank, which has been readying a review of the payments system, Albanese said the government was predisposed towards banning surcharges on debit card payments.

A day later, the retail attack was broadened to trading practices. The government has been working on a review of Australian Consumer Law for more than a year, but this week revealed it wants to legislate bans on practices such as subscription traps and drip pricing before next year’s election.

“The aim is to assist people with [the] cost of living by removing dodgy arrangements and making sure that consumers get value,” Albanese said during a press conference in Tasmania.

The government’s new-found focus on these issues is partially driven by the state of the economy.

Shoppers are made aware of inflationary pressures every time they head to the supermarket.Credit: Bloomberg

Directly giving households more cash to deal with cost-of-living pressures – such as a new tax cut – would add to inflation. The stage 3 tax cuts, though desperately needed after a spike in income tax collections over the past three years, were dangerous enough given their size.

But extra cash, as some have argued, would make life even more difficult for the Reserve Bank, which markets expect to start cutting official interest rates early next year.

This has left the government looking at areas that can, at the margins, deliver cost relief to consumers without adding to price pressures.

Targeting supermarkets or retailers who might trap their customers in subscription traps is hardly going to upset voters.

Consumers’ trust in the two big supermarket chains is now almost as low as it is in politicians. Roy Morgan’s annual survey of trust in the nation’s brands, released last month, showed both Coles and Woolworths were now among the top 10 least-trusted companies in the country.

Coles was already in the top 10 and moved to the fourth least trusted (behind Optus, Qantas and Facebook). Woolworths surged 194 positions to fifth on the list.

The focus on the weekly search for bananas and milk is bipartisan.

The Coalition has for months been on the retail sector bandwagon, culminating in its decision to support divestiture powers in the supermarket and hardware sectors. Under its plan, which has caused friction within the Liberal Party, the ACCC would be able to take action on competitiveness, workforce and public interest grounds.

The retail fight has got to the point that Liberal leader Peter Dutton in August singled out Bunnings – where thousands of Australians enjoy weekend sausage sizzles while shopping for cheap leaf blowers and garden Christmas decorations – for its profit margins.

“We want to make sure that, particularly where Bunnings has a more significant presence than it ever has, where Mitre 10 is probably the biggest competitor, but the margin between Mitre 10 and Home Hardware and others, and Bunnings, is astronomical,” he said.

The Coalition has yet to wade into Albanese’s most recent attacks, including surcharges and unfair trading practices.

But with the country now in the early stages of what is shaping to be a long election campaign, the chances of Dutton and Albanese trading blows about home-brand shampoo or the best-tasting biscuit can’t be far away.

The greatest danger is that this new-found interest in supermarkets is too late. Albanese, or Dutton, could end up in the discount rack like a can of beans.

Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.