Coles denies land banking at consumer watchdog inquiry

One of Australia’s two supermarket giants has denied it is sitting on unused land in one capital city to stop any competitors opening up.

Coles executives say the company’s ownership of a vacant lot 200m from one of its supermarkets in an inner suburb of Perth is not an example of anti-competitive land banking.

The consumer watchdog will run its final day of public inquiries into supermarkets on Friday, and Coles executives are giving a second day of evidence.

Woolworths, Metcash and Aldi heavies have been hauled into the inquiry earlier this month.

But on Thursday, Coles defended its ownership of a vacant lot in the Perth suburb of Maylands, about 5km from the CBD.

Coles chief executive Leah Weckert says Coles wants a return from the properties it owns. Picture: NewsWire / Martin Ollman

The inquiry was told that Coles had owned the land since late 2008. The lot sits 180m across busy Guilford Rd from long-established Coles Maylands.

Coles Group’s attempts to build a large liquor store were knocked back in court, and a later attempt to sell the land fell through, the inquiry was told.

Coles owns 42 undeveloped sites and has development applications in for 25 of the sites, the inquiry was told on Friday morning.

Coles and Woolworths’ perceived practice of owning prime real estate and not turning it into stores – known as land banking – has been one focus of the Australian Competition and Consumer Commission investigation.

This inquiry is separate from the case where the ACCC is separately suing Coles and Woolworths for allegedly offering fake discounts.

Land banking stymies competitors from owning land that could be a store, diluting consumer choice. Coles has about 28 per cent of the Australian marketshare, and Woolworths has about 37 per cent.

Aldi has a 10 per cent market share, and IGA supplier Metcash holds about 7 per cent.

At the ACCC inquiry on Thursday, Coles chief executive Leah Weckert said the company had a limited amount of capital and wanted to own land that would in the future make money.

Coles' attempts to develop the site were knocked back in 2013. Picture: Google

“As a company with a finite balance sheet we are trying to use as best we can, I want to be investing in properties that are going to give us a return,” Ms Weckert said.

Coles property general manager Fiona Mackenzie said owning the vacant Maylands land had not hindered competition, as an IGA and Aldi operated nearby.

There is an IGA directly across Guilford Rd from the vacant land.

Originally, Coles Group wanted to build a large liquor store on the vacant site but faced opposition and the courts knocked back the liquor licence. Later, in 2019, “another large retailer” declined to buy the land, Ms Mackenzie said.

As it stands, Coles said it planned to build a “dark store” warehouse for filling online orders on the land.

REWARDS, SUBSCRIPTIONS

Lawyers for the consumer watchdog have targeted Coles’ cornering of vast numbers of Australian consumers with its subscription and Flybuys schemes.

ACCC lawyer Naomi Sharp SC drilled into Coles’ use of subscription services as Coles executives fronted a supermarket inquiry for a second day on Friday.

Coles chief customer officer Amanda McVay said Flybuys encouraged people to shop at Coles, hence not shop around at other stores.

Flybuys added competition to the supermarket sector by adding value for Coles customers, she said.

Ms McVay was asked if Coles needed to simplify how customers redeemed Flybuys points and understood what value the scheme delivered.

Ms McVay responded that the company was continually improving this process.

“We are taking steps to make it resonate even more with customers,” she said.

Flybuys gives people a $10 discount once they have spent $2000/earnt 2000 points.

Coles trialled member-only pricing in 2023, but customers were “more interested” in bonus points or specific offers rather than member-only pricing, Ms McVay said.

Australians are shopping around various supermarkets more and more since inflation rose sharply in the past two years. Picture: NewsWire / Gaye Gerard

Ms McVay indicated Coles could be considering a member price scheme in the future.

“I would not like to talk about the future plans,” Ms McVay said, adding she would be willing to talk about future plans in a private hearing.

The supermarket does have two auto-renewing subscriber schemes where people pay and get free deliveries and 10 per cent off a shop up to a $50 discount once a month.

Ms McVay also declined to say publicly how many Coles Plus subscribers there were.

Ms Weckert said because of cost-of-living pressures people were shopping around other stores much more than previous years.

When subscribers have not shopped at Coles for an undisclosed amount of time, customers get an email that personalised item suggestions.

Flybuys users who have not shopped at Coles for a while get an email that does not have personalised items, Ms McVay said.

Coles says most of the customer data it collects is de-identified. Picture: NewsWire / Gaye Gerard

Coles collects consumer personal data at the checkout during an online shop and when someone logs in and browses the Coles website or app but does not purchase.

Video data from the self-service check-outs and staff body-worn cameras was not identified to the customer, Ms McVay said.

Staff were wearing body cameras because of a “very significant increase” in aggressive interactions between staff and customers, Ms Weckert said.

“We’ve had some terrible incidents over time, We do have a number of stores that are high risk,” the chief executive said.

Coles shares customer email addresses with a third-party market research company and de-identified data with Coles’ media arm Coles 360.

Coles sells de-identified customer behaviour data to suppliers so the suppliers can see how their products are selling.

Woolworths had sophisticated customer data analysis, Aldi had the membership data from its members and Amazon was “one of the most sophisticated” data analysts in the industry, Ms McVay said.

Originally published as Coles denies land banking at consumer watchdog inquiry