Be careful what you wish for - our supermarket operators do just fine

Those laying into our supermarket operators would do well to consider the other options. North Korea anyone?

Woolworths CEO Brad Banducci has nothing to apologise for.

Shoppers should ask themselves one very basic question: who do they want deciding what they can buy in their supermarkets and at what prices?

Politicians and bureaucrats from the ACCC and other places?

Oh yeah, I’m sure that would go well. Take your pick: the Soviet Union around 1962? Venezuela 2022? Or North Korea, pretty much anytime?

Or the actual businesses trying to make a profit in a, yes, competitive, marketplace.

Businesses that know that to make that profit – and indeed, to just survive – they have to try to balance the interests of both suppliers and customers, and also look after their workers.

On that point, the workers, let me take a moment to pay tribute to them, and to their managements.

To the hundreds of thousands of people who work in food retail – across the ‘Big Two’, Coles and Woolies, plus Aldi, IGA, Costco, and all the rest - as, in my view, the great unsung heroes of Covid.

All of them, plus all the others in the supply chain – the delivery people, the farmers and those working in the factories. All off them, turning up around the clock, 24/7, through the two dark winters of Covid to keep us fed.

Now a lot of out-and-out garbage has been said and written about how uncompetitive our Woolies-Coles supermarket sector is; how their profits are so much bigger than the very different UK market.

That might have been true – except that it wasn’t; and I’ll come to that – in the pre-Aldi, pre-Costco days of 20 and 30 years ago.

Today, it’s just laughable. Everybody and I mean everybody has that choice – either physically or online.

People also have zero sense of the value in the convenience factor; what they are indirectly paying for a banana, to be able to buy it at the same price pretty much anywhere across the vast continent.

As Coles CEO Leah Weckert noted Tuesday, the Coles margin had been stable at less than 3c in the sales dollar for the last five years.

That’s pre-Covid, through Covid, the chaos of the initial post-Covid period, and now in the world of generalised cost-of-living pressures.

Why not demand Coles and Woolies slash prices – make losses - to offset high interest rates and increased home loan repayments?

That would make us much sense as all the other garbage.

Long-forgotten is what happened through the 1990s and 2000s, when the big two did rule the roost, pre-Aldi and pre-Costco. And competed fiercely, even viciously.

First, Woolies then-CEO Roger Corbett embarked on root-and-branch cost-cutting efficiency drives across Woolies, delivering lower prices to customers and forcing Coles to follow.

Then Ian McLeod did the same at Coles in the early 2010s, forcing Woolies to follow.Prices across the Coles-Woolies networks in 2020 were something like 15 per cent lower than in 2005.

A final word on Woolies CEO Brad Banducci.

If any CEO is the opposite of arrogant it is Banducci.

And he was perfectly entitled to point out that former ACCC head Rod Sims was, well, an out-of-touch former competition czar.

Brad, you had nothing to apologise for.

Originally published as Be careful what you wish for - our supermarket operators do just fine