Qld supermarket inquiry: FoodWorks reveals freight costs could force prices to increase again

Independent supermarkets are being forced out of the market when Woolies and Coles moves to town, an inquiry has been told.

Independent supermarkets are being “crucified” by major retailers Woolworths and Coles in Queensland, an inquiry has been warned.

Australian United Retailers (AUR) Queensland operations manager Wayne Mason said the buying group – which acts for the 103 independent FoodWorks supermarkets across Queensland – had concerns about how the two major supermarkets were impacting regional and rural communities.

FoodWorks across Queensland are struggling to compete against the major supermarket chains. Picture: Supplied

Speaking before the Queensland government’s probe into supermarket pricing on Tuesday, Mr Mason said independent retailers would suffer if the government continued with its plan remove freight subsidies that assist FoodWorks stores in remote and regional communities get their groceries delivered at a cheaper rate.

Mr Mason told the inquiry that AUR had been informed by Metcash – which supplies groceries to the company – that if the subsidy was removed, there could be an increase in freight costs up to 351 per cent, depending on location delivery.

“If prices go up 351 per cent for the cost of freight, that’s going to be directly put on to consumers and the costs of goods are going to go up,” he said.

Australian United Retailers Queensland operations manager Wayne Mason says regional and rural businesses will suffer if freight subsides are cut. Picture: Dan Peled / NCA NewsWire

Mr Mason said he couldn’t understand why the government would put community grocery stores like FoodWorks at risk by adding extra unnecessary costs to the retailer, especially in regional and remote communities.

“Why would we want to make it more expensive to live in the bush?” he stated.

“The cost of goods, going to these places, if we don’t service these communities they’re not going to survive.

“We have a lot of stores in the country (like) Longreach, Dalby, Tara and St George.

“We play a major role in the health of the rural economy in providing employment and services to those people in the communities where Woolworths and Coles don’t want to go. They only want to go where they make profit.

“But these are special people and if we don’t’ support them (the independent retailers), then the communities that rely on them for supply and employment, they won’t survive either.

“We’re losing farms at a fast rate, and we can’t keep ignoring the need to support regional communities and … if Coles and Woolworths aren’t going there, who is going to service them?”

Woolworths and Coles are coming under the microscope of the Queensland inquiry into supermarket prices. Picture: NCA NewsWire / Max Mason-Hubers

However, when asked about whether he had any further details about freighting costs if the subsidies were removed, Mr Mason said he could only refer to what he’d been told by Metcash, which deals directly with Linfox logistics company.

“We only get everything second hand through Metcash,” he said.

“What I can’t tell you is what happens before we get the freight bill.”

Metcash Queensland and Northern NSW general manager Roy Leisk told the inquiry that it would be “country stores that would be impacted” if the subsidies were removed.

Metcash Queensland and Northern NSW general manager Roy Leisk says independent stores could face a rise in freight costs. Picture: Dan Peled / NCA NewsWire

Mr Leisk said “mum and dad businesses” would be forced to increase their prices if freight costs were doubled to deliver goods to the regions.

Referring to FoodWorks’ store closing in Oxley after a few years after Woolworths opened 2km down the road, Mr Mason said small business owners faced “unreasonable” pressures because of the unfair competition.

“We can’t survive up against a Woolworths (and Coles) because of their economies of scale,” Mr Mason said.

“Whenever we go up against a major chain store, we lose half our business.

“It crucified the business and they ended up closing.

“It happens all the time. If Woolworths decide to go somewhere, they go there.

“What it does to families and what it does to small businesses is wrong.”