Ritchies boss says PM’s profit gouging claim is a slur against the grocery industry

Fred Harrison has been working in supermarkets for 50 years, and comments from the election trail have left him fuming. Meanwhile, former ACCC chair Allan Fels says profit gouging is hard to prove.

CEO of Ritchies supermarkets, Fred Harrison, views the ‘price gouging’ accusation as a slur against the entire industry. Picture: Aaron Francis

Ritchies supermarket boss Fred Harrison watched Anthony Albanese’s weekend press conference — and the more he watched, the ­angrier he became.

With more than 50 years in the industry, Mr Harrison is aghast at the language used to describe supermarkets as “price gougers”, which he says is a slur against the entire sector and is causing stress and angst for the hundreds of thousands of Australians who turn up everyday to work for a supermarket, including his.

The supermarkets have been labelled the “bad guys” and have become an easy target to kick, he added. “I have been working in the supermarket industry for 50 years and the company I work for, Ritchies, we work our backsides off to try to be as competitive as we possibly can, we make a modest return on our investment and profitability,” Mr Harrison, who runs the nation’s largest chain of independent supermarkets, told The Australian.

“It is an easy group to knock, people see supermarkets, money going in the tills, and it is just a slur against the whole industry. To label the supermarkets as ‘price gougers’ and continue with that language after the ACCC report … it is inflaming the stress and angst against our industry, and it is not the truth.

“It makes people think we are ripping them off. I just wish people would be far more careful with the words they are choosing.”

Ritchies boss Fred Harrison is angry and frustrated supermarkets are being made the ‘bad guy’. Picture: Glenn Hunt

Mr Harrison was reacting to the weekend election announcement from the Albanese government that Labor would impose “heavy fines” on supermarkets found to be price gouging despite just a week earlier an Australian Competition & Consumer Commission investigation finding no evidence of price gouging in the $120bn supermarket sector.

When asked on the campaign trail on Sunday to define “price gouging”, the Prime Minister doubled down, saying it “was when supermarkets are taking the piss of Australian consumers”. The former competition regulator Allan Fels told The Australian on Monday “gouging” is hard to prove.

The campaign moment took Woolworths and Coles by surprise. “Despite a 12-month ­inquiry into supermarkets, neither the government nor the ACCC found evidence of price gouging,” Coles said in a terse statement. “What’s needed are measures that tackle the real ­factors driving higher grocery ­prices, which are rising costs such as ­energy, fuel, labour, insurance, production, freight and distribution.”

Mr Harrison, who runs a network of 84 stores under the Ritchies banner, pointed to the ACCC report as vindication of super­market behaviour.

“I thought it was summarised when the ACCC released their findings just over a week ago, but it seems to be back on the agenda,” he said.

“And what I find staggering is that there’s been eight ­inquiries ... and there is a 441-page report from the ACCC and the words ‘price gouging’ doesn’t ­appear once.”

He said he was not proud to be working in an industry constantly being referred to as ripping people off.

“I think I’m proud of the industry and how hard we work and how we service the local community, but I don’t like this idea that ­supermarkets are the bad guys.

“I think we provide much-needed work in the community. We are there rain, hail or shine seven days a week, public holidays. We don’t introduce public holiday weekend surcharges like all the cafes and restaurants do, yet we seem to be labelled as the bad guys, and it’s not the case.”

Mr Harrison said it needed to be remembered that grocery manufacturers were putting up prices, fuelled by their own inflation across wages, energy and other business costs, which has been fully documented.

Former ACCC chair Allan Fels, who ran the regulator between 1995 and 2003 and was also commissioned by the ACTU to conduct an inquiry into price gouging across all sectors, said it was hard to prove gouging — due to its lack of an academic definition — and he preferred the term “excessive pricing”.

Excessive pricing is defined, he said, when prices are substantially above costs and a reasonable ­profit, and well above what would apply in a moderately competitive market.

Former ACCC boss Alan Fels has found no evidence of profit gouging by the supermarkets. Picture: David Geraghty

His ACTU report found no evidence of profit gouging, but he has called for legislation to combat excessive prices for all companies and which should be based on ­European Union and British laws. “All I did was recommend the ACCC dig deeper than I was able to,” Professor Fels said.

“They should introduce a ­divestiture law across the whole economy based on the US ­approach.”

The federal opposition and Greens have called on divestiture powers to break up the supermarkets if it is proven they are misusing their market power.

Professor Fels said a current ACCC Federal Court case against Woolworths and Coles over alleged fake discounting could be considered price gouging, however, if proven in court. That action is ongoing.

Meanwhile, a recent report by JP Morgan analyst Bryan Raymond has found Woolworths’ price premium to German discounter Aldi in March decreased significantly to 7.8 per cent (against 8.4 per cent in ­February), the lowest level recorded for Woolworths in the two years of conducting the price ­survey.

The report found Coles’ price premium also decreased to 8.5 per cent (against 9.2 per cent in February), in the middle of the historical range.

“The narrowing of the price gap to Aldi from both Coles and Woolworths in February and March indicates that the major ­supermarkets are attempting to reposition their value perception ahead of the ACCC final report and the federal election,” Mr Raymond said.