The grocery wars continue, with the chair of the IGA national board issuing a warning to supermarkets to cease their discount war or risk putting more small businesses in jeopardy.
The warning comes just after the Food and Grocery Council issued a similar statement after Coles announced it would introduce more discounts for 100 of its popular products, as part of a push to boost private label sales.
However, Coles has defended its action in a statement saying it’s helping households save money.
IGA national board chairman Ben Ryan released a statement yesterday calling for an end to the discount wars, which he said have caused significant deflation and are putting more pressure on SMEs. The IGA national board represents about 1,400 independent grocery stores across Australia.
“This is not simply a case of small business crying foul because they don’t want to compete. Small businesses find it almost impossible to compete on a level playing field when the big national grocery chains behave like predators.”
“If a small business loses money it goes under, if a store in a large national chain loses money it is amortised over the group with the hope it will improve over time as their duopoly grows.”
In a statement, a Coles spokesperson said the company is helping Australians “meet rising household costs”.
“This is a multi-million dollar investment by Coles which will lower the cost of shopping for millions of Australians and we can do this by working more efficiently within our own business.”
The spokesperson also referenced research from Deloitte which found investment from Coles into new products flows through to the SME supply chain.
While the two major supermarket chains have been attempting to tighten relationships with local suppliers, damage from the price wars has already been felt across the industry – SmartCompany has reported on the numerous food businesses which have collapsed over the past few years.
Recent research from IBISWorld suggests private label sales are set to make up a third of all supermarket sales by 2017.
Ryan said this is the only country in the world where two businesses – Coles and Woolworths – have been allowed to dominate a variety of industries such as dry groceries, petrol, hardware, and alcohol distribution.
“There appears to be nothing to stop them behaving in this irrational manner, they appear to want to destroy all competition in the retail sector.”
Ryan says the Australian Competition and Consumer Commission needs to “stand up to these companies once and for all and ensure fair competition on a level playing field”.
“It is time for the large national grocery chains to start playing fair with the Australian people and give everyone a go – they can have their marketing war over products that won’t see the farmers, manufactures and suppliers go broke.”
Small businesses have become increasingly concerned over the pressure being placed on them by major supermarkets, although the industry recently welcomed a push by Woolworths to emphasise local produce.