JuddsABlue
Norm Smith Medallist
Channeling my inner SB here (except I provide cliffnotes at the bottom 
)
We all know Coles and Woolworths, we all most likely have shopped at either or. We all most likely do all of our shopping at one of these two places. Its a little tribal, for instance my girlfriend is a coles girl and I'm a woolys guy, so when she shops at Coles I get annoyed because they dont have a couple of things I like etc
And what we also know, but dont really like to invest too much time thinking about, is these two companies own an absurdly high percentage of the grocery market share, around 75% roughly. The immediate and obvious impact of this is small business owners, think local butchers/fruit stores and even now pharmacies and plenty others.
The second and also much publicized impact of this type of power and competition against each other is the price these stores purchase products off the supplier. We all remember the media uproar of Coles and Woolies going toe to toe in milk wars, driving down the gate price of the farmers milk, destroying the farmers profits and ability to earn a living. For those who didnt catch it or dont remember, Coles and Woolies essentially said to the farmers "this is the new price of milk" over and over again, driving the gate price down to an absurdly low amount so they could pass on promos such as $1 per liter to get people in to the store. There are other examples I've heard but dont have sources for of these companies going to other general supplies and telling them what they'll be buying their product at. The suppliers dont have a choice, if you're not on their shelves you're not selling at all.
A third and not so obvious effect of their power is what actually sits on the shelf. Their own branded products are growing from strength to strength. Take Woolworths Tomato Sauce for example. They would obviously want their own product to sell over the other products from Fountain or Heinz wont they? So how do they do it? Firstly they undercut because they have that power, so the suppliers who manage to get their products on the shelves of these supermarkets are going to be competing directly against a bottle next to them on a shelf thats cheaper.
But how long until Woolworths want the entire tomato sauce market? What happens when you, a keen Heinz Tomato sauce man (or your wife), is shopping and dont see any Heinz sauce on the shelf? Do you storm out of the store, and go trecking across the suburb for another supermarket with Heinz? Probably not. For now, if you're diligent, you'll make the effort to not buy sauce, you'll go to another store and buy it. How long will that last? Are you destined to do all your shopping at Woolworths, except for sauce? You'll always make an extra stop off for that delicious red poison? You might, but most wont. They'll pick up the next sauce bottle, whatever it is. And so, by eliminating one product from its shelf, Woolworths have just increased their own market share of tomato sauce.
Now apply this to all products, to butter, milk, bread, spices and all the other things you buy. If we were to lose all of our favorite products at once, of course we would leave. But make no mistake, product by product, price by price, theyre increasing their ownership of what they sell and what we buy, and where the money goes. It'll be death by a thousand cuts, small blow after small blow, they'll own more and more and others will silently go broke.
Less to small business shop fronts, less to farmers, and less to suppliers, to the point where they will control nearly everything we eat and buy. At the moment they currently control about 75% of the grocery market, which is scary to say the least. Along side that, a lot of the remaining 25% is split up between Aldi, IGA, while a mere 7% remains under the category of "other supermarkets" (read small business owners)
So what can we do about it? We can all pledge to shop more at our local green grocer and butcher, but will we really?
We are probably too far past the tipping point, but if we dont act now to increase the market share of smaller companies, I guess we never will.
But thats the discussion, whats your tipping point? What would the two giants have to do to stop you from shopping there? Is the price too good and your bottom line is paramount? Or are you already shopping local and making your dollar talk?
There are many, many branches that veer off on this topic, such as their fuel control, credit cards, pokie machines, liquor, insurance companies and much more. They have a massive customer base and everybody wants it, GE Money have just signed up with Coles and Coles will soon be offering personal loans. GE need Coles customer base through their reward card (remember when we all gave them all of our details for 1c discount on flights for every dollar we spend?), Coles want that precious loan interest money. Others may be more experienced to introduce points of discussion on those topics, which are certainly as dangerous,
Imagine a world where you need to go get a Coles loan, to pay off your Coles credit card, because you've maxed it out using it buy Coles Fuel, Coles groceries and your Coles insurance home and car premium. Plus you might want to sneak a little down the Coles pokies on the weekend at the Coles own local pub.
Over to you, bigfooty
Cliffnotes:
-Coles and Woolies own 75% of the grocery market
-They have the power to choose what foods make it to their shelves, and in turn what companies succeed and fail as we'll only buy what they present to us
-Because of this power, they essentially decide what price they want to buy from suppliers, because suppliers cant say no because there are no other avenues to sell from, they'll go broke
-They are branching out to several other markets which they already have good control over
-Its killing small business
-When will it end, someone think of the children
Marketshare source: http://www.roymorgan.com/findings/5...oolworths-while-aldi-makes-gains-201402120013
)We all know Coles and Woolworths, we all most likely have shopped at either or. We all most likely do all of our shopping at one of these two places. Its a little tribal, for instance my girlfriend is a coles girl and I'm a woolys guy, so when she shops at Coles I get annoyed because they dont have a couple of things I like etc
And what we also know, but dont really like to invest too much time thinking about, is these two companies own an absurdly high percentage of the grocery market share, around 75% roughly. The immediate and obvious impact of this is small business owners, think local butchers/fruit stores and even now pharmacies and plenty others.
The second and also much publicized impact of this type of power and competition against each other is the price these stores purchase products off the supplier. We all remember the media uproar of Coles and Woolies going toe to toe in milk wars, driving down the gate price of the farmers milk, destroying the farmers profits and ability to earn a living. For those who didnt catch it or dont remember, Coles and Woolies essentially said to the farmers "this is the new price of milk" over and over again, driving the gate price down to an absurdly low amount so they could pass on promos such as $1 per liter to get people in to the store. There are other examples I've heard but dont have sources for of these companies going to other general supplies and telling them what they'll be buying their product at. The suppliers dont have a choice, if you're not on their shelves you're not selling at all.
A third and not so obvious effect of their power is what actually sits on the shelf. Their own branded products are growing from strength to strength. Take Woolworths Tomato Sauce for example. They would obviously want their own product to sell over the other products from Fountain or Heinz wont they? So how do they do it? Firstly they undercut because they have that power, so the suppliers who manage to get their products on the shelves of these supermarkets are going to be competing directly against a bottle next to them on a shelf thats cheaper.
But how long until Woolworths want the entire tomato sauce market? What happens when you, a keen Heinz Tomato sauce man (or your wife), is shopping and dont see any Heinz sauce on the shelf? Do you storm out of the store, and go trecking across the suburb for another supermarket with Heinz? Probably not. For now, if you're diligent, you'll make the effort to not buy sauce, you'll go to another store and buy it. How long will that last? Are you destined to do all your shopping at Woolworths, except for sauce? You'll always make an extra stop off for that delicious red poison? You might, but most wont. They'll pick up the next sauce bottle, whatever it is. And so, by eliminating one product from its shelf, Woolworths have just increased their own market share of tomato sauce.
Now apply this to all products, to butter, milk, bread, spices and all the other things you buy. If we were to lose all of our favorite products at once, of course we would leave. But make no mistake, product by product, price by price, theyre increasing their ownership of what they sell and what we buy, and where the money goes. It'll be death by a thousand cuts, small blow after small blow, they'll own more and more and others will silently go broke.
Less to small business shop fronts, less to farmers, and less to suppliers, to the point where they will control nearly everything we eat and buy. At the moment they currently control about 75% of the grocery market, which is scary to say the least. Along side that, a lot of the remaining 25% is split up between Aldi, IGA, while a mere 7% remains under the category of "other supermarkets" (read small business owners)
So what can we do about it? We can all pledge to shop more at our local green grocer and butcher, but will we really?
We are probably too far past the tipping point, but if we dont act now to increase the market share of smaller companies, I guess we never will.
But thats the discussion, whats your tipping point? What would the two giants have to do to stop you from shopping there? Is the price too good and your bottom line is paramount? Or are you already shopping local and making your dollar talk?
There are many, many branches that veer off on this topic, such as their fuel control, credit cards, pokie machines, liquor, insurance companies and much more. They have a massive customer base and everybody wants it, GE Money have just signed up with Coles and Coles will soon be offering personal loans. GE need Coles customer base through their reward card (remember when we all gave them all of our details for 1c discount on flights for every dollar we spend?), Coles want that precious loan interest money. Others may be more experienced to introduce points of discussion on those topics, which are certainly as dangerous,
Imagine a world where you need to go get a Coles loan, to pay off your Coles credit card, because you've maxed it out using it buy Coles Fuel, Coles groceries and your Coles insurance home and car premium. Plus you might want to sneak a little down the Coles pokies on the weekend at the Coles own local pub.
Over to you, bigfooty
Cliffnotes:
-Coles and Woolies own 75% of the grocery market
-They have the power to choose what foods make it to their shelves, and in turn what companies succeed and fail as we'll only buy what they present to us
-Because of this power, they essentially decide what price they want to buy from suppliers, because suppliers cant say no because there are no other avenues to sell from, they'll go broke
-They are branching out to several other markets which they already have good control over
-Its killing small business
-When will it end, someone think of the children
Marketshare source: http://www.roymorgan.com/findings/5...oolworths-while-aldi-makes-gains-201402120013
