The recent supermarket inquiry has shed light on many Australian families’ financial struggles in purchasing basic necessities and groceries. This situation has been further complicated by the recent case against major supermarket chains Coles and Woolworths for allegedly misleading discounting practices.
“The ACCC has uncovered evidence suggesting that these supermarkets may have been inflating prices while creating the illusion of discounts. This revelation underscores the critical need for greater transparency in grocery pricing for consumers,” said Dr Meg Elkins, RMIT Senior Lecturer in Economics, specialising in community wellbeing and dynamic pricing.
“In light of these findings, the new mandatory rules for the Food and Grocery Code of Conduct, recommended in the recent Supermarket Inquiry, must be implemented urgently. These measures are essential to restoring consumer trust and ensuring fair pricing practices in the grocery sector.
“Trust is fundamental in the relationship between consumers and retailers. The ACCC’s case could confirm what many consumers have long suspected about deceptive discount pricing. It’s crucial that we take immediate action to protect Australian families and ensure they can access affordable groceries without fear of being misled.
“There is evidence that supermarkets may have artificially inflated prices while creating an illusion of discounts. The impact of these practices extends beyond individual households. There are worries that such pricing strategies may have contributed to overall inflation, as consumers unknowingly paid higher prices for goods they believed were discounted,” she said.
Dr My Nguyen, is a Senior Lecturer in Finance who specialises in market competition, empirical corporate finance, banking, sustainable finance, and digital financial services at RMIT.
She says the ACCC’s move highlights the need for transparency and honesty in marketing strategies, especially in the retail sector where consumers rely heavily on advertised discounts.
“This case could set a legal precedent for how promotional pricing is regulated in Australia. If the ACCC’s claims are upheld, it might lead to more rigorous enforcement of consumer protection laws in the future.
“Coles and Woolworths often engage in price wars, trying to undercut each other to gain market share. This competitive pressure can sometimes lead to aggressive pricing strategies that may push the boundaries of consumer laws.
“Competitors might use this opportunity to highlight their own pricing transparency, potentially gaining market share from consumers who are disillusioned with Woolworths and Coles. In the long run, ensuring fair pricing practices can contribute to a healthier economy by fostering trust between consumers and businesses, which is essential for sustainable economic growth.”
Dr Tamara Wilkinson from Monash Law School says the timing of the ACCC’s actions against Australia’s two largest supermarkets is particularly significant given the cost-of-living pressures that have been impacting Australian households in recent years.
“By briefly raising prices and then offering ‘discounted’ prices that were higher than the original item prices, as is alleged by the ACCC, Woolworths and Coles may be found to have prioritised their bottom lines over complying with their legal obligations not to mislead or deceive consumers,” she said.
“The financial penalties for engaging in misleading or deceptive conduct in Australia can be significant, and given that the ACCC has alleged a large number of contraventions, this litigation could have serious financial consequences for Woolworths and Coles if it is successful.
“It is also likely to send a powerful signal to the market that this kind of conduct – raising and then ‘discounting’ prices – is not acceptable.”
Associate Professor Fiona Newton, Department of Marketing, Monash Business School says the allegations are likely to further erode consumer trust in major supermarkets. However, this may not lead to significant changes in shopping habits due to factors like convenience, product range and ingrained routines.
“Shoppers on tight budgets will likely continue prioritising price, despite feeling frustrated or distrustful, as they may perceive limited alternatives,” she said.
“On the other hand, those with more discretionary income might explore independent supermarkets as a way to express their dissatisfaction.”