The ACCC supermarkets inquiry issues paper released on 29 February expresses interest in how retail competition differs across Australia, particularly in regional and remote areas. A major focus will be the supermarkets’ approach to setting prices and “whether there is evidence to show that a lack of effective retail competition is contributing to higher prices.”
Business Council of Co-operatives and Mutuals (BCCM) Chief Executive Officer Melina Morrison says: “With the ACCC inquiry underway there is no better time than now to rethink how consumers and producers can get the best outcomes from the supermarket sector. We welcome the ACCC’s wider lens on supply chains as well as pricing. Supermarket competition is not just about lower prices for Australians and fairer relationships with suppliers. It’s about national security. With such high concentration in ownership, supermarkets can have an influence on the shape of domestic food production.”
The BCCM submission will encourage the ACCC to closely examine different business models in regional Australia and around the world as a guide to how the sector can meet the objectives and needs of all those who send supplies to delivery docks or those who walk out the front door with trollies each and every day.
“The inquiry represents a fantastic opportunity to support a shift in how the national supermarket sector is managed and how a ‘co-operative’ approach can ensure equity, diverse ownership and community cohesion have equal place alongside profit as major operational benchmarks,” Ms Morrison said.
“If we conclude that certain markets are too concentrated then the answers might lie not only in how to encourage in more players, but also different business models.”
Supermarket co-operatives are a major force in overseas markets. In Germany, two of the three largest retailers are co-ops with a combined turnover of $US142 billion, while in France the largest supermarket group, E. LeClerc is a co-op. Italy’s largest supermarket chain, Conad, is also a co-operative with turnover of $US20.1 billion. “In the UK, The Co-operative is a well-known high street chain of supermarkets. That’s solid evidence of the trust that communities elsewhere in the world place in businesses structured as co-ops.”
With 134 co-ops now active in the Australian retail sector (and a combined gross revenue of $1.13 billion in 2023), the BCCM believes there is considerable scope to expand the sector and provide greater competition and choice for consumers.
“Nearly 80% of Australia’s existing co-ops are located away from metropolitan areas, supporting regional communities with essential services, generating vital employment, and retaining wealth in local economies,” Ms Morrison said.
“What is required now is a regulatory framework that allows the co-operative business model to develop and provide further diversity in these markets.
“We are increasingly seeing that, in Australia, the notion of social licence does actually count for something.
“It is part of the DNA of co-operative businesses, and the growing discontent among Australian consumers should tell us there’s need for more diversity of corporate form as well as more competition.”
The BCCM is the peak national body for Australia’s $37 billion co-operatives and mutuals sector. Co-operatives and mutuals provide essential services and affordable pricing to their members across the economy from banking, insurance and superannuation to retail, agriculture, health, social care and housing. Co-operatives and mutuals are member owned and operated and include some of Australia’s biggest household names including HCF, NRMA, Norco and Australian Unity.
Source of global data: World Cooperative Monitor’s “Exploring the cooperative economy” report 2023 (launched January 2024).