Yahoo Finance Coles shopper’s $200 grocery bill reveals why supermarkets can ‘jack up prices'
High grocery prices could continue unless major changes are made to the Australia's supermarket system, an economist says.
A Coles shopper has shared his shock at paying nearly $200 for a small trolley of groceries, as an expert warns shoppers need to look beyond the big supermarkets to get savings.
The Queensland dad shared a picture of his grocery haul on social media, along with the caption: “$200 at Coles for this”.
The trolley included a 30-pack of Pepsi cans, two bottles of Pepsi, two sizzle steak packets, cup noodles, Coco Pops, chips, popcorn, a jar of Nutella, broccoli, cauliflower and a bag of carrots, along with shampoo, conditioner, fabric softener and cleaning spray.
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The dad explained he had “growing teenagers who love to snack on things other than the fresh vegies and fruits all the time”.
A comparable trolley of goods with cheaper brand items reduced the cost to around $125.
While some people criticised the shopper over his choice of groceries, the image exposes a bigger problem facing shoppers at the checkout right now.
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Coles, Woolworths dominate the market
Woolworths and Coles control about two-thirds of the Australian grocery market. But a recent survey found the big two supermarkets were becoming less dominant.
About one in five Aussies say they now shop at Aldi, according to data from Finder, while the remainder shop at Metcash-run stores (including IGA and Friendly Grocer) or other independent supermarkets.
Another Queensland shopper also attracted attention after sharing just how much $10 got them at a fruit and vegetables market.
The image shared by the shopper shows a haul with five bags of limes, carrots, cucumbers, capsicums, pears, apples and nectarines, cauliflower and more, from the St Ives market in Goodna.
Finder head of consumer research Graham Cooke said the two shopper hauls showed the importance of "shopping widely" and looking beyond the big supermarkets for deals.
“I think diversifying your shopping is the best way to make sure you are getting the best value,” Cooke told Yahoo Finance. “Check out your Coles, Woolies, Aldi and your farmer’s market. Then you get a sense of where the types of things you buy tend to be cheaper.”
Shop around
If you don’t have time to shop around more widely, Cooke said you could still save money by being careful about which brands you picked.
Cooke said he did his own price comparison for the Coles shopper’s trolley and put comparable products in his local online shopping website.
"I tried to keep it low cost and it came in at $125, rather than $200. It can make a big difference with which brands you pick,” he said. “In a cost-of-living crisis and if you are living paycheque to paycheque, it makes sense to shop around a little more to get better value.”
With the average household now spending $188 per week on groceries, Cooke said it was important for shoppers to look for ways to “squeeze value” wherever they could.
Bigger structural changes needed
Australia Institute senior economist Matt Grudnoff said a lack of competition meant supermarkets could “jack up their prices” and earn bigger profits.
“What actually needs to change is the structural problem. We have too little competition,” Grudnoff told Yahoo Finance.
“The first thing is to prevent it from getting worse. If you have stronger regulations around mergers and acquisitions, you can stop large companies from gobbling up their new competitors as they emerge.”
But to fix the current crisis, Grudnoff said Australia needed to introduce antitrust laws.
“Basically, what they do is they break up these big companies into smaller companies and then force competition into the market that way,” he said.
So, imagine if Woolworths and Coles were split into two. There would then be four big players, plus existing supermarkets like Aldi and IGA.
“Effectively, you would have six big players that were all able to compete against each other and you would have more competition,” Grudnoff said.
“It’s more than just stopping competition from getting worse - and, to be clear, we need that as well - but we also need to actually fix the problem as it currently exists.”
While upcoming inquiries into supermarkets could put the heat on Coles and Woolworths to lower their prices, Grudnoff said it was unlikely shoppers would receive long-standing relief unless there was “real legislative change”.
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