JavaScript disabled. Please enable JavaScript to use My News, My Clippings, My Comments and user settings.

If you have trouble accessing our login form below, you can go to our login page.

If you have trouble accessing our login form below, you can go to our login page.

Coles takes aim at the corner store

Cheap milk at Coles Express is seen as a direct attack on the corner store.

Cheap milk at Coles Express is seen as a direct attack on the corner store. Photo: Paul Harris

Coles has opened a new front in its food price war but this time its larger rival, Woolworths, is not the target.

The company is now offering $1 per litre milk through more than 600 Coles Express outlets Australia-wide in what is seen as a direct attack on the traditional corner shop - a sector which is already suffering in the cross fire supermarket giants’ food price war.

Coles has not added its $1 bread to its convenience store offering but did cut the price of its Coles brand bread from $2.49 to $2.30.

According to a recent report from industry research firm Ibis, consolidation is inevitable in the same way that Coles and Woolworths have cornered the supermarket sector.

The president of the Queensland Dairyfarmer’s Organisation called for consumers to boycott the cheap Coles Express milk and support their local independent corner stores which are being squeezed out of business.

‘‘Dairy farmers see that the market has failed and this is yet another urgent example for the ACCC to investigate predatory pricing,’’ he said.

Coles corporate affairs chief Jon Church denied the price cuts would put pressure on independent convenience stores, saying ‘‘the volume of milk and bread sold at Coles Express is very small compared to Coles supermarkets and will not make a material difference to other convenience stores".

"We have aligned prices with supermarkets because customers told us they did not understand why they should pay more for the same product at Coles Express. We thought they had a point and so we now offer the same price for these products whether bought at our convenience stores or supermarkets," he said.

According to Ibis, Coles and Woolworths have already created tougher trading conditions for traditional convenience stores via cheaper prices at the supermarkets.

‘‘A renewed focus by supermarket on everyday staple items such as bread and milk, coupled with significant price reductions in these categories caused further frustration for convenience operators who relied on such goods to attract consumers in the first place,’’ said the Ibis report.

Their direct entrance into the convenience market, via alliances with petrol retailers, has intensified competition further.

“These heavily discounted offers on products such as milk, subsidised by the major chains against their many other product categories, might seem to be a win for consumers in the short term, but the long term outcome is a further erosion of competition in the marketplace and increased plight for small retailers,” said Australasian Association of Convenience Stores (AACS) executive director Jeff Rogut.

The supermarket giants are not the only players driving industry consolidation.

7-Eleven has lifted its share of the market to more than 650 stores with the acquisition of around 300 Mobil petrol stations in 2010.

Woolworths operates 550 outlets which are co-branded with Caltex.

‘‘Independent convenience stores need to implement new strategies to compete with convenience outlets operated by large companies like Coles and Woolworths. Larger players will effectively crush those that continue to offer the same product range and methods of doing business,’’ said Ibis.

185 comments

  • And we're to be surprised why?

    Commenter
    Meh..
    Location
    Sth Cst
    Date and time
    January 10, 2013, 1:11PM
    • That's the tragedy isn't it? What is government purpose but to protect citizens? But no, this pitiful government let these huge monopolies strangle out everything from petrol stations, to pubs and clubs, to green grocers, bottlo's..everything in Australia is owned or controlled by Colesworths. In other countries these companies would be broken up.

      Commenter
      L R
      Date and time
      January 10, 2013, 2:31PM
    • I don't think anybody is asking us to be surprised

      Commenter
      Marty
      Location
      Chelsea
      Date and time
      January 10, 2013, 2:34PM
    • Anywhere else in the world you would not have so much market-share between 2 operators. But the ACCC is a toothless tiger when it come to matters such as these. and the poor old consumer is always put last. They already own the food market, alcohol market, gambling market, petrol market etc. They want to get into the pharmacy market, banking......the list goes on. In the year 2100 a child will ask his grandfather "Really, Pop.......were there other stores that were not called Coles or Woolworths?"

      Commenter
      Bazza
      Date and time
      January 10, 2013, 2:41PM
    • And for the next shock, watch the ACCC do nothing...

      Commenter
      taking it, as usual
      Location
      in the land of oligopolies
      Date and time
      January 10, 2013, 3:07PM
    • Because the retail duolopy has been around for decades. As for the responsible party surely you should be pointing the finger at the ACCC and not the govt.

      But where is your evidence to support your outburst?

      Also at this point in time the basics such as milk & bread are back at 1980's levels. I don't hear anyone complaining about $1/litre a milk apart from the dairy industry. Also beer/wine/basic spirits are similar price or lower then in the 1980's thanks to some healthy competition by the likes of the big chains. If anything competition has improved with the likes of Aldi/Costco entering the markets over the last few years. The latter to offer fuel in the next year.

      Commenter
      Which pitiful govt are you referrring to?
      Date and time
      January 10, 2013, 3:24PM
    • The question is, do we want the ACCC to stand up to the Coles and Woolies of the world and insist that they charge more for their products, or should the ACCC be insisting that the suppliers charge the little guys the same pricing as the larger operators.
      The latter will force higher pricing on the duopoly because the suppliers will no longer be subsidised by the small operators higher buying pricing.
      After all this argument is not so much about competition as it is about survival of small operators.

      Commenter
      The Bigger Picture
      Location
      The Mall
      Date and time
      January 10, 2013, 3:27PM
    • Bazza you're wrong. The consumer has the power but is too lazy to shop elsewhere.

      The corner shop owners and farmers are the real losers in the supermarket monopoly.

      Commenter
      consumers have the power - use it
      Date and time
      January 10, 2013, 3:45PM
    • Coles have never forced me to buy thier cheap milk. They always give me the option to pay a dollar or to buy the full priced milk. I also buy the milk for a dollar. The farmer is getting the same price at the gate whichever bottle i buy.

      Commenter
      bear1
      Date and time
      January 10, 2013, 3:49PM
    • How do you solve the problem though? Coles and Woolies were applauded when they dropped the price on generic products, so its a bit hypocritical to now lambast them for the very same action.

      You cant have it both ways. People complain that the prices are too high, but when prices go down you get complaints that the low prices are killing competition...

      I cant see an easy way out myself.

      Commenter
      Gav
      Location
      Sydney
      Date and time
      January 10, 2013, 3:49PM

More comments

Comments are now closed




Featured advertisers

Special offers

Credit card, savings and loan rates by Mozo

Executive Style