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An end to Stalinist supermarket planning. Now incumbency to rule

By johnboy - 7 May 2013 26

Andrew Barr has announced he’s going to stop playing dollhouses with supermarkets in the ACT:

In its response the Government notes that there have been several important changes in the Territory’s supermarket sector since 2010, when the Government introduced the Supermarket Competition Policy Implementation Plan (SCPIP).

These changes include:

— The new ‘full-line’ supermarkets to be built in Dickson, Kingston, Casey and Amaroo, which will address the undersupply of such stores in Gungahlin and central Canberra;

— Supabarn’s creation of a new wholesaling operation, and the arrival of Costco in the ACT, both of which will see increased competition in the local grocery wholesaling market; and

— A shift in the Australian Competition and Consumer Commission’s approach to the supermarket sector. In particular, the ACCC has been undertaking vigorous work in regulating supermarket competition across Australia.

Further, as part of the implementation of the SCPIP a site in Chisholm has been sold to Aldi, and potential sites for new full-line supermarkets and the expansion of existing supermarkets have been considered during master planning work for Erindale, Kambah Village and Weston.

As a result of the changes to the local supermarket sector and the ACCC’s greater level of scrutiny, the ACT Government will reduce its level of direct intervention in the sector and withdraw the SCPIP.

While there will no longer be a direct role for the SCPIP, the ACT Government will continue to play an important role in shaping the Territory’s supermarket sector by ensuring that the Territory Plan and other planning activities provide appropriate support for local centres. In its response to the Inquiry, the ACT Government reaffirmed its commitment to maintaining a clearly defined hierarchy of shopping centres across Canberra.

Having achieved retailing nirvana Andrew now wants prospective new players to justify their proposed existence:

Further, proponents of new supermarket space will also be required in some circumstances to prepare a small business impact statement for similar businesses that are already trading in the same geographic market.

While no longer maintaining a formalised supermarket competition policy, the Government will continue to consider supporting proposals to boost competition. Should exceptional circumstances arise the government will retain its prerogative to sell land directly to particular supermarket operators.

It is important to note that the ACCC will continue to monitor and regulate the acquisitions of supermarkets and supermarket sites. And the ACT Government will continue to support the work of the ACCC to ensure the best outcomes for supermarket competition.

What’s Your opinion?


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26 Responses to
An end to Stalinist supermarket planning. Now incumbency to rule
Ian 4:35 pm 08 May 13

I have to wonder if the ditching of the policy might magically coincide with some legal advice that the policy probably wouldn’t stand up in court if Woolies or Coles decided to challenge it, and that Woolies and Coles have had a chat to ACT Govt along the lines of enough’s enough of shutting us out.

proboscoid 4:34 pm 08 May 13

rosscoact said :

I can see where you’re coming from but it’s not borne out in practice.

Take wine and beer as an analogy for the entire product list.

The duopoly dominates the liquor industry, I think they control over 60% of the market.

Much of what they sell is own label stuff which comes out of the same blended tankers at different price points. That’s not an issue though, a crime against good taste certainly, but if that’s what you drink good on you. What it does however is obfuscate the real prices for the remainder of their products.

The remainder of wine products is 20 to 30% higher than what you can buy at other bricks and mortar retailers and considerably more than online retailers. This applies to all their outlets in varying degrees with Dan Murphy’s at the lower end and Vintage cellars at the other.

An example is the recent 30% off sale (for six wines) at Woolworths which coincided with the Penfolds 2013 release. Even at 30% off they were still more expensive than could be purchased elsewhere with no minimum buy requirements).

I have no doubt that other product lines (if not all) are in the same boat.

I’m just not convinced that market power leads to a greater benefit for the consumer in any context. Didn’t I read somewhere that we have close to the highest food costs in the world? Obviously other factors at play but if the competition was fierce between the big two wouldn’t that not be the case?

Good point. I suspect alcohol is special for some reason, perhaps because it is more heavily regulated.

I can think of places in the world where the price of groceries is similar to Australia, but alcohol is far far cheaper.

rosscoact 3:53 pm 08 May 13

proboscoid said :

I really fail to see the point behind negative public opinion on super markets.

The desirable outcome is where competition drives prices down. Coles and Woolies are in cut-throat competition with each other.

Rosscoact said above that they are just driving out competitors so they can jack the prices up. But that isn’t the case. If they did jack their prices up to start skimming profits of customers, it would make the market more attractive for potential competitors to enter the market. In fact, duopolies (or two firms dominating a market as is the case here) can result in some of the fiercest competition because there is a strong incentive to steal market share from competitors.

The strategy of Coles and Woolies is simple. It is to minimise costs by creating enormous economies of scale through vertically integrating warehouses, logistics and retail. In doing so they use less of society’s resources to fill your shopping trolley.

This is unabashedly a good thing.

PS the government should allow retail outside town centres etc. Currently retail space in Canberra because it is restricted to certain areas. More land available for setting up firms means more competition.

I can see where you’re coming from but it’s not borne out in practice.

Take wine and beer as an analogy for the entire product list.

The duopoly dominates the liquor industry, I think they control over 60% of the market.

Much of what they sell is own label stuff which comes out of the same blended tankers at different price points. That’s not an issue though, a crime against good taste certainly, but if that’s what you drink good on you. What it does however is obfuscate the real prices for the remainder of their products.

The remainder of wine products is 20 to 30% higher than what you can buy at other bricks and mortar retailers and considerably more than online retailers. This applies to all their outlets in varying degrees with Dan Murphy’s at the lower end and Vintage cellars at the other.

An example is the recent 30% off sale (for six wines) at Woolworths which coincided with the Penfolds 2013 release. Even at 30% off they were still more expensive than could be purchased elsewhere with no minimum buy requirements).

I have no doubt that other product lines (if not all) are in the same boat.

I’m just not convinced that market power leads to a greater benefit for the consumer in any context. Didn’t I read somewhere that we have close to the highest food costs in the world? Obviously other factors at play but if the competition was fierce between the big two wouldn’t that not be the case?

proboscoid 3:22 pm 08 May 13

I really fail to see the point behind negative public opinion on super markets.

The desirable outcome is where competition drives prices down. Coles and Woolies are in cut-throat competition with each other.

Rosscoact said above that they are just driving out competitors so they can jack the prices up. But that isn’t the case. If they did jack their prices up to start skimming profits of customers, it would make the market more attractive for potential competitors to enter the market. In fact, duopolies (or two firms dominating a market as is the case here) can result in some of the fiercest competition because there is a strong incentive to steal market share from competitors.

The strategy of Coles and Woolies is simple. It is to minimise costs by creating enormous economies of scale through vertically integrating warehouses, logistics and retail. In doing so they use less of society’s resources to fill your shopping trolley.

This is unabashedly a good thing.

PS the government should allow retail outside town centres etc. Currently retail space in Canberra because it is restricted to certain areas. More land available for setting up firms means more competition.

poetix 3:01 pm 08 May 13

Yes, we have a long way to go before we reach the heights depicted in this video. (Wait for the music after the speeches.). Some of the furniture is fantastic.

http://www.youtube.com/watch?v=GjbIMr4HnHM&feature=youtube_gdata_player

rosscoact 1:30 pm 08 May 13

JC said :

rosscoact said :

Once Colesworths complete their stranglehold on the supermarket businesses in the ACT groceries will go the way of petrol i.e. 15% higher than the nearest capital cities.

Canberras fuel price has ALWAYS been higher than Sydney. In the past they said it was because of the design of Canberra where more or less every suburb had a servo miles from any competition. Then came the Shell/Coles Caltex/Woolies go-branding and that now gets the blame.

Though you do realise that neither Coles nor Woolies actually controls the price of fuel except for Woolworths owned sites? The rest are still owned, leased or branded by the oil company with the supermarket co-brandibg and of course in Canberra there are MANY non shell/coles or Woolworths/Caltex sites to buy from.

Well no, it hasn’t always been the case that Gilgandra is lower than Gungahlin, that’s a recent development.

Also, what possible reason do the independents have for lowering prices? The effective duopoly means that if you want to fight them on price they will lower their price on fuel until you go broke.

With impregnable market dominance and a wide range of low value products they can raise their prices one cent on 50% of their goods across Australia (not the ‘basket’ of course) to make up any profit shortfall caused by attacking bothersome businesses.

DrKoresh 1:04 pm 08 May 13

FarrerGirl said :

I made the mistake of not checking the use by date of some duck I purchased at the Civic Supabarn…Oh my god, it was so bad – the stench of the meat was beyond words – we had to open every window to evacuate the rancid odour. In my haste to rid the house of this duck, I threw everything into the outside bin – I really should have rinsed off the label and taken it back to Supabarn.

That’s just fowl! I hope you gave them the bill.

FarrerGirl 12:48 pm 08 May 13

c_c™ said :

Last time I was in Supabarn, I found no less than 8 different products lines where most of the stock on the shelf was weeks past the ‘Use-By’ date. Orange juice, cheeses, milks and meat – some serious items to sell past the Use-By.

I made the mistake of not checking the use by date of some duck I purchased at the Civic Supabarn…Oh my god, it was so bad – the stench of the meat was beyond words – we had to open every window to evacuate the rancid odour. In my haste to rid the house of this duck, I threw everything into the outside bin – I really should have rinsed off the label and taken it back to Supabarn.

c_c™ 11:30 am 08 May 13

I’ve yet to go into a supermarket other than Coles and Woolworths that’s worth going into.

Last time I was in Supabarn, I found no less than 8 different products lines where most of the stock on the shelf was weeks past the ‘Use-By’ date. Orange juice, cheeses, milks and meat – some serious items to sell past the Use-By.

Most of them are expensive and have poor product range. Supabarn isn’t tiny, and many locals belong to the IGA network, so it’s not like they lack buying power.

At the end of the day it should be the market that decides what business prevail, and until the minors get their act together, Coles and Woolies are going to be dominant.

JC 11:13 am 08 May 13

rosscoact said :

Once Colesworths complete their stranglehold on the supermarket businesses in the ACT groceries will go the way of petrol i.e. 15% higher than the nearest capital cities.

Canberras fuel price has ALWAYS been higher than Sydney. In the past they said it was because of the design of Canberra where more or less every suburb had a servo miles from any competition. Then came the Shell/Coles Caltex/Woolies go-branding and that now gets the blame.

Though you do realise that neither Coles nor Woolies actually controls the price of fuel except for Woolworths owned sites? The rest are still owned, leased or branded by the oil company with the supermarket co-brandibg and of course in Canberra there are MANY non shell/coles or Woolworths/Caltex sites to buy from.

PantsMan 3:55 pm 07 May 13

Maybe Andrew Barr could now focus on the $350m deficit he’s foisted on us!

DrKoresh 1:27 pm 07 May 13

rosscoact said :

Once Colesworths complete their stranglehold on the supermarket businesses in the ACT groceries will go the way of petrol i.e. 15% higher than the nearest capital cities.

Shop at Supabarn then

rosscoact 12:25 pm 07 May 13

Once Colesworths complete their stranglehold on the supermarket businesses in the ACT groceries will go the way of petrol i.e. 15% higher than the nearest capital cities.

Mothy 11:50 am 07 May 13

Mothy said :

note one of the majors.

Not.

Damn cranky typing.

Mothy 11:42 am 07 May 13

So, in 2009 we accept John Martin’s review of Supermarket Competition Policy. Page 26 of that report recommends that Amaroo and Casey group centre supermarkets be released to independent operators, note one of the majors.

On 7 March 2013 expressions of interest in operating the full line supermarket at Amaroo close.

On 7th May 2013 as above, we abandon the Supermarket Competition Policy Implementation Plan.

Gee, let me think what happens next…

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