Coles faced the Australian Competition & Consumer Commission (ACCC) on Thursday (Wednesday GMT) as part of the regulator's Supermarkets inquiry hearings.
In November, the ACCC commenced its live streamed hearings involving senior executives of Aldi, Metcash, Woolworths and various supplier representatives, with Coles the last in the line-up.
So far in focus, chief executive Leah Weckert has answered questions around store pricing in regional and remote locations, saying the supermarket operates a "state-wide pricing" model in more than 300 of its regional supermarkets and prices are the same regardless if a customer shops in rural Victoria or Melbourne.
However, in remote locations the supermarket giant said it does charge a "freight premium" leaving shoppers to pay more for the same product than in metro areas.
When asked about the company’s sales revenues lifting 4.3% in 2024 despite the cost-of-living pressures faced by its customers, Weckert responded that in challenging environments and raising costs “We need businesses like Coles to be profitable for the long-term.”
Counsel Naomi Sharp SC has raised concerns of the supermarket’s improved margins after its suppliers said they are grappling with lower profits amid Coles reporting earnings margin increased from 4.8% in 2023 to 5% in 2024.
The supermarket said it has accepted more than 90% of the cost price increases issued by its suppliers and that Coles itself has faced rising costs, with Weckert claiming in both 2021 and 2022 its earnings margin held steady at 5% and the 0.2% increase year-on-year was driven by improved operational efficiences.
Barrister Sharp continued by asking if the chief executive thought the Australian sector was an oligopolistic market with Woolworths’ 38% retail sales share, Coles’ 29% and Aldi’s 9% stake, however Weckert said other retailers with the likes of Amazon, Chemist Warehouse and Bunnings need to be considered and argued "If an oligopoly implies that there’s a lack of competition, then no I don’t."
The hearing with Coles continues to 22 November.
In January, the Australian Government announced it had directed the ACCC to conduct an inquiry into Australia’s supermarket sector to examine the pricing practices of the supermarkets and the wholesale and retail level.
The supermarkets inquiry will run for one year with the final report expected by February 2025.
The ACCC has commenced separate proceedings in the Federal Court against Woolworths and Coles for allegedly breaching the Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products, which pre-dates the Supermarkets Inquiry and will not consider the issues in dispute in the public hearings.