With the grocery giant Coles, still out there price cutting like a drunken soldier, discount milk, bread, fruit&veg, meat etc, one has to ask, just who is picking up the tab.

We all know production and transport/handling costs are up and the introduction of the carbon and renewable energy taxes have not helped.

So if Coles can sell cheaper, lots cheaper in many cases, yet, still achieve record profits, who is paying for the discounts.

More importantly,if it is the producers, as I suspect, is this fair, and should consumers feel guilty of supporting such unfair practices.

Perhaps the Goodman Fielder case is just the beginning of producers saying, enough is enough.

rehctub,

Have you never head of 'Lost Leaders' milk and bread are ideal examples of such items. The $1 bread and $2 milk are just that, lost leaders. Firstly screw the supplier for the best possible price, Goodman Fielder who supply Coles with their $1 bread, along with other high margin breads are one of those suppliers. Then position these lost leaders at the rear of the store, this will result in customers walking past lots of high margin items, some of which the average customer will purchase, as they make their way to the cheap bread and milk. I believe lost leaders only account for 2% to 4% of total sales. Take a little hit on 4% of your sales and at the same time score a big profit from the other 96%. No to mention the increase in sales from enticing customers into the store with lost leaders in the first place.

Allowing ourselves to get into the position of basically having a duopoly controlling our food markets is the biggest shame.

How did it happen - apathy, perhaps?

Poirot,
My partner and I do the bulk of our shopping at Aldi where the prices are substantially lower than 'name brands' of similar quality at Coles and W'worths. For fruit and veg we go to Paddy's where freshness is generally better than at the big two and prices can be as much as 1/2 to 1/3 of what they charge. Eg a couple of weeks back we bought whole watermelon (as you know us Greens love our watermelon ha ha) 20c/kg at market, next day at Coles it was 89c/kg big special. A careful shopper can save a lot of money over a year.

Soon Australia will have no dairy industry if this continues. Those losing out the most are dairy farmers who barely meet running costs. The lost leaders are not doing the supermarkets any harm but it is damaging Australia's long term agricultural sustainability.

And consumers are also part of the problem with an unwillingness to pay 'real costs'. This idea that everything must be cheap under consumerist growth mantra will have long term effects. What was wrong with budgeting and being careful with spending or saving to buy something. We are no better off overall given the personal debt-cycle fuelled by housing costs. The 'me me' society and overconsumption can only fail in the long term.

I am hoping there will be some last minute wisdom on these sorts of topics and that it won't take a disaster to shake things up.

Paul, I have been involved in retail my entire working life, so I am well aware of what a 'lost leader' is.

However, a lost leader, is just that, something that is sold at a loss, and I will almost guarantee that the likes of bread and milk (cheap) are at worst, sold at cost, at best, at very, very thin margins.

I say this because if the likes of GF sold their cheap bread to Coles even at cost, they would not pull their bread from sale, as the sheer volumes they sell, along with as you point out, their premium branded items would make the business well worthwhile.

Same goes for dairy farmers, because if Coles were selling cheap milk, at a loss, then the farmers would be doing hand stands from the sheer increase in volumes being sold.

The fact is, this is not happening, so I ask you, who is funding the loss leaders, the producers, or Coles themselves?