Your problem sonofgloin, is that Woolies and Coles are both public
companies, so we can follow the money trail, the figures are
published.

Coles work on a net profit of around 3c in the Dollar, Woolies are
a little more efficient, they work on around 4-5c. Hardly a rip off.

But the journey of raw materials down the value adding and processing
chain is a long one. Costs are enormous. From truck drivers to
factory workers to checkoutchicks, everyone wants to be paid.

Australians are paid some of the highest wages in the world. They
have some of the highest lurks and perks along the way too.
Superannuation, holiday leave loading, weekend overtime rates,
payroll tax is charged at 6% too. The list goes on.

Companies who operate here and supply Woolies and Coles, be they
Nestle, Unilever, Kraft, etc, build all those costs into their
products. Economies of scale are relatively small in Australia,
compared to say Europe, or the USA. No flat rate 9 bucks an
hour for staff, as is commonly paid in the US.

Somebody has to pay for all that and it is you, the consumer.

If he is correct, sonofgloin, then there are a lot of people missing out on a massive opportunity.

"University of NSW associate professor Frank Zumbo said comparing costs over 10 years eliminated variables such as currency movements or transport costs and exposed the country's "cosy" supermarket duopoly as the main reason... why our grocery prices are rising faster"

Which begs the question: if it is the supermarkets who are responsible for the high prices, why aren't there competitors springing up all over the place, undercutting them?

As Yabby kindly pointed out, it is because they are already working on slim margins. No small business could realistically undercut those prices and trade profitably.

Also, as rehctub mentioned, the supermarkets' shelf space is already subsidized by the suppliers themselves. So if even you went to those suppliers and offered the base price - i.e. without the premium for getting them on the shelves, which would mean that they earn more - there is still clearly insufficient margin for the small outlet.

I'm also not sure what you - or even University of NSW associate professor Frank Zumbo - see as an alternative, in which the consumer is the winner.

Any suggestions?

Friday, 26 February 2010 09:12
Patrick Stafford
“Supermarket giant Woolworths recorded an 11.4% increase in first-half profit the grocery retailer recorded net profit of $1.09 billion for the 27 weeks to January 3, higher than the $983.3 million recorded during the previous corresponding period. Group earnings before interest and tax rose by 11.1% to $1.68 billion from $1.52 billion. Sales, excluding petrol, rose by 6% to $27.2 billion, with a dividend announced of 53c”.

Yabby, $1.68 billion gross profit......$1.09 net profit for 27 weeks trading this year don't look like 3,4,or 5 cent profit in the dollar to me. At 5 cents in the dollar they would have to turn over 30 billion dollars in sales to achieve their gross outcome. Why are you defending the pillaging through duopoly of the grocery dollar? They are shafting us and the government does not give a dam.

Yabby I wrote it, I posted it, and reflecting on the figures after I posted it, I got it wrong. My apologies.

All this talk about grocery stores. Why it reminds me when I was a young feller, we used to hunt, kill and slaughter our own meat. We never 'ad no supermarkets. Competition? Struggle for existence, that's what we had for competition. Hrrmmmmpth! (wipes spittle from chin).

I agree with Pericles' about monopoly gouging- and I can't help but feel that Australia is quite exclusive in government having especially low emphasis on protecting consumers here.

Doesn't matter for supermarkets tho- I avoid either of those horrid chains like the plague- old, low-quality food which you can smell the preservatives wafting out from with a price-tag one would only tolerate for absolute-top-range premium-quality stuff?

No thanks, unless I need some coca-cola I will happily shop at the alternatives (and with direct-from-farmer sales becoming stronger, the consumer choices are expanding).