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How much do Woolworths and Coles really hurt small business?

Not that much is I read this article by Lindsay Tanner (Labor finance spokesman and federal member for Melbourne), from the Herald Sun last week. Tanner’s position on the big guys getting bigger is not clear. Take this:

For all kinds of reasons, we tend to dislike major retailers like Coles and Safeway. They’re often blamed for killing smaller shops and suburban shopping strips, squeezing suppliers and exploiting workers.

While there’s some truth in such criticisms, they’re often very exaggerated.

Then this:

The big supermarket chains are not charities. They try to get prices low in order to make money. This intense competition benefits the consumer.

Some argue they’ve become too big and powerful. The best test is to look at their profits.

They’re reasonably healthy, but they’re not in the same league as other big companies such as banks.

There’s a huge range of smaller, specialised shops competing with them, often in the same shopping centre.

Be sure to read the whole article for context.

I think Tanner misses a few key points: supermarkets are not transparent – take Coles, their FlyBys loyalty program is not that great, they do not disclose adequately to consumers the value of th spend in terms of points and therefore discount; supermarkets cherry pick against small business – take newsagents, supermarkets choose the top magazines while small business newsagents don’t have the luxury of such a choice; supermarkets pursue profits whereas small businesses connect with the community; supermarkets control economies whereas small businesses support diversity of supply – take vegetables for example, Coles could wipe out a region with one national buying decision. This buying power could turn farmers into the working poor, all in pursuit of profit.

Like Tanner, I shop at Coles. I don’t like that they, through their buying decisions, try and control what I buy. I’d shop elsewhere but it’s not convenient. So I have to live with what they make more profit from or put with the inconvenience of shopping elsewhere.

The High Street Britain 2015 report.released by UK parliamentarians last week was on the right track. It seeks to curb the power of supermarket chains for the good of the economy and for the good of the community.

1 Comment

  1. alistair macnaughton

    March 8, 2011 at 6:37 PM

    i am learning to hate coles and woolworths. the milk fiasco is a prime example of pure disregard for australian people and farmers alike. I vow never to shop there again. they are reaping huge profits from the fuel outlets-about 18/19 cents a litre-that’s robbery. get out of the country-both of you!!!

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