<?xml version="1.0" encoding="ISO-8859-1"?> <docID>333631</docID> <postdate>2024-11-21 13:19:58</postdate> <headline>Coles defends big profits as buyers feel checkout pain</headline> <body><p><img class="size-full wp-image-333632" src="https://citynews.com.au/wp-content/uploads/2024/11/20241121118629382911-original-resized.jpg" alt="" width="900" height="487" /></p> <caption>Coles CEO Leah Weckert is appearing before the consumer regulator's inquiry into supermarkets. Screenshot: Australian Competition and Consumer Commission</caption> <p><span class="kicker-line">By <strong>Alex Mitchell</strong> and <strong>Jack Gramenz</strong></span></p> <p><strong>Coles has defended its increasing revenues and profit margins as executives suggest the grocery giant is not immune to pressures such as rising rents and energy costs.</strong></p> <p>Fronting the consumer watchdog's supermarket probe on Thursday, representatives from the sector heavyweight labelled Australia's grocery market "highly competitive", echoing comments from rival Woolworths earlier in the week.</p> <p>That is despite the Australian Competition and Consumer Commission describing the duo as an oligopoly that controls 67 per cent of the national market.</p> <p>Counsel assisting the inquiry Naomi Sharp SC grilled Coles chief Leah Weckert on the company increasing its profit margins while consumers struggled to keep up with rising prices and suppliers complained of being squeezed.</p> <p>Coles supermarkets earned $2.02 billion before tax in the 2023/24 financial year, up from $1.77 billion a year earlier.</p> <p>Its pre-tax profit margin increased from 4.8 per cent to 5.2 per cent.</p> <p>Ms Weckert said global supply-chain issues meant suppliers had charged more in recent years and the business was not immune to broader economic factors such as staff wage increases, rent hikes and growing energy costs.</p> <p>But she accepted Coles had a job to do in rebuilding trust with fed-up customers who were sick of paying more for household essentials.</p> <p>"We have been through a period where the price of groceries has gone up and that has really been driven by the supply-chain dynamics we've seen globally," she said.</p> <p>"The increases in food prices have actually been lower than what we've seen in the vast majority of other OECD countries ... that would point to the fact that actually, there is very strong competition here."</p> <p>Consumer group Choice previously told the inquiry that customer trust in supermarkets had plummeted due to their huge profits while grocery prices increased.</p> <p>Ms Sharp questioned Coles' increasing profitability in those circumstances.</p> <p>"We see Coles' profit has increased, both in dollar terms and percentage terms, and against that ... suppliers say they're being squeezed, consumers say they're being squeezed," she said.</p> <p>Mirroring Woolworths - which said niche retailers such as the Cheesecake Shop, Nextra Newsagents and 7-Eleven were competitors - Coles said the commission's competition metrics were too narrow and grocery markets included more than supermarkets.</p> <p>Ms Weckert confirmed Coles charged a "freight premium" on prices at its remote stores and could not point to any measure to offset customers being forced to pay more for food in those areas.</p> <p>The commission previously found that a site's distance from a central location could be another barrier to competition as it made it harder for rivals to enter the local market.</p> <p>The consumer watchdog's inquiry is investigating the extent and nature of competition between Coles and Woolworths.</p> <p>It is taking legal action against the grocery duo separately, accusing them of misleading customers with fake or misleading discounts.</p> <p>UNSW finance associate professor Mark Humphery-Jenner said the prevalence of pricing practices perceived as unfair by consumers could be overblown, noting thin profit margins in the supermarket sector.</p> <p>"Retailers' costs have increased; consumers' disposable income has decreased," he said.</p> <p>Coles chair James Graham told shareholders earlier in November supermarkets had been "targeted" as a scapegoat for issues caused by inflation.</p> <p>The inquiry's final report is due in February.</p> <p>https://citynews.com.au/2024/wrapped-up-supermarkets-charge-more-for-unpackaged-veg/</p> </body>