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Market forces: How Coles bought entire shopping centre to force ‘little guy’ out

Smaller grocers have slammed the business tactics used by retail giants, telling a Queensland inquiry they have been “annihilated” by major supermarket chains.

May 14, 2024, updated May 14, 2024
Retail chain Drakes Supermarkets has stores across SA, Queensland and the NT. Photo: ABC

Retail chain Drakes Supermarkets has stores across SA, Queensland and the NT. Photo: ABC

A day after Coles and Woolworths were grilled by Premier Steven Miles, the likes of IGA and Foodworks vented their frustration at the Brisbane pricing probe on Tuesday.

The company in charge of IGA criticised the practice of rezoning land to allow for major supermarkets to establish themselves in an area.

Metcash government relations manager Luke Mackenzie cited an example in which Coles bought an entire shopping centre in the inner-Brisbane suburb of Milton.

He told the inquiry the local IGA was forced to close and called on the Australian Competition and Consumer Commission to unwind the “ridiculous” acquisition.

“The community is outraged that they are losing the only independent left in that market when Coles is already present twice,” he said.

Roz White, who owns and operates a Sunshine Coast IGA supermarket said her business was “taken out at the knees” when a major supermarket came to town.

“We were the only supermarket in town and a major competitor came into that catchment and just annihilated us financially,” she said.

Foodworks state operations manager for Queensland, Wayne Mason, said smaller retailers being forced to close when a major supermarket moves in “happens all the time”.

“Your choices are either ‘I’m going to play the game, invest more money and probably get burned’ … or ‘do I exit now’, ” he said.

“What it does to families and what it does to small business is wrong.”

Availability of land is also proving a challenge for smaller retailers, with Aldi telling the inquiry it had limited its ability to expand regionally.

National buying managing director Jordan Lack said Aldi had to assess cost, population and proximity to distribution centres.

“It’s really important for us to consider not only what we do, also what we don’t do and unfortunately that means we can’t be the same as our competitors,” he said.

“We can’t be in all communities and that is a deliberate decision.”

The German grocer, which represents about 10 per cent of the Queensland market, has also chosen to avoid click and collect shopping and home delivery.

Mr Lack said this had to do with keeping prices low.

Mr Miles proposed the inquiry to examine the gap between grocery prices and what farmers are being paid for produce during the cost-of-living squeeze.

He made a surprise appearance on Monday to ask Woolworths whether it would apologise to families doing it tough and rebuke Coles for a perceived lack of contrition.

The inquiry will hand down its report at the end of May.

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