From abcdiamond post

Top 2 hold 48.0% in UK (53.1% in Australia)
Top 4 hold 75.6% in UK (65.4% in Australia)

Looks like the consumers vote with their feet equally to me.

It's not about market share but about how competition drives prices down. The two major supermarkets haven't had any real incentive to compete on price.

And because there isn't really anywhere else to go consumers have to lump it. Of course, consumers are welcome to go to FoodWorks or Franklins, but their prices represent even worse value than the duopoly. So the result is less downward pressure on prices.

The small retailers that make up the remaining percentage can't afford the economies of scale that the duopoly does.

Another large player would make a lot of difference, particularly if driven by a genuine desire to reduce prices in return for market share.


S

Aldi is a lot cheaper so obviously not all of Australia is the same.

I wasn't addressing that point rather your blind consumers comment. Australians clearly often go out of their way to take the opportunity to get better quality or price somewhere other than the big 2. Just as much if not more so than the uk consumer does as it is often at a greater inconvenience here than in the uk.

Maybe some, definitely not the majority. If that were the case than places with out of date retail models like Harvey Norman wouldn't still exist.

The figure that you provided only really give the details of market share - not how that market share correlates to the price/value that the consumer receives. Very few independent retailers offer value better than the duopoly.


S

Hugh Fearnley-Whittingstall will be knocking on your door..........

Not defending HN as I refuse to shop there as they are so shite, but a friend recently bought an LED TV and some appliances there that were the cheapest he could find anywhere, including the internet. They really went out if their way to get his business. Desperate maybe? The customer is the winner either way.

I'm not clear what your point is. You seem to acknowledge that the big 2 do not offer value for money to the consumer, but are you saying that australians shun the big 2 in favour of cheaper options like aldi? Cos that's not what I see: they aren't exactly empty. It's just a shame that the aldi shopping experience is so soviet, if they got their act together and offered more choice and convenience then this ridiculous scenario of trudging round different shops to get groceries, fruit/veg and meat would end. People have better things to do!

My comment is in reference to this statement: "where the consumers blindly pay what the retailers ask..."

Abc's numbers show that just as many avoid the big 2 here as they do in larger markets like the uk. And as you say avoiding the big 2 here often involves shopping local with small business people at some personal effort...abc said 32% of food purchases here are not made in supermarkets at all.

In the uk it is easier to avoid the big 2 as more of the small business have been swallowed up by the multinationals - which sadly IMO happens to all markets as population increases - so avoiding the big 2 often involves just shopping in another supermarket. So the statement "consumers blindly pay what the retailers ask" seems equally valid or invalid in both markets.

I think it is starting to change, and retailers are starting to have to make more of an effort to capture sales. The old model of consumers being insulated from the pricing information in other countries is long dead. Certainly, the IT component sector has really sharpened up, and prices here are comparable with what you would see in the US.

I still think that we don't really have a completely free market here though - there still seems to be too much interference and/or accepted cartel/duopoly behaviour, some of which affects other areas of industry too.

It still grates on me when I hear sectors of the retail market demanding government protection instead of attempting to make themselves more competitive. And if they have to defend themselves from overseas markets, well so be it.


S

I am really surprised that a big international grocery retailer like Carrefour, Walmart or Tesco has not moved in here yet. Why don't they come? Nothing is stopping them, in fact I think the government would welcome them with open arms as it would drive down prices, taking pressure off interest rates etc, thereby taking the heat off them (awkward questions in parliament) in return. Many multinational companies operate here very successfully here, make big profits etc. The market is there. Maybe Australia's high minimum wage (highest in the world) is putting them off. These companies have a reputation of paying low wages, it's part of their high profitability. I don't know what the reason is.

Agreed. A European or US style chain market with loss leading principles could really clean up, and, as you rightly say, introduction of some real competition would place downward pressure on inflation.

I wonder if the government would welcome Tesco, Wal Mart et al with open arms though. I wonder if that would be considered to 'un-Australian' to receive open government support.


S

I think they would. They don't have to give Walmart, for example, open support, just get out of their way. Any retailer, as long as they abide by the law and regulations and pay their taxes, can open here. Costco came to Melbourne a few years ago and are busy expanding, they are still too small here to have a big impact yet. Aldi are doing well, IGA are South African.

Yeah, the furniture looks like the kind of stuff only pimps would buy.

(With apologies to anyone who shops there )