13/04/1999 - 22:00

Big chain power causes concern

13/04/1999 - 22:00


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WA’S independent supermarket owners are pleading for Federal Government intervention to save their businesses.

Big chain power causes concern
WA’S independent supermarket owners are pleading for Federal Government intervention to save their businesses. They want the government to invoke its anti-monopolies legislation to stem the flood of big chain takeovers.

The owners want the big chains’ high market share levels frozen and then wound back to 75 per cent by 2005, with the proviso that no single supermarket chain controls more than 25 per cent of the market.

The call was made in a submission by WA Independent Grocers’ Association vice president John Cummings to a special parliamentary inquiry into retail held in Perth recently.

The association was initially told there was no time for the inquiry to come to Perth. Only heavy lobbying from the association and other interested parties brought the inquiry here.

Mr Cummings warned independent metropolitan and country supermarkets would become a thing of the past as the large chains, such as Coles and Woolworths, took more and more of the market.

“Latest industry research shows Coles and Woolworths already control 60.5 per cent of the WA market,” he said.

“Over the past two years the Coles Myer group, which owns Coles supermarkets, has snapped up 24 previously independent supermarkets and in doing so added more than $230 million to the group’s turnover.

“Nationally Coles, Woolworths and the Franklins group have a massive 80 per cent market share and if something is not done quickly, we predict this will climb to 85 per cent by the year 2000.”

Mr Cummings said jobs in metropolitan and rural WA would be lost forever and small business reliant on local supermarket contracts would also be jeopardized — if not bankrupted. He said controls had to be put in place.

“For every five jobs lost when an independent supermarket closes its doors, only three are actually created in a large chain,” Mr Cummings said.

“We should not have a situation where industry growth means job losses. It’s nonsensical and rips at the very fabric of our community.”

Mr Cummings said customers were also likely to be losers because there was increasing evidence to show prices increased where there were no independent supermarkets to compete with large chains.

He said in the US the top three supermarket chains controlled just 21 per cent of the market while in Japan the figure was only 17.5 per cent. In the UK the top three chains control 45 per cent of the market.

“It isn’t a life or death struggle for the highly paid directors of these companies in Sydney or Melbourne,” Mr Cummings said. “But it is for those of us who have our life savings invested in these businesses and for our staff who rely on jobs in small supermarkets for their income.”


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