Nationals leader David Littleproud slams Coles for product cut, but experts suggest it could drop prices

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Nationals leader David Littleproud slams Coles for product cut, but experts suggest it could drop prices

Nationals leader David Littleproud has hit out at Coles after the supermarket giant flagged a 10 per cent cull in its product range offering to shoppers.

The supermarket giant will cut more than 2000 items from its massive 20,000 range as part of rationalisation program to simply its supply chains and remove duplication on its shelves.

Mr Littleproud, speaking with NewsWire on Thursday, said the move would increase prices at the checkout.

“This is a direct measure to try and reduce competition to push up prices and push up their margin,” he said.

“It’s as simple as that.

“You don’t take competition away from the shelves, unless you are trying to do one simple thing: rescue competition and increase prices.”

QUT retail marketing and consumer behaviour expert Professor Gary Mortimer cautioned, however, the cull could potentially lead to a small drop in prices for shoppers if the company secured an overall reduction in its cost base.

Camera IconNationals leader David Littleproud has warned Coles’ plan to rationalise its product offering will lead to higher prices for shoppers. NewsWire / Martin Ollman Credit: News Corp Australia

“Even if it is one or two per cent (reduction) in supply chain costs, you would hope to see that materialise in some lower food prices for shoppers,” he said.

“Once you reduce your range, you reduce your complexities.

“For example, you might have five different suppliers for tinned tuna and within those tinned tunas, you might have 12 varieties of flavour.

“Once you remove that complexity out of your supply chain, it reduces your costs … you don’t have to deal with so many suppliers … once you strip out those costs, hopefully what that leads to is lower prices at the checkout.”

Mr Littleproud said he was “cynical” the cull would deliver lower costs to consumers.

“They (Coles) have got a long and chequered history around this and when you start seeing fundamental shifts in restrictions in the numbers of products that they are going to put on their shelves, that’s a simple basic economic principle, that you are reducing competition,” he said.

“And when you reduce competition, you reduce choice and you increase prices.”

Coles chief operations and sustainability officer Anna Croft flagged the cull to investors in November last year, confirming the company would pursue a “double digit rationalisation” program in 2025.

“We have 13 basic table salts. We don’t need those,” she said.

“We might go to five and we might add three different types of salt in to give customers more choice.

“Take one of our leading hair-care brands, we have six different pack sizes ranging from 80ml to 1.1 litre.

“Now that drives huge complexity. We might not need six, we might have three, and we’ll work with that leading manufacturer to say what’s the right architecture and how do we pull that through in the same space so that we improve availability, we improve efficiency end-to-end.”

Croft said the move would deliver more “choice” to its customers.

“We will be simplifying overall but we’re reinvesting in the categories in the space that makes the most amount of difference to customers,” she said.

“So yes, net reduction, but it will be reinvestment in categories and removal of duplication that we think we can add more choice to customers and be very data-driven, thoughtful and purposeful around how we do that to make sure it’s tailored to the right categories.”

Professor Mortimer said most shoppers would not likely notice the change.

“I don’t think consumers will actually notice any sizable difference when they are doing their grocery shopping each week,” he said.

“You take a supermarket with 20,000 items, well 2000 will disappear. But it certainly won’t be Coca-Cola, Cadbury block chocolate, Sanitarium Weet-bix.

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“It won’t be your big core brands. It will essentially be fringe brands or those ‘nice-to-haves’.”

The $25bn retail giant has come under sustained scrutiny in recent months alongside competitor Woolworths around concerns Australia’s comparatively concentrated supermarket landscape could be inflating prices for consumers.

The ACCC has labelled Australia’s supermarket landscape as an “oligopoly” or a market typified by a small number of dominant companies and potentially uncompetitive practices.

Coles CEO Leah Weckert, appearing at the watchdog’s inquiry into supermarket prices in November, pushed back against any assertion the market was not competitive.

“There are two large retailers and the important piece is do they compete?” she said.

“I can assure you that competition is very fierce.”

Woolworths controls about 38 per cent of the share of supermarket retail sales, the ACCC has found, while Coles controls about 29 per cent.

Aldi controls about 9 per cent, Metcash 7 per cent and others, such as retailers IGA and Drakes, account for about 17 per cent.

Mr Littleproud said the Coalition would establish a “supermarket commissioner” to independently assess the behaviour of supermarkets if elected to government.

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