Supermarket Code of Conduct

This Code was tabled in the Australian Parliament in March 2015.   However, former Kellogg Chief Executive Yves Heude warned, in an AFR article on 13 March 2015, that suppliers should not rely on such a code to protect them from tough retailer tactics.   He felt that supermarkets are moving from a win-win approach to a ‘balance of power’ approach, where they use market power to secure better deals from suppliers.   He suggested that having a unique product that is relevant to consumers is the key.   Having a commodity product means you are in trouble.

A unique product with very loyal consumers means you have the balance of power.

The focus of Innovation Optimisers is helping food manufacturers develop such unique products, and, importantly, how to position it in the market, see

However, there may be hope yet.  The CEO of Wesfarmers (which owns Coles), Richard Goyder, in an article in the AFR of 2-6 April 2015, said that the actions by Coles that led to an ACCC prosecution for unconscionable conduct were ‘morally indefensible’.

Interestingly, Goyder also spoke of ‘unstoppable trends’ including the growing world demand for food.   China will have another 200 million people moving to cities in the next five years, and moving into the middle class.   He said this ‘favours food investment.’

Another article on Coles and Woolworths in the AFR on 22 May spoke at an investors meeting about Wesfarmers putting the income from its coal businesses into Coles (and Bunnings).   An analyst’s conclusion was that Coles was not interested in more takeovers and also was not interested in a full-blown price war with Woolworths.  However, Woolworths has announced a $500M investment to ‘neutralise’ Coles and ‘contain’ Aldi.    Another analyst said that Wesfarmers was showing leadership across products and categories rather than simply responding to competitors.      Speculation about Woolworths, its senior management and its future continues.

More to come yet, including that the German discount supermarket chain Lidl will be coming to Australia.   Both Aldi and Lidl are private companies so do not have the same disclosure rules and stock market pressure as a listed company such as Coles and Woolworths.

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