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By ERIC CUMMINS
OUTH Australia's Foodland
supermarkets are backing
anti-trust laws -- similar to
those in the United States and
United Kingdom -- to deal with
community development projects
that threaten to undermine retail
In a reaction to the huge and
expanding competitive advantages
enjoyed by the duopoly of Coles
and Woolworths, Foodland claims
the way market power is used,
backed by unlimited cash reserves,
would not be allowed in some
Foodland has also called for cre-
ation of a 'needs test analysis' poli-
cy, possibly administered by local
government, to determine whether
a new supermarket development
will fill a community need or take
business away from existing small-
There are three developments in
SA concerning local supermarkets
and other retailers at Wallaroo,
McLaren Vale and Nairne.
And they have revived a range of
issues affecting supply and demand
for foods, who the growers supply,
how much they get paid, the rising
cost-of-production and the diffi-
culties of getting higher prices for
While the farmers' markets at
Willunga, Victor Harbor, McLaren
Vale, Adelaide showgrounds and
Mount Barker are a growing suc-
cess story, their emphasis is on
fresh from the farm and organic
produce at reasonable, but sustain-
able, prices for the producer.
The Foodland enterprise
embraces 108 supermarkets or
stores around the State, all of them
independently-owned but operat-
ing under the one banner.
Chief executive Russell Markham
says any new Coles or Woolworths
store that opens in proximity to an
independent supermarket invari-
ably affects store turnover, either
short or long term.
"These chain store openings are
always heavily promoted in all
forms of the media and supported
by deep discounts and special
offers designed to change the cus-
tomers' shopping habits," he said.
"Our stores have no option but
to meet that competition head-on
and this may create issues with
store profitability and, invariably,
that business' long-term viability.
"Independent retailers do not
have the ability to amortise these
deep discounts across all their
national businesses like Coles and
Mr Markham said that indepen-
dent retailers also needed to main-
tain high-service levels and usually
employed more people proportion-
ately to do this.
In country areas, the duopoly
could also amortise freight costs
across all their businesses while the
independent retailers paid the
freight for every load of groceries.
There was considerable variation
in the extent to which independent
retailers had lowered prices to stay
competitive for a range of foods,
but milk prices had been reduced
20 per cent.
Mr Markham said the 'needs test
analysis' proposition should deter-
mine whether a new supermarket
development was actually the best
option for the community it would
"If it is designed to be anti-com-
petitive and take away business
from existing independents and
smaller traders and increase the
already high market share of the
duopoly, it would not be best for
our rural community, the suppliers
and producers on the land if all
competition is eliminated.
Support for anti-trust laws
CEO cites threat to local retail
Store turnovers suffer
Foodland wants end to duopoly's power
SALAD Greens and Kitchen Herbs at Echunga has been growing and selling
what its business name implies for 17 years.
And manager Judith Zehle (pictured) believes what is happening with milk
prices in the continuing discount war is "scary" for producers generally.
"I had an experience five years ago where I could not produce the goods
large supermarkets wanted for the prices they were prepared to pay, so I
stopped selling to them," she said.
"Coles said it wanted a salad mix for about half price I was prepared to sell
"Nowadays, we sell all over the place -- to Foodland, restaurants, green gro-
cers and the three farmers' markets at Willunga, Mount Barker and Wayville
showgrounds." She saysthe new Foodland at Stirling has indicated that it
wants to support local producers.
Judith said her business was expanding slowly and becoming more diversi-
fied, which was what small growers had to do.
She produces 70 per cent of what the business sells, with produce brought
in to supplement the variety.
Supermarkets want cut
prices for quality produce
"We oppose supermarket devel-
opment plans when they are just a
grab for market share by the duop-
oly and a threat to the viability of
the incumbent retailer, as has hap-
pened at Wallaroo.
"We would support the introduc-
tion of anti-trust legislation and
any legislation that addresses
whether the conduct of the retailer
in development projects has the
effect or likely effect of bringing
about a substantial lessening of
Mr Markham said the duopoly
also had the ability to pay a price to
a developer in excess of a site value
in order to secure a prime location.
"This market power and unlimit-
ed cash reserves makes it extreme-
ly difficult for an independent to
compete for a site if using his own
money," he said.
"The duopoly also has a large sta-
ble of brands in different retail sec-
tors which can be used to bargain
in a lease negotiation.
"These factors virtually guarantee
that the duopoly will continue to
grow its already high-market share
and dominance, which would not
be allowed to happen in overseas
countries such as the United States
• Need to know more?
Balhannah Foodland manager Luke Hein (pictured) stack the shelves at
Balhannah. CEO of the SA supermarket chain Russell Markham says any new
Coles or Woolworths stores that open in proximity to an independent supermarket
invariably have an affect on store turnover, either short or long term.
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