Coles, Woolworths warn more red tape will lead to | Australian Markets

Coles claims its revenue margins have been inflated in a damning shopper watchdog report that discovered the grocery store, together with rival Woolworths, hiked costs to enhance earnings and used promotions that made it arduous for buyers to decide a good deal.

In response to the 441-page report, Coles and Woolworths on Friday cautioned that any more regulation or measures introduced in after the inquiry may lead to elevated red tape and drive up prices.

The Australian Competition and Consumer Commission’s report discovered Coles and Woolworths have been some of probably the most profitable supermarkets within the world and their margins had elevated over the previous 5 financial years.

It confirmed Australia’s grocery store sector was extremely concentrated with an oligopoly construction, dominated by the 2 grocers.

The regulator discovered Coles and Woolworths’ earnings margins have been between 5 and 6 per cent previously 5 years, nicely above IGA provider Metcash.

In response, the duopoly pointed to the ACCC’s evaluation that discovered hovering prices of doing business had led to greater grocery costs.

Coles mentioned internet revenue was the “only true measure of a company’s profit” and that had remained at about 2.6 per cent as a proportion of gross sales over the previous 5 years.

“This means we earn around $2.60 for every $100 a customer spends in our stores — less than 3¢ in the dollar,” it mentioned.

“The ACCC’s analysis of these margins excludes the other significant costs like energy, rent, wages which have all increased.”