Woolworths the owner of discount chain Big W who have 177 stores in Australia, wants archrivals Amazon and Costco who only has 15 stores in Australia included in the grocery sector code of conduct.
The call for the world’s biggest online retailer to be included comes after former Labor minister Craig Emerson outlined in an interim report making the existing voluntary code mandatory, with stiff penalties of up to $5.2 billion for retailers who breach the code of conduct.
Woolworths said Costco and Amazon should be covered by the tougher code despite Costco being a small retailer in Australia.
The review found the existing code was “not effective” because it lacked fines and power imbalances meant suppliers were too scared to challenge Coles and Woolworths.
Coles said in a statement it would seek to work co-operatively on changes to the code, while Woolworths went further, calling for online and foreign competitors to be covered, expanding the code’s powers to include Bunnings and Chemist Warehouse.
Woolworths has not explained how much revenue Costco who only has 15 stores is stripping from the Big W business which is predominantly CE and households’ goods and fashion.
Several CE retailers that ChannelNews has spoken to including Harvey Norman and JB Hi Fi management agree with the inclusion of Amazon who has major global buying power when it comes to several categories including appliances and consumer electronics goods.
A Woolworths spokesperson said “Healthy retailer and supplier relationships are vital to the success and prosperity of the Australian grocery industry. We collectively work to meet the needs of millions of customers every day,” a Woolworths spokesman said on Monday.
“Woolworths is a foundation signatory to the Food and Grocery Code of Conduct, and we support it becoming mandatory for all large retailers and wholesalers of groceries to engender public trust and to level the playing field for retailers and wholesalers alike.”
Woolworths management claim that Costco and Amazon had global revenues “many times the size of Australian supermarkets.”
Over 95% of that revenue is generated outside of Australia.
“Customers have more choice than ever, instore, and online, to fill their shopping basket. They can and do cross-shop widely. Suppliers also have more channels to market,” the spokesman said.
The AFR Claim that Prime Minister Anthony Albanese and Treasurer Jim Chalmers welcomed Dr Emerson’s rejection of break-up powers for Coles and Woolworths.
His review found that forced divestiture could easily result in “greater market concentration” if one large chain was forced to sell to another or result in store closures if no buyers could be found.
“This work is all about how we make our supermarkets as competitive as they can be, so that Australians get the best deal possible whether they be the providers, or of course the consumers at the checkout,” Mr Albanese said.
“And this recommends the code be made mandatory with very heavy penalties for major breaches of a fair go for families.”
The Greens have legislation in parliament that would give the Federal Court new divestment powers. Mr Albanese has likened calls for break-up powers to the economics of the Soviet Union.
