Woolworths and Coles should be forced to provide their current prices to third parties using application programming interfaces (APIs) that would facilitate live price comparisons, the ACCC has argued in releasing the final report of its cost-of-living-driven supermarkets inquiry.
Published after surveys of over 20,000 consumers and eight separate supplier roundtables, the 441 page final report comes six months after an interim report led to 10 days of public hearings into the rising cost of groceries and competition failures in Australia’s top-heavy supermarkets industry.
That industry took $14.68 billion in January alone from consumers who spent $204 per week on average, according to Finder.com.au, which found that the prices of fruit had increased by 12.3 percent in January and 9.5 percent over the past year.
Fully 27 out of 30 categories tracked by Finder increased in price in the year to September 2024, with oils increasing 9.4 percent, eggs 9 percent, and vegetables 8 percent – fuelling the ongoing cost-of-living concerns that prompted the ACCC inquiry just over a year ago.
Price increases have made consumers more price sensitive and supermarkets should be pushed to give them the information they need to shop around, the ACCC found while noting that many supermarkets – especially in remote areas – don’t even put prices on their products.
Expectations of better pricing visibility are among the report’s 20 recommendations, which also include regular reviews of supermarket loyalty programs and requiring supermarkets to publish notifications when shrinkflation “in a manner adverse to consumers” is observed.
Price visibility is key to shopping around
Among the most transformative of the ACCC’s recommendations is the proposal that large grocery chains develop and publish APIs providing current prices to third-party vendors, such as makers of comparison shopping apps, who have relied on problematic screen scraping in the past.
While supermarkets often advertise their sale prices far and wide, everyday prices on non-discounted items are harder to obtain in a timely manner – with many apps struggling with incomplete data sets that makes their apps less useful for consumers than they should be.
Standardising the publication of prices would address this, the ACCC advised in recommending that all supermarkets be required to publish prices on all products instore; that Coles, Woolworths, Aldi and other large supermarkets publish pries instore and on their websites.
Publishing prices via API “will also likely present technical challenges and a degree of compliance burden,” the ACCC noted, but added that this burden “is reasonable for very large supermarkets given their existing technical capabilities and significance in supermarket retailing.”
Dynamic pricing data would need to be published in a “consistent and usable format” as is done in other industries participating in the consumer data right (CDR), the report recommended, and might require government funding to help price comparison tools meet API access requirements.
Overall, mandating API access to prices “could materially benefit consumers and competition,” the ACCC concluded, noting that such a rule “would promote the ability of third-party price comparator businesses to develop effective models for the benefit of competition and consumers.”
No easy solution for rising prices
Despite demanding supermarket giants be more transparent with customers about pricing and the benefits they’re getting from loyalty programs, shares surged as the “benign” report validated a status quo that’s letting major supermarkets milk high-margin, everyday goods.
Aldi, Coles, and Woolworths “appear to be among the most profitable supermarket businesses globally,” the ACCC found while stopping short of declaring the businesses to be a price-gouging duopoly – and noting that it took 20 years for Aldi to secure just 9 percent of the local market.
While it also identified systemic challenges – such as the freight costs and lack of competition that keep prices higher in regional and remote areas, and the “significant” barriers to entry preventing the entry of another major grocery chain – the ACCC found there’s no easy way to reduce prices.
“There is no ‘silver bullet’ that will address all the issues we have identified in the supermarket sector,” ACCC deputy chair Mick Keogh said.
“We are confident that our recommendations will make a difference for consumers, will equip suppliers to make more informed business and investment decisions while bearing a more appropriate level of risk, and will boost competition in the sector.”
