The answer to ridiculous grocery prices? It might be community-owned supermarkets

Community-owned and operated supermarkets could help to slow inflationary pressures on groceries in rural and regional areas, according to a consumer watchdog.

The Australian Competition and Consumer Commission (ACCC) has urged state and federal governments to consider supporting such endeavours in communities where there is little or no choice.

Supermarket giants Coles, Woolworths and Aldi will continue to drive higher prices in regional areas without such increased competition, a new ACCC report has found.

Major chains have little incentive to be competitive on pricing because of their large market share, the ACCC said. It estimated Woolworths controlled 38 percent of national supermarket sales, Coles 28 percent and Aldi nine percent.

The consumer watchdog said aspects of Australia’s supermarket sector “are not working well and this is leading to poorer outcomes for consumers and suppliers than would be expected in a more competitive market”.

According to the ACCC a lack of competition was likely causing price increases and leading to “reduced range, store amenity, opening hours and service quality compared to more competitive markets in metropolitan areas”.

The ACCC found that higher freight costs were likely the primary driver for higher prices in regional areas.

It made 20 recommendations to the Federal Government to improve Australia’s supermarket performance, including greater price visibility in remote areas.

ACCC Deputy Chair Mick Keogh said “some supermarkets in remote locations do not display the price for all grocery items on the shelves, which inhibits a consumer’s ability to make an informed choice about product value”.

“Consumers outside the big cities will continue to suffer when it comes to their shopping bill on food and groceries because of the clear oligopoly in the supermarket sector.”  

Melina Morrison from the Business Council of Co-operatives and Mutuals told AAP.

“The slow attrition of mum and dad stores, smaller supermarkets, independent stores and co-operative shops is also the result of policies failing to support different corporate structures like co-ops and mutuals.”

She said co-ops can play a “vital role” in regional areas, which are “thinner, less profitable markets”. 

“Co-operatives are an excellent choice for retail, holding investment in the community, employing locally and facilitating shorter and more localised supply chains.”