ACCC chairman Rod Sims says Woolworths has fat margins as suppliers fear profits shrinkage

 In Australia, Coles, NewZealand, Woolworths
Australian Competition and Consumer Commission chairman Rod Sims says Woolworths has one of the highest profit margins of any large supermarket chain in the world, and while the chain’s plan to cut grocery prices should be a win for shoppers, the regulator will use the extra clout of the new code of conduct to help protect suppliers.
Mr Sims says the high profit margins of Woolworths and its rival Coles were largely a result of a "very cosy duopoly" which expanded for decades, but which is now being reined in somewhat by the success of the German discount chain Aldi, with its core focus on dry groceries.
He says compared with overseas operators, the Australian duo have high profit margins and while the Woolworths pledge to cut prices is likely to hit shareholders in the company, it will be a plus for overall competition and for supermarket shoppers.
"They have very high margins businesses compared with overseas," Mr Sims says.
The ACCC will be closely monitoring the market, armed with a new food industry code of conduct, enabling it to do audits and demand documents and which has been drawn up with the support of Coles and Woolworths.
But large food suppliers in the $88 billion food and grocery market in Australia are nervous about the impact on them of Woolworths’ plan to find $500 million of cost savings from its own business and use it to fund price cuts.  Sydney Morning Herald – Read more…

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