Market Performance
As of 21 March, 2:43 pm AEDT, the S&P/ASX200 gained 32.60 points (0.41%), pushing the index to 7,951.50. Over the past five days, the index climbed 2.08%, though it remains down 2.54% year-to-date.
Boss Energy Ltd (BOE) and Woolworths Group Limited (WOW) led today’s gains, rising 7.41% and 5.58%, respectively. Other top performers included Coles Group Limited (COL) (+4.66%), Deep Yellow Limited (DYL) (+4.52%), and Genesis Minerals Limited (GMD) (+4.30%).
On the downside, Liontown Resources Limited (LTR) (-6.07%), Pro Medicus Limited (PME) (-5.12%), and Pilbara Minerals Limited (PLS) (-4.35%) recorded the largest losses.
Woolworths and Coles Surge After ACCC Findings
The strong performance of Coles (+4.5% to $19.40) and Woolworths (+5.5% to $29.72) followed the release of the ACCC’s supermarket pricing inquiry report. Investors viewed the report positively, triggering a “relief rally” for the supermarket giants.
Craig Woodford, senior research analyst at MST Marquee, explained:
“There have been concerns amongst investors there would be significant consequences for the supermarkets. While there will be ongoing scrutiny, the ACCC report has concluded that the supermarkets are not responsible for price gouging. The share price response is definitely best described as a ‘relief rally’.”
ACCC Inquiry: Findings and Impact
The ACCC‘s report cleared Coles and Woolworths of price manipulation, despite their dominant market positions. Supermarket analyst George Boubouras, managing director of K2 Asset Management, highlighted:
“Their margins have fallen however remain high vs global peers which is a key attribute of oligopoly pricing power. Interestingly, the report concluded there is limited evidence of pricing power within the sector.”
Boubouras pointed out that Australia’s major supermarkets remain among the most profitable in the world. Despite decades of increased competition, Coles and Woolworths still hold significant market dominance.
“Given this persistent market dominance of both COL and WOW, it is difficult to reconcile that this does not lead to ‘structural’ dominance in the sector, from supply chain through to pricing,” he added.
The lack of concrete evidence of wrongdoing has been a positive outcome for investors, reducing regulatory uncertainty around the supermarket giants.
Changing Consumer Shopping Habits
The ACCC inquiry has influenced Australian shopping behaviours. A Canstar Blue survey found that 43% of Australians have changed their grocery shopping habits since the probe began in January 2023.
- 23% are now more cautious when shopping at Coles and Woolworths.
- 17% shop there less frequently.
- 35% are splitting their grocery shopping across multiple stores to maximise savings.
Consumer Advocacy and Price Transparency
Consumer advocacy group Choice welcomed the government’s support for the ACCC’s recommendations on price transparency, shrinkflation, and misleading discounts.
Choice CEO Ashley de Silva stated:
“We need to fix the power imbalance between supermarkets and ASX consumers and price transparency will help us do that.”
He pointed out that one in four shoppers struggle to determine if a supermarket discount is genuine. The ACCC recommended that supermarkets display previous prices to improve pricing clarity.
Push for More Regional Supermarkets
The Business Council of Co-operatives and Mutuals (BCCM) supports ACCC’s call for government incentives to establish community-owned supermarkets in regional Australia.
BCCM CEO Melina Morrison stated:
“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.”
The ACCC report found that supermarket dominance ASX is even stronger in regional areas, limiting consumer choices. Supporting community-owned stores could enhance competition and reduce grocery prices.
Aldi’s Response to the Inquiry
Aldi Australia CEO Anna McGrath welcomed the ACCC’s findings, highlighting Aldi’s commitment to low prices.
“The ACCC’s inquiry into ASX the supermarket sector confirms Aldi’s role in offering products at ‘everyday low prices’.”
Aldi remains Australia’s third-largest supermarket chain but faces competition pressures from Coles and Woolworths.
ASX Market Outlook
The ASX’s upward trend today, driven by strong performances from supermarket giants, reflects investor confidence in the resilience of Australia’s retail sector. However, with continued consumer advocacy pressure, regulatory oversight, and shifting shopping behaviours, the supermarket landscape may still face challenges in the future.
