Coles and Woolies

The Shonky Award for... cashing in during a cost-of-living crisis.

Last updated: 02 November 2023

Australians have been doing it tough in 2023. Between the soaring cost of living and rising rents and mortgage interest rates, consumers are feeling the pinch everywhere.

For most, the weekly hit to their hip pockets as they pay for their groceries at the supermarket checkout is a painful and regular reminder of just how much more everything costs.

In September, we asked a nationally representative sample of Australians what they thought about the prices charged by the big supermarkets. We found that more than 60% of shoppers believe the price increases seen at the duopoly are not simply due to higher costs.

More than 60% of shoppers believe the price increases seen at the duopoly are not simply due to higher costs

Instead, they told us they believe the big two are making a lot of money from the price hikes we've all seen at the checkout.

In the same survey, we found more Australians than ever are concerned about increasing food prices, with 88% saying they're worried about the cost of food and groceries. This number has been steadily rising from a low of only 56% in January 2021.

But in the midst of this misery, Coles and Woolworths seem to be thriving. Australia's two largest supermarkets have posted supercharged annual profits that are up on pre-pandemic levels.

Bumper year for the duopoly

Woolworths Group, which owns the largest supermarket in the country, posted a $1.62 billion annual profit in August. This figure takes in all divisions of the company, including Big W and New Zealand supermarkets. Earnings from the company's Australian supermarkets alone (before tax and interest) was $2.86 billion, a whopping 19% year-on-year leap.

Meanwhile, Coles Group, owner of the second-largest supermarket, posted a $1.1 billion annual profit. Its supermarket arm alone posted a before-tax and interest earning of $1.76 billion, up a more modest 2.9% on last year.

The huge profits are not going unnoticed by shoppers. Graham Dawson, who lives in one of Australia's most advantaged local government areas, North Sydney, says while he counts himself lucky to be able to afford the rising prices at his local Woolworths, they still come as a shock.

There is a feeling of powerlessness against the big corporations
Shopper Graham Dawson

"Every time I go into the supermarket I find something has gone up. I thought some of it might be temporary and it might go down, but the only thing that has gone down is avocados," he says. "Everything else is going up."

Graham estimates that his grocery bills have gone up significantly in the last year.

"There is a feeling of powerlessness against the big corporations that – despite the difficult circumstances they say they are in – are posting huge profits," he says.

CHOICE director of campaigns and communications Rosie Thomas reports that less than 20% of people think Coles and Woolies are doing all they can to keep prices down.

Shoppers wish for more competition

Many consumers feel they're being fleeced by the supermarket duopoly, but with such a dominant market share, they're left with few practical alternatives.

Nearly 40% of those surveyed in our September Consumer Pulse told us they would stop shopping at Coles and Woolworths if there was another option.

Alex Suriya from Edgecliff in NSW is one of those. He'd noticed prices increasing slowly and steadily, but when a packet of sliced cheese hit $15 it prompted him to look elsewhere.

When a packet of sliced cheese hit $15, it prompted Alex to look elsewhere

"We made the decision to boycott our local Coles and make a bit more effort to shop at Aldi, and our local chemist, bakery and butcher. That's saved us about 30% on our food bills. It's been two months since we started and I can't see us going back," he says.

Woolworths controls an estimated 37% of the national grocery market, while Coles follows with around 28%.

Former chair of the Australian Competition and Consumer Commission Rod Sims is among those who have linked rising grocery prices to a lack of competition in the market.

"At a time of general concern about rising prices, they can increase prices a little bit more," Sims told The Guardian Australia in May. "They've only got to watch each other rather than anybody else because the two are so dominant."

Supermarkets defend profits

Woolworths did not directly respond to our specific questions about its profit margins, but pointed us to a prior media call with group CEO Brad Banducci, where he said there was a "high degree of competition" in the grocery sector, and added that their profits were a "balanced" result.

"Improved financial performance in [the 2023 financial year] reflects a return to relative stability following the material disruption of COVID in the last three years and more than $300 million in COVID-related costs," he said.

A Coles spokesperson tells us: "At a time when cost of living is adding pressure to Aussie families and their grocery budgets, Coles is making it easier than ever for customers to find great value in store and online with the launch of its 'Great Value, Hands Down' campaign.

"Coles stores across the country and Coles Online will bring immediate value to customers by bringing down the price of more than 500 products for at least three months," they say.

Most think Woolies and Coles could do more to lower prices

"Both supermarkets love to talk up what they're doing to help customers in their advertising, and they heavily promote their so-called specials in store," says CHOICE director of campaigns and communications Rosie Thomas. "This is despite the fact that for some specials it may be hard to tell if you're getting a genuine discount."

There's certainly a fair degree of scepticism from the public.

"In our September survey, less than 20% of people thought Coles and Woolworths were doing all they could to keep prices down," says Thomas.

"Only 18% of Coles shoppers and 17% of Woolies shoppers agreed their supermarket was doing everything they could to keep the price on everyday groceries low."

I find it ironic that they're making billions of dollars in profits and there are so many people struggling to get by ... It's just corporate greed
Shopper Alara Burke

Alara Burke from Pyrmont in NSW is one shopper who feels increasingly cynical about the big two supermarkets.

"I find it ironic that they're making billions of dollars in profits and there are so many people struggling to get by," she says. "It's just corporate greed. A lot of people I know have just stopped shopping there. If they really cared they would just drop the prices – there's no need for them to be as high as they are."

Like Alara, we think if Coles and Woolworths really had any concern for their customers doing it tough, they would actually lower prices, even if that meant smaller profit margins.

Until that happens, we're sure Australian shoppers will agree with us that these supermarket behemoths have earned this Shonky Award.

About our survey: CHOICE Consumer Pulse September 2023 is based on an online survey designed and analysed by CHOICE. 1035 Australian households responded to the survey with quotas applied to ensure coverage across all age groups, genders and locations in each state and territory across metropolitan and regional areas. The data was weighted to ensure it is representative of the Australian population based on the 2021 ABS Census data. Fieldwork was conducted from 29 August to 18 September 2023.