Episode Details

The Australian Competition and Consumer Commission recently concluded a court case against Coles, alleging that the supermarkets popular Down Down promotions misled consumers. The ACCC argued that Coles used a pricing tactic called was now pricing, where items are temporarily increased to set a high was price before being discounted. This practice was shown to have occurred with various products, such as dog food and baby formula, which were priced low for extended periods before being briefly increased and then discounted. The ACCC claimed that this deceived shoppers into believing they were getting significant savings.

The promotions were popular among shoppers, leading to increased sales, as seen with baby formula, where weekly revenue jumped by twenty-seven thousand dollars. However, the case has sparked outrage amid rising grocery bills and inflation, with food prices contributing to last years inflation rate of 3.4%. Parliamentary probes have already criticized Coles and its competitors for high profits in a market with limited competition.

Coles defended its practices, stating that the price increases matched real supplier cost increases due to inflation, and the discounts were genuine drops from those new levels. The companys lawyers emphasized that shoppers primarily seek fair deals in the aisle, not a deep understanding of price history. The judge focused on whether the bargains felt real, rather than examining past prices.

Coles reported that supermarket margins have climbed to 5.8%, significantly higher than pre-pandemic levels. The outcome of the case could have far-reaching implications for the industry, particularly as Woolworths is expected to face a similar lawsuit soon. The situation remains under observation as grocery prices continue to rise.

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