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The former executive of Coles, which sets prices for pet food, has hit back at the suggestion that the only motivation for promoting a product is to boost sales and make money, as the supermarket fights a federal lawsuit alleging it misled customers with “down” discounts.
The federal court in Melbourne on Thursday morning heard an at times combative exchange with the Australian Competition and Consumer Commission’s lead lawyer, Garry Rich SC, and Paul Carroll, head of Coles’ pet food category, with whom the watchdog has argued over alleged price changes at the center of his case.
Nature’s Gift Wet Dog Food in a 12kg tin, which Coles had priced at $4 between 18 April 2022 and 7 February 2023, was increased to an “everyday price” of $6 for a seven-day period before the supermarket reduced it to its third price of $4.50.
Coles promoted this price with a red “down” discount sticker, even though it was 50 cents more expensive than the one sold eight days earlier; it was a move he has since admitted was a mistake and went against internal pricing “guardrails.”
Rich asked Carroll about the difference between “everyday” and “down” pricing and internal rules for when Coles must change them or whether it can impose further temporary discounts or increases, known as “boosts.”
Rich told Carroll that when he was asked to negotiate a price change with suppliers, he was motivated to agree on the new price as well as a plan to reduce that price to a cheaper “down” promotional price – which under Coles’ policy should only occur after at least four weeks – and a red shelf ticket for a longer period. He said this is because promotions increase product sales.
Rich told Carroll, who disagreed with this statement, “You’re not doing charity, you’re doing this to make money for your employer,” emphasizing that he personally cares about the customer and the prices they face.
The court heard further evidence from email exchanges between Carroll and other colleagues of Coles, as well as the supplier of the dog food product in question.
On February 10, 2023, two days after dog food went for $6, Carroll emailed Chris Reid, then head of pricing and value, asking for advice on how to be more competitive with Woolworths in selling the product, which was priced at $4.50. Reid told Carroll that after a four-week period at $6 the price might be lowered to compete, but that it would not be advertised as a “downward” special because it would not be in the spirit of “downward”.
“You were planning to do what Mr. Reid told you was not in the spirit of decadence,” Rich said, and Carroll agreed that was true. But Carroll said staff members were encouraged to be competitive and Reid said a lower price of $4.50 would be allowed as long as it wasn’t promoted with red feather stickers and related rules.
The trial continues.
