Supermarket giant ‘genuinely cares’ about customers
A supermarket giant battling allegations it manipulated grocery prices as part of a nationwide “downward” promotion insists it “genuinely cares” about its customers.
Coles is vigorously defending claims from the Australian Competition and Consumer Commission that it deliberately misled customers during the campaign, which was first launched in 2010.
The retail giant also admitted strong-arming its suppliers, threatening to remove products from shelves if they refused to meet the retailer’s pricing demands, the Federal Court in Melbourne was told on Thursday.
The watchdog claims Coles systematically raises prices on everyday items before offering discounts on prices equal to or higher than the original shelf price.
“Discount” discounts on everything from biscuits to dog food have tricked shoppers into thinking they’re getting value for money, like Nature’s Gift pet food.
The court was previously told that a Nature’s Gift product was sold at $4 for 10 months, then increased to $6 for a week before falling to its “discounted” price of $4.50.
Paul Carroll, senior category manager for pets, admitted that the “down” campaign helped boost sales.
The company has effectively used this tactic to boost pet product sales during the pandemic, as the number of Australians adopting animals has skyrocketed during lockdown.
Mr Carroll said: “I can’t speak to customer perception; every customer is different. But in my experience, yes I have seen sales increase by offering promotions specifically for the pet category.” he said.
“I wouldn’t consider this to be sales volume, but I would say it provides a good perception of value to the customer.”
While Mr Carroll repeatedly insisted the “downstream” intention was to make products “accessible”, he conceded the real aim was to increase sales.
Coles received discounts from suppliers when their products were discounted and promoted.
The court was told that during negotiations with Real Pet Food Company, supplier of Nature’s Gift pet products, Mr Carroll threatened to pull the range from shelves due to disputes over pricing and discounts.
Emails read to the court revealed Mr Carroll also offered Real Pet Food a “direction” to reach a deal acceptable to the supermarket giant before putting existing product shipments on hold.
ACCC barrister Garry Rich SC said: “You said in your email that you were happy to give him direction on where you should invest.”
“By this you mean that you are happy to tell Coles what additional promotional finance or other benefits it can provide so that you can fully accept its CPI (cost price increase) request.
“You were telling him you could make suggestions about the amount of promotional finance or other benefits Real Pet Food could provide to Coles.”
While Mr Carroll admitted writing the emails, he said his aim was to reduce costs for the benefit of customers.
“You talk about customer benefits, and we continue that discussion. But the reason you want to provide benefits to your customers, as you define it, is because they buy your product,” Mr. Rich said.
Mr Carroll argued he “genuinely cares about customers” before admitting it was about boosting the supermarket giant’s sales.
The competition watchdog is seeking serious penalties for alleged breaches related to Woolworths’ “falling prices” and Coles’ “falling” promotions over 15 months.
The case continues before Judge Michael O’Bryan.
