Damning leaked emails have confirmed all our suspicions about Coles. Not only has the greedy supermarket been hiking its grocery costs, but it’s been doing so for its own benefit — which means it’s been screwing over customers. As if that isn’t bad enough for us, a sneaky source from Woolworths also alleged that yes — as per the inquiry into price-gouging — Woolworths has indeed used the excuse of inflation to increase costs. Buckle up, because this is a chaotic mess.
The emails, leaked by an insider to Four Corners, show that Coles received a request from a multi-national supplier to increase the cost of its products to the supermarket by 5%. To reiterate, this is the cost to Coles — not us — for its products.
Coles initially rejected the request because of “customer needs”, however, it then told the supplier that if it allowed this increase in price, it would lose of a lot of money — and so it would need to be compensated for this “gap”.
Except, according to the Four Corners source, this whole “gap” thing is not actually real or legit.
“Now this gap is, truthfully, made up. There’s no rhyme or logic behind it,” the insider, who works for the supplier, said, per ABC News.
“When I questioned where this gap came from, they only shared with me an image, not even the actual data.”
The supplier then offered Coles a $25,000 one-off payment, to be put toward online promotions, to cover this “made up” gap. And Coles, all concerns for customers suddenly evaporated, gleefully accepted.
But wait, it gets worse: after accepting the fee to cover its alleged losses, Coles then went ahead and passed on the price increase to customers anyway. Meaning it essentially is making money off both sides.
“They’re (the customers) the ones that are getting screwed. It just means higher prices at the shelf because the supermarkets are extremely greedy,” the source said.
“Their main objective with these price increases, regardless of what they’re saying to the public, is a margin enhancement exercise. They want to make more money for every price increase that goes through the supermarkets.”
However, Coles CEO Leah Weckert has rejected accusations that the supermarket’s actions amount to price-gouging. Instead, she claims that this one instance is not reflective of all Coles’ deals with suppliers, and that Coles hasn’t done anything dodgy.
“You have an email from one supplier, we have over 8,000 suppliers that we work with,” she said.
“We have a team of people whose job it is to look to validate cost, price increases and we take that job very seriously.”
Yeah, the thing is, the emails show that when Coles asked the supplier to actually detail why it needed to increase its cost, the supplier refused to give any details. And Coles just… accepted that, without further interrogation.
Woolworths also allegedly tried to increase prices under the cover of inflation
Another insider alleged to Four Corners that about 18 months ago — AKA during the peak of our cost of living crisis — Woolworths began increasing its prices under the cover of “inflation”.
The source — who has direct knowledge of all this stuff — claimed the supermarket giant requested its suppliers pay some of the money they made from the price increases Woolies granted them back to the supermarket giant.
This would mean suppliers wouldn’t make their full profit, despite customers paying more for their products. Much like Coles, with these tactics Woolworths would be making money off both its suppliers and its consumers at the same time, with only the supermarket winning.
Woolworths CEO Brad Banducci has denied the supermarket used these dirty tactics, despite the fact that its profits increased from 5.3% to 6% while its cost of doing business remained stable.
“When a supplier asks for a price increase, we would like to engage to make sure it’s based on true cost increases. And so we are very keen to make sure we don’t pass on anything more to our customers than is required,” he told Four Corners.
He also denied the supermarket’s increase in profits amidst inflation was proof that it was price-gouging.
“There are many things that go and drive the delivery of that result. It’s a lot of hardworking productivity and investment,” he said.
“I’ve reviewed the supply cost increases, which we’d have to agree in many cases would’ve been legitimate.
“Between the price on the shelf and the cost increase from the supplier. Those have been in lock step.”
Hmm.
The full Four Corners investigation into supermarket price-gouging will air on Monday night at 8.30pm.
