Where’s All My Money Gone?

by BobinOz on August 13, 2010

in Australia vs UK

Who is it, here in Australia, who takes on average 23 cents out of every dollar Australians spent? Surely there is only one answer to that, it has to be the taxman doesn’t it?

No, it isn’t. Would you like a clue?

Okay, so you’ve run out of milk, sugar, breakfast cereals and of course you need to decide what you are going to be cooking for dinner tonight. Where are you going to go? Hmmm, that’s a big decision.

You could go to Coles……….

coles Wheres All My Money Gone?

Our local Coles Supermarket

…….or you could go to Woolworths

woolworths Wheres All My Money Gone?

Woolworths at Indooroopilly

Or you could go to………

And therein lies the problem. That’s it! Coles or Woolworths. The choices after that are pretty slim. We have the occasional IGA or Aldi and that’s about it. There are a few independents around, but I’m not sure I’ve seen one.

Back in England we had Tesco, Sainsbury’s, Co-op, Asda, Morrisons, Safeway, Marks & Spencer, Iceland, Somerfield, Budgens and Waitrose to name just the ones that I know.

So who takes on average 23 cents out of every dollar Australians spent? Answer: Coles and Woolworths. Yes, together these two giants are cleaning up here in Australia.

Is it a problem? Well I didn’t think it was until I discovered this rather frightening video. Take a look at this…..

Maybe it’s not as bad as the video is suggesting. I did a groceries cost comparison post a while ago and prices here turned out to be surprisingly close between Australia and the UK.

But you have to say that when two companies have a virtual duopoly on selling us food, alcohol and petrol, (among other things) it can’t be good.

Happy shopping everyone!

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{ 18 comments… read them below or add one }

Stradbroke Island August 14, 2010 at 3:14 pm

Yes, it’s about time we had some real competition here is Australia. There are a few little boutique places starting to open up here in Brisbane offering a good selection of produce and products that you won’t find in the big 2.

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BobinOz August 16, 2010 at 8:02 pm

I suppose we should be thankful that at least we still have independent butchers and greengrocers around, their stuff is always cheaper than the big boys.

But how long before they are driven out? They are already a dying breed in England.

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sandra October 18, 2010 at 8:38 pm

I come over here from uk in 1970 went back for a visit 4 years later. Ive just been back a couple of months ago to London for a months holiday. havent been back in about 35 years could not get over how cheaper the food was !! And the variety is overwelming my eyes were popping out of my head. Since being back here in Australia now I hate to go shopping the stores look half empty with no variety at all. & the prices are a rip off. Now I have a long face shopping. and ive really lost interest Id love to see Morrisions and Asda out here sure give woolies & coles a good shake up. We surely are all getting ripped off. Lets all get something going. YOur video was sure a good eye opener.
Thanks Sandra

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BobinOz October 20, 2010 at 3:52 pm

Hi Sandra

I have to agree with you as far as choice is concerned, when I first got here it was immediately noticeable that there were much fewer options in the supermarket. But I kind of found that cute, like going back 20 years. The shops weren’t overflowing with ready-made meals and 100 different kinds of crinkled chips. And I still think it is quite cute.

But as for price, well, I’m not surprised everything is so cheap in England with the current exchange rate. Just three years ago everything would have cost you 50% more than you did pay on your recent holiday. That’s a massive difference and that’s why England is so cheap right now.

One day the pound will recover. One day……….

But on a slightly different note, did your visit make you pine to return to England?

Cheers

Bob

PS – I’ve just posted more about this today in my post about currency exchange rates, you can read it here…. AUD – GBP and USD

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sandra October 21, 2010 at 7:05 am

Hi Bob :)

yes very true what you wrote. When i did go back to uk in about 1975 & changed dollars into pounds we got alot more pounds then so it was great. thats when the crusies where cheap. but then the dollar was strong.

Well my Husband is Australian & I went back on my own for a holiday, I think he thought I was going to come back running uk down. but it worked in reverse on some things . not good for him lol.

Well must admit after not being back for so many years it was a good eye opener. Of course I loved the country side in uk I stayed in Lenham with my cuz jean & her husband Brian. Oh the countryside is beautiful so many trees and lovely country lanes and the little quaint pubs :) loved it :)
Thou i could not get over the paying for parking every where you went !!!even in the country in some parts.
Loved the shops & of course the food Gammon steaks which I missed & pork pies and pie and mash :) so much vareiety as I said befor & the roses chocolates we pay here $24 for a kilo box of roses in uk 5 pounds for the same thing. wish I could have bought some back thou I did bring jellies and walnut whips e.t.c,

It would be nice to live in uk 6 months and 6 months here haha. Would I live there after being here in Oz I dont think so. even thou there is alot i miss im glad my daughter is growing up out here in Australia. I feel its alot safer. I saw some seedy parts of london and to be honnest I travelled from Romford to woolwich going through Deptford & did not feel safe going through those parts of uk on the train. I suppose everything feels different when on Holiday.
The transport I found great but is exspensive unless you get a day Ticket. well as we know petrol is more expensive.
I did love the shops & supermarkets very much seem to have more specials e.t.c & so big. loved Boots the chemist.

also not having to get my bags checked was great coming out from a shop. Thou I loved all the little places you can visit like the castles e.t.c so many places of interest. When I was over there it was there summer as I was there mid july to mid August but was more like our winter here I was still cold :) uk has changed alot. even my relatives say this. since all the trucks coming in from the Eu and seems anyone can just walk in uk now just through the door which seems really odd to me. from Iraq to Poland and anywhere else and they dont need a passport. !! No border protection.

It was good coming back home and seeing Blue skys again each morning & we do have great beaches here. I feel safer here in Australia.

If theres some things id bring back here to Oz it would be the Transport all the places of interest castles e.t.c the little country lanes shops.& pubs. but then again I suppose it would not be Australia. I love my swimming pool here . dont think id have one in uk. with the weather I like the layout of the houses here having there own laundry room. e.t.c & open planned. We are both hoping to go back for a visit one day again this time my husband would love to see uk. also
I was looking at old videos yesterday on You tube from the 60s. everyone commeneted how England has changed since then. And not for the best.

Oh one thing I did love was the good sausages 30 varieties !! never ate steak in uk was buy eating stuff i missed but never missed it :) thou years back when we lived in uk steak it was luxury once a week thing. now we have it any time. My husband does love his steak :)

Cheers sandra

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BobinOz October 22, 2010 at 8:25 pm

Hi Sandra

First up, I’ve got to thank you for giving us such a detailed reply. It’s great that you have taken the time to share with us so much information about what you thought when you returned to England.

It’s also very difficult to disagree with anything you say, I think you’ve nailed it! The only point I’m not fully with you on is the shopping thing, to me Boots look exactly the same as Terry Whites. But then I am a bloke.

In fact you’ve given us such a good insight I have made your comment the subject of today’s post, I hope you don’t mind. You can read it here, it’s called Australia or England? The Pros and Cons.

Thanks again Sandra, I really appreciate it.

Cheers

Bob

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Michael November 28, 2010 at 10:08 pm

Bob,

Nice website. I was shocked to hear that Coles and Woolies take in 23% of household expenditure in Australia. Do you have a source for this figure?

Though as you say Aussie high prices are comparable to those in the UK the thing is we have far more arable farm land so it is a disgrace we pay so much for food. Honestly I am astounded 2 businesses take in 23% of all expenditure here and wonder whether it is their lockdown on commercial property or government legislation keeps out competitors?

Cheers,
Michael.

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BobinOz November 29, 2010 at 9:49 pm

Hi Michael

The main source of the 23% figure was the YouTube video. It was created by the HungryBeast, who are on the ABC network, as in the Aussie equivalent of the BBC, so quite reputable I think.

But I have also just located a second source, and again, they look straight, and they say it’s 25%! Check out this article on The Land. I think the problem is Coles and Woolworths own so many businesses, it is frightening.

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Michael November 30, 2010 at 7:21 pm

Thanks bob. The 23-25% figure seems to also include revenue from alcohol, hardware, bulk goods and other non food retail which makes it easier for me to understand how they can control such a huge portion of the Australian retail market. I am not so shocked now that I know 23% of our incomes are spent on food alone.

Cheers,
Michael

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BobinOz December 2, 2010 at 1:02 am

Yes, booze, petrol, food, we’re already at 20% without thinking too hard. Then add the rest of their stores. Not such a big surprise is it?

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Andrew December 13, 2010 at 5:19 pm

I find this rather hard to believe.

Assume we are talking about Woolworths + Westfarmers rather than just the supermarkets.

Revenue for WOW + WES Financial Year 2009/10 = $51.8bn + $51.8bn (just happen to be the same). Together this is $103.6bn. You can look that one up on the ASX website.

Household final consumption expenditure ABS Cat No A2302826T Quarterly: $177,956m + $175,279m + $173,063 + $171,072m = $679,370m = $679.4bn for Financial Year 2009/10.

Therefore, assuming WOW and WSF do not do business with other businesses; i.e. every cent of revenue is derived from consumers, then WOW and WES account for 14.9% of houshold consumption.

I would be surprised that WOW and WES would account for more than 10% of houshold consumption once non-operational income and business income is removed from their revenue lines. Thus the 25% seems rather exaggerated to me….

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BobinOz December 14, 2010 at 12:56 am

I am very impressed with your argument against it being 25%, you’ve done some good research. I haven’t checked your figures but I assume they are right, in which case, yes, something’s wrong. My sources are basically the video from The Hungry Beast and the article mentioned in a comment above. Both are trustworthy, I’d say.

But I’ve just gone through them again, looking for clues. The answer was easily found, luckily for me, I’m no Inspector Clouseau. It’s in this quote…..

Between the two of them they account for 25 cents out of every $1 spent in Australian retailers, according to analysis by IBISWorld, which values the market at $350 billion.” Read the full article at The Land.

It’s retail spending! So between them, WOW & WES account for about $87.5 billion which now fits perfectly with their total revenue which, as you said, is $103.6 billion. So clearly household consumption expenditure includes a lot more than just retail spend. Actually, around $329.4 billion worth.

So you are entirely correct. Nowhere on the video do they mention its 25% of retail spend. That is slightly misleading. Thankfully the written article does make it clear. Thank you for bringing it to our attention.

But what I want to know is, what sort of stuff do we buy that is not “retail spend” but is part of household consumption expenditure. Would that be paying rent or buying an old house? Or buying a second hand car? But if you buy a new house or a new car, would that be retail spend?

Anyway, to sum up and add a slight correction to this post, Coles and Woolworths have a 25% market share of the Australian retail market, not a 25% share of EVERY dollar spent by Australians. But 25% of retail spend is still worryingly large, and can’t be good for consumers.

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Michael December 15, 2010 at 9:38 am

Bob,

My understanding is that retail spending covers everything purchased by a household from a retailer (grocery store, department store, boutique, outlet, dealership, reseller, restaurant).

If my understanding is correct then it would follow that non retail spending includes b2b trade and in terms of household spending perhaps buying homes and paying rent would be covered because these are generally transactions between individuals.

Andrew,

The only division of WOW that I would see any major proportion of revenue being b2b would be petrol sales. That division aside the others are heavily targeted towards consumer sales.

WES might have a much higher proportion of course given they operate various divisions targeted towards business sales (Bunnings, Officeworks, Bullivants, coal and gas extraction,

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BobinOz December 16, 2010 at 9:16 pm

Hi Michael

Dang! It’s more complicated than I thought. So you’re saying some Bunnings/Office Works/petrol sales are retail and some not, depending on whether a private individual or a business buys the stuff?

I can’t see how that could work, when those places sell things, they don’t know who is buying, business or private. How could they split it?

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Trevor Stokes February 11, 2014 at 6:28 pm

Coles and Woolworths are the no.1 and no.2 retailers and they love to use that power to get what they want. I have friends in both the farming and the transport industry who supply goods and services to both retailers and the standard comment from all of them is ‘don’t’.

Lets start with Farmers.

Quite a few farmers here have direct contact with one or the other of this pair, and that cuts out the agent/distribute that you would normally have to deal with, which should mean that you can make more money right? wrong. More and more stories are emerging from people who have dealt with them that the main line used is ‘this is what we are offering, accept it or we will make sure you never get a contract from us again.”

Now we move onto the trucking industry

Between these two alone they control 1/3 of all road freight that moves in this country and like with their dealings with the farmers they are not above using that to set prices so low and deadlines so tight that it is impossible to make a living and also impossible to do the job within current safety regulations laid down by the Government.

Same deal, you accept our rates and conditions or you will never get a contract from us again. They have gone a step further in some cases by adding something to the effect of ‘and we will ruin your reputation in this industry’ and in the trucking industry your reputation is your biggest selling point.

Here is a typical load of crap that those subcontracting to Coles or Woolworths have to put up with.

Government regulations say you can drive a truck no more than 12 hours in a 24 hour period:

You arrive outside the Cole or Woolworths distribution center/warehouse at 12 midday. (driving hours remaining = 12)

You are kept waiting in line outside for 3 hours waiting to get in and load (Unpaid i might add, because they do not class it as ‘work’ but the government regulations will not let you class it as ‘rest’ so you are on the clock) (driving hours remaining = 9)

You finally get in and they load you, taking anywhere between an hour and 2 hours to get you loaded, paperwork signed and you out the gate. For the ease of the maths, and we’ll give those working the warehouse a break and say that they were working fast that day, we’ll say it took an hour. (driving hours remaining =8)

Before you depart, you are told ‘this WILL be at our (insert warehouse location 10 hours drive away here) by Midnight.

And then when you arrive, having skipped all your breaks and maybe pushing the speed limit to get there in time, you are kept waiting outside their warehouse another 3 or so hours waiting to get in, again unpaid. And they also do not care when you got in the line outside their warehouse, they time you from when the trailer doors close to when they are opened at the other end.

If you push for more money to cover increased costs, your contract is not renewed. If you are ‘late’, your contract is not renewed. If you tell them that it is impossible to make a certain distance in a certain time, hey, you guessed it, your contract is not renewed.

They have all the power and do not like not getting their own way. The trucking industry finally managed to get the government to put together an independent tribunal to oversee things like pay rates and the ‘chain of responsibility’ which is a great thing in giving the trucking industry more say in what they should be paid, the trip times expected etc.

And Coles and Woolworths have complained, rather loudly, about this saying that it will ruin their profits (Coles raked in $16 billion profit last year) and they cannot afford it. As such they have gone to their mates in the current government and are working to have the tribunal disbanded.

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BobinOz February 12, 2014 at 3:42 pm

At this stage my lawyers have advised me to include the word “allegedly” as often as possible in my answer.

So, if this is how truckies are “allegedly” treated, it sounds pretty shoddy, “allegedly”.

Maybe this is what Coles mean in their adverts when they say they are driving down prices :-)

Ahem, “allegedly”.

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Trevor Stokes February 12, 2014 at 6:05 pm

well, there has to be some truth to it i reackon, after all, they are now being investigated under ‘chain of responsibility XD All i can say is it is about time.

Managers from Coles have gone on record as saying that while they ‘are committed to the safe practices of transport’ (or some BS like that) they have also confirmed that they also have pressure from head office to ‘reduce transport costs by about 20% this year’

Anyway, it is always nice to see the opinions of a recent immigrant (well, somewhat recent XD) on this country. Your blog makes for very entertaining reading.

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BobinOz February 13, 2014 at 9:31 pm

Yes, it will be interesting to see how this one pans out, it would be nice to think it could end up with a better deal for the truckies.

Thanks for the thumbs up on my blog Trevor, appreciated.

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