Coles Myer and Woolworths control retail in Australia. This means they control suppliers and landlords. Their power is far reaching, way beyond what I imagine I am sure. It reaches from their shelves through the checkout out past their petrol pumps down the freeways and past factories, past the wharfs where they bring so much of what they sell in and down to the farms where they dictate what is grown and at what price.
The public faces of each of these companies does not reflect their long and powerful tentacles. The public faces are TV and print commercials of happy people working and shopping in their businesses. The carefully crafted advertising front humanises Coles Myer and Woolworths and while often the in store experience does not match the advertised image, we’re drawn back – such is the power of the image in the advertisements.
While there have been some minor skirmishes which scrape the images of these giants, they remain well thought of by consumers. This is despite their all powerful and profit motivated control over so much of our economy. Their respective benign public images have allowed them to extend their reach without challenge. Their move into petrol and convenience over the last two years is a good example. They now dominate in a category where they had no footprint just a few years ago. They have leveraged their P&C offering to create a smoke and mirrors loyalty scheme which bounces consumers between supermarkets and petrol outlets as if they are the silver ball caught on a pinball machine between two bumpers.
Newsagents have seen their businesses eroded by the power of these two retail giants. Whereas fifteen or so years ago they did not carry newspapers, magazines, stationery and greeting cards, today these two stores are very strong in these core newsagent categories. Newsagents have allowed the supermarkets to get away with it. They have been scared by their might.
This week newsagents are watching supermarkets do it to them again. We have discovered that a supermarket chain has leveraged 16% commission for product which newsagents receive just 5% commission for. Initial research indicates that newsagents sell more than supermarkets. Yet their commission is barely one third.
At some point someone in government is going to wonder when Coles Myer and Woolworths amassed this power and who let it happen. They will realise the damage to communities across the country. They will realise the jobs lost. They will lament the loss of small business stumblings, entrepreneurship and creativity which trained so many. They will wonder why their constituency has given up.
Newsagents can compete with Coles Myer and Woolworths by respecting and rewarding employees; engaging them in building the business; ensuring that the business has a bright and knowledgeable face for customers; that the product range is good; that prices are fair; that the business actively engages with the local community; that customer service is more than a policy – that’s it’s action every day. We need to out humanise these retail giants and provide a connect with consumers such that they feel the difference shopping in our businesses.
This is how we beat the giants. With small personal steps. Every day. While they can buy better and spend more promoting their businesses they cannot provide better service than an owner standing at the counter ensuring the best customer experience possible every time.
This is what newsagents need to be working on.
In the meantime we should also be educating our politicians and our customers about the social and economic risks of these and other retail giants having more control than they have today.