Warnings data collected by Coles and Woolworths leading to unfair market

Warnings data collected by Coles and Woolworths leading to unfair market
  • PublishedMarch 26, 2024

The weekly shop for Toowoomba mother Tammie Irons, like many Australians, has been getting increasingly expensive.

She said feeding her teenagers was a struggle and she often spent more than $300 a week on groceries.

“They eat a lot more than younger children … I also have two coeliac boys, so the price of groceries is becoming increasingly more expensive for us,” Ms Irons said.

To help cut down the cost of shopping, Ms Irons uses the Woolworths loyalty program.

“By the time I get to Christmas, I’ve got around $150 or so off my shop, which I really appreciate,” she said.

But critics have raised concerns the massive amount of data being collected is helping further expand the power the two supermarket giants have in Australia.

What data do the supermarkets collect?

Coles and Woolworths operate the Flybuys and Everyday Rewards loyalty schemes respectively.

The schemes collect data from customers, including “what, how, when and where you buy from us”, according to the Woolworths privacy policy.

The data is used in a number of ways, including personalised marketing and for insights on customer behaviour.

Coles said the data could also be used to “protect our lawful interests and facilitate purchases or our businesses”, while Woolworths cited “investigations in cases of fraud or data security risks” as a possible use.

Data control

Queensland Fruit and Vegetables Growers (QFVG) said the data held by the two big supermarkets gave them immense power over producers.

CEO Rachel Chambers said the data, combined with the use of supply agreements with growers, allowed supermarkets to control the supply and demand of fresh produce.

The agreements, as outlined in submissions to the Senate inquiry on supermarket prices from Coles and Woolworths, see growers and supermarkets negotiate each week on the prices of fruit and vegetables.

The prices are affected by factors including market availability and the volumes needed, with each party given the right to reduce costs or adjust the amount of produce needed on any given week.

A woman standing in front of apple trees
Rachel Chambers says big data is giving supermarkets an unfair advantage over growers.(ABC News: ABC Sunshine Coast: Owen Jacques)

In its submission to the Senate inquiry, the QFVG said the supermarkets’ control of data gave them the ability to negotiate lower prices with growers and thus create an unfair market.

“They understand exactly what the consumer buys, basically, on a day-to-day basis, their data is so intense,” Ms Chambers said.

Ms Chambers said she believed many people were unaware their data was contributing to such a power imbalance.

“Data can also be used as a power source. Who owns the data owns the world.

“The data asymmetry, the power imbalance, sits within the data.”

The QFVG has called for a greater discussion about the collection of data and how imbalances can be addressed.

It suggested periodic price data be provided to an independent body to act as a watchdog over the market.

In statements provided to the ABC, Woolworths said it was standard practice for businesses to look at previous sales to help predict future demand and that it was investing millions of dollars in advertising to promote Australian produce.

Coles said it used data to inform its ordering requirements to ensure produce was available to customers at any given time and at affordable prices.

Doubling down

Coles and Woolworths are both doubling down on big data – Coles earlier this year signed a deal with US defence company Palantir to “optimise its workforce”, while Woolworths purchased data company Quantium in 2021 for $223 million.

“It’s part of a broader move that both Australian chains are making to move towards a sort of more data-driven, high-data-collection kind of way of doing business,” University of Queensland research fellow Luke Munn said.

He said the millions of data points supermarkets collected gave them “a pretty personalised profile” of customers, allowing them to better market goods.

“It’s a Faustian pact, because customers give up their privacy, but maybe some customers would think that’s worth it for getting sort of customised offers,” he said.

Dr Munn said he believed the trend showed the supermarkets were acting more like tech companies with an emphasis on cutting costs.

“Emphasising inexpensive technology means that you’re not investing in worker salaries, you’re not investing in cheaper groceries — it’s a choice that has pretty large implications,” he said.

Competition concerns

Consumer group Choice said the data held by Coles and Woolworths was helping to push smaller players out of the market, by allowing them to better target consumers with advertising.

A woman standing on a city street
Choice data advocate Kate Bowers says more regulation is needed to protect consumers’ privacy.(ABC News: ABC News: Billy Draper)

“What we can see is unfairness that is happening so that customers are not necessarily getting the best deals, but also smaller players are not able to compete on price,” Choice consumer data advocate Kate Bower said.

“Smaller independent supermarkets are mostly reliant on foot traffic and traditional advertising to attract customers, making it very hard to win customers from the majors.”

Choice has also expressed concerns about “opaque” data-sharing practices by both the supermarket loyalty programs.

“The privacy policies use vague terms such as data partners or business partners that make it difficult for consumers to know who their information is actually being shared with,” Ms Bower said.

Choice has called on the federal government to implement greater privacy protections and for the Australian Competition and Consumer Commission to examine the consequences of big data on the retail industry.

A sign for Woolworths on top of another for Coles
Woolworths and Coles collect data from the millions of transaction that happen every week.(ABC News)

Small business impact

Indea Weisfelt and Damon Atkinson said the data held by Coles and Woolworths made it a challenge for their small business to compete.

The couple, who run an online service providing produce direct from farmers in Toowoomba, said the supermarkets had a major advantage when negotiating with growers.

A woman and a man and their son in a shop they own
Damon Atkinson, Indea Weisfelt and son William at their shop in Westbrook.(ABC News: ABC Southern Qld: David Chen)

“They’ve got a lot of leverage over the growers,” Mr Atkinson said.

“They’ve got a lot of data that they collect too from the customer, so they know when people are likely to buy certain products and how much.

“We don’t have that same leverage over growers. We don’t want to. We ask our growers to set a price with us that they’re comfortable with.”

A man eating some tomatoes
Damon Atkinson says it is difficult for small businesses to compete with Coles and Woolworths.(ABC News: ABC Southern Qld: David Chen)

Ms Weisfelt said she was worried what the overall impact Coles and Woolworths would have on the agricultural sector.

“[In] the six years that we’ve been in this industry, there’s been dozens of growers pack up and leave the industry,” she said. “To us, that’s really scary.

“It’s becoming harder to source produce, prices are getting more expensive, because there’s less on the market.

“Because these big supermarkets are undercutting these farmers, they’re leaving the industry because it’s not sustainable for them anymore.”


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