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shopper loyalty

Will government inquiries improve the shopper relationship with suppliers and supermarkets?


In the last 5 years numerous factors beyond the control of suppliers and supermarkets have disrupted supply chains and consumer demand. These include COVID, wars, severe weather, inflation, increasing CODB (cost of doing business), COL (cost of living). Obviously in this environment relationships between shoppers, suppliers and supermarkets could be strained.

After 40 meetings and reviewing 56 submissions Dr Emerson, independent reviewer of the food and grocery code of conduct, has released his interim report. His recommendations include making the code mandatory, financial penalties for non-compliance and changing the dispute resolution process to address suppliers fear of retribution. The ACCC inquiry into pricing practices of supermarkets is on-going and will make recommendations later this year. Will these inquiries recommendations improve the relationship between shoppers, suppliers and supermarkets?

This quick blog highlights shoppers have power in the relationship with supermarkets. The current inquiries focus on the supplier / supermarket relationship, so it is debatable they will deliver benefits for shoppers.

Consumer / Shopper demands

Much has already been written about the increasing power of shoppers. For example, as outlined by Jim Blasingame, in his book The Age of the Customer, customers now control the relationship with sellers and they also control the product information. Generally speaking, the digital age has empowered shoppers more than ever before. My blog, Who has the power? , provides more information. In response to the increasing power of shoppers many suppliers and supermarkets are customer or shopper led, obsessed etc. My blog, A simple introduction to Customer Centric Strategy , provides more information.

“These customer obsessed organizations see customer experience as a source of commercial value: not just a differentiator versus competition (although it certainly is that) but a mechanism for superior profitability. The net result? Customer obsession results in a sustainable source of financial value for shareholders and owners.”

Customer first. Customer obsessed. Global Customer Experience Excellence Report, 2019. KPMG

Therefore, a category management mindset suggests success is meeting / exceeding shopper demands. This is generally described as being ‘shopper led’.

Food and Grocery Code of Conduct Review

A heavy imbalance in market power between suppliers and supermarkets in Australia’s heavily concentrated supermarket industry necessitates an enforceable code of conduct.’

Dr Emerson

After 40 meetings and reviewing 56 submissions Dr Emerson, independent reviewer of the food and grocery code of conduct, has released his interim report. The first sentence (above) in the interim report highlights his focus is on the relationship between suppliers and supermarkets. One of his recommendations is:

The Code should place greater emphasis on addressing the fear of retribution. This can be achieved by including protection against retribution in the purpose of the Code and by prohibiting any conduct that constitutes retribution against a supplier.

Dr Emerson suggests the current code is not effective. To improve the code he suggests making the code mandatory and including penalties for non-compliance to address these concerns. However, none of his recommendations clearly explain how this will benefit shoppers.

IMHO (in my humble opinion) this inquiry, including its recommendations, has focused on the supplier / supermarket relationship. It is debatable that any of the current recommendations (firm and draft) would deliver benefits for shoppers. Dr Emerson does suggest;

‘An effective Code of Conduct would benefit consumers through greater choice and better prices by enabling suppliers to innovate and invest in modern equipment to provide higher‑quality products at lower cost,’

ACCC inquiry into pricing practices of the supermarkets

‘The key source of contention is why profits and margins increased so dramatically.’

ABC News, Coles, Woolworths profit surge raises questions over inflation profiteering, Feb 23

A category management mindset suggests meeting / exceeding shopper demands is fundamental to category management success. The goal is to create long-term loyalty with shoppers.

The government, in part, has commenced this ACCC inquiry because ‘grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures’ ACCC Chair Gina Cass-Gottlieb. The inquiry may suggest category decisions that maximised sales / share / margin for supermarkets may have not met shopper demands. Due to COL pressures shopper demands have increased for lower prices / value. My blog, Value in FMCG , provides more information.

Ironically the inquiry highlights the increasing power of shoppers. In this example, shoppers have used their ‘influence’ to convince the government that they should have inquiries into supermarkets. So, shoppers have influence over the entire value chain, not just for a particular brand / category / supermarket.

The ACCC inquiry into pricing practices of supermarkets is on-going (interim report due by 31st August 24).

Shopper behaviour

Low shopper loyalty is an on-going issue in the Australian supermarket industry. Australian Retailers Association (Supermarket loyalty non-existent, Sept 15) explained that 7% of shoppers shopped at all 4 supermarkets (Aldi, Coles, IGA, Woolworths), 28% shoppers shopped at 3 supermarkets and 37% shoppers shopped at 2 supermarkets during a 4 week period in 2015. More recent data (below) highlights an increasing amount of shoppers are ‘shopping around’ due to COL pressures.

shopper loyalty

Source: NielsenIQ Homescan 52 w/e 25/03/23

Low shopper loyalty in Australia highlights shoppers can and do shop at more than 1 supermarket. This behaviour also highlights the power of shoppers. If supermarket A offer does not meet their expectations’ they will shop at other supermarkets / speciality stores. Also, shoppers can purchase products from other channels. For example, if frozen pizzas in supermarket A are too expensive then buy a cooked pizza from Domino’s.

New data from the Australian Bureau of Statistics (ABS) has revealed Aussies bought about 3.9 per cent less food in 2022-23 than the previous year, marking a drop of 63g or 337kj a day. (Aussies eating less fruits and veges, drinking less milk amid rising checkout costs, ABS data reveals, April 24).

COL and other factors have changed shoppers’ behaviours in the short term also. Generally speaking, shoppers are buying less volume (or smaller packsizes) due to financial constraints. This again highlights the power of shoppers. Shoppers do not have to buy many items sold in supermarkets. Obviously, it is harder for shoppers to not pay other COL expenses such as electricity and rent / mortgage.

Category Management Mindset

If shoppers have a demand, e.g. lower prices due to COL pressures, then a category management mindset suggests suppliers and supermarkets should focus on meeting this demand. To assist shoppers’ struggling with COL pressures suppliers and supermarkets could offer more P/L (private label), smaller packsizes and where possible lower prices (normal sell and promo). Short term this would maximise sales / share and more importantly build long-term loyalty with shoppers. Generally speaking, suppliers and supermarkets have been adopting these tactics recently to maximise sales / share. The recent changes to ranging / pricing (normal and promo sell) again highlight the power of shoppers.

Inquiries may suggest that the adoption of tactics to address shopper COL pressures were slow and/or only occurred after inquiries were announced. The timeline to implement these tactics was normal. Suppliers and supermarkets go through a category review process, normally annually, and it is hard to change range etc out of review. Also, suppliers and supermarkets had to manage increasing CODB pressures, like other industries in Australia, so it was challenging to offer lower prices (normal and promo sell).

The obvious risk of not meeting shopper demands is declining sales volume / shoppers switching to alternate brands / categories or channels.


It is debatable whether any recommendations / legislation will change shopper behaviour. Australian supermarket shoppers are not currently loyal and ‘shop around’ for the best deal. With shoppers increasing use of digital, including price comparison sites, it is likely that the low levels of loyalty will continue. New entrants, ranging from Amazon to Temu, have already entered the Australian retail market and provide shoppers with even more options to ‘shop around’. Also, if the offer does not meet shopper demands then shoppers can decide not to buy that brand / category for many items offered in supermarkets. These current behaviours (and others) highlight shoppers already have power in this relationship.

IMHO (in my humble opinion) inquiries should focus on what information suppliers / supermarkets should supply shoppers. If shoppers are concerned about pricing / profits what specific information is required to build trust between shoppers and suppliers / supermarkets? What profit level for major supermarkets is acceptable for shoppers? Ironically public supermarkets, such as Woolworths, releasing financial results may be a major factor in shoppers’ perception that supermarkets prices / profits are too high.

Do shoppers trust supermarket brands?

Roy Morgan 10 most trusted and distrusted brands

12 month average to December 2023, n=25,683

Many will suggest that shoppers do trust supermarkets / major retailers in general. For example, independent research by Roy Morgan highlights the 5 most trusted brands in Australia are retailers – including the 3 major supermarkets. This (and other) research suggests that government inquiries into the relationship between shoppers and supermarkets is unnecessary.

So, is the underlying issue increasing retail prices due to market power of major supermarkets or numerous factors (including COVID, wars etc) increasing CODB for suppliers and supermarkets?


Disruption is normal in the supermarket industry. Recently many factors beyond the control of suppliers and supermarkets may have damaged the relationship with shoppers. Due to the power of shoppers and competitive nature of the industry suppliers and supermarkets have improved their offer where possible. The goal is to build long-term loyalty with shoppers. This is a very challenging goal considering Australian shoppers long-term low level of loyalty to supermarkets.

The obvious question is what could government inquiries recommend to improve the shopper relationship with suppliers / supermarkets? Shoppers already have increasing power, regularly shop around and can stop buying numerous products stocked by supermarkets if the offer does not meet their expectations … 

The information provided in this blog post was general in nature. If you require more information I offer a free initial consultation. Contact Details .