Senate starts inquiry towards Bunnings, IKEA and Petbarn after allegations of market power abuse
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Australians take pride in supporting local businesses.
Yet, in the shadow of retail giants, the struggle for small businesses to stay afloat recently became a challenge.
The Senate recently launched an inquiry into the market power of these large retailers and the impact they have on competition, suppliers, and consumers.
Melbourne-based pet store owner Naman Thakar felt the squeeze firsthand.
His sales for dog food and pet supplies have dwindled as customers have turned to the larger stores and Petbarn and Petstock.
'It's harder to compete with the bigger guys when they have higher purchasing power,' Mr Thakar lamented.
In Mr Thakar's shop, a 4kg bag of dried cat food could sell for $87.99.
However, the same item in Petbarn is available for $62.49 for the store's loyalty program members.
Flea treatments, once a profitable item for Mr Thakar, are now sold at a meagre 10 per cent margin in a desperate bid to keep up with prices.
However, it's more than just pet supplies Mr Thakar is having a problem with.
Hardware behemoth Bunnings and pharmacy giant Chemist Warehouse recently expanded their pet category.
Meanwhile, Coles just launched a pet specialty website.
This diversification by large retailers into various sectors became a growing concern for small business owners, who fear they may not be able to sustain their businesses longer.
The Senate inquiry, initiated by Nationals Senator Ross Cadell, aimed to scrutinise the practices of big retailers.
Other allegations included that the Wesfarmers-owned Bunnings has been treating its plant suppliers poorly.
Some suppliers allegedly reported that they were forced into giving discounts or not committing to minimum order requirements.
The inquiry's terms of reference could also encompass other major brands like Mitre 10, Dan Murphy's, and IKEA.
The Australian Competition and Consumer Commission (ACCC) has already expressed its concerns about the consolidation of market power, particularly in the pet retail space.
The ACCC has submitted to the inquiry and highlighted its limited power to control mergers, even where particular market share or capitalisation levels are met.
In response, the federal government proposed new laws that would require major merger and acquisition proposals to seek approval from the competition regulator.
Suppliers started feeling pressure from the aforementioned retail giants, with many fearing retribution if they spoke out.
ACCC Chair Gina Cass-Gottlieb noted that similar concerns extend beyond pet retail—from medical to liquor store acquisitions.
The inquiry should also examine the rise of exclusive brands, which could lock customers into purchasing from a single retailer and make it difficult for independent stores to compete.
Bunnings was 'surprised' by the allegations and reiterated that they allow suppliers to voice their concerns.
According to the retailer's Managing Director, Michael Schneider, Bunnings continues their guarantee for the 'lowest price on any item, or it will beat a competitor on price by 10 per cent'.
However, Metcash, which operates Mitre 10 stores, raised Bunnings' exclusive arrangements with suppliers, which they claimed to be detrimental to smaller retailers and consumers.
While the inquiry could shed light on the practices of these large retailers, no one knows yet what policies or laws could change.
The federal Labor government ruled out some changes to powers that could break up retailers that have become too big and powerful.
However, the inquiry could still influence public opinion and bring about greater awareness of the challenges small businesses face.
What do you think about this Senate inquiry? Do you think these retailers are bringing smaller, independent businesses down? Let us know your thoughts and insights in the comments section below.
Yet, in the shadow of retail giants, the struggle for small businesses to stay afloat recently became a challenge.
The Senate recently launched an inquiry into the market power of these large retailers and the impact they have on competition, suppliers, and consumers.
Melbourne-based pet store owner Naman Thakar felt the squeeze firsthand.
His sales for dog food and pet supplies have dwindled as customers have turned to the larger stores and Petbarn and Petstock.
'It's harder to compete with the bigger guys when they have higher purchasing power,' Mr Thakar lamented.
In Mr Thakar's shop, a 4kg bag of dried cat food could sell for $87.99.
However, the same item in Petbarn is available for $62.49 for the store's loyalty program members.
Some of the retailers under scrutiny were IKEA, Bunnings, and Petbarn for gaining a huge chunk of market shares. Image Credits: Shutterstock/Sunflowerey, jax10289, Bunnings
Flea treatments, once a profitable item for Mr Thakar, are now sold at a meagre 10 per cent margin in a desperate bid to keep up with prices.
However, it's more than just pet supplies Mr Thakar is having a problem with.
Hardware behemoth Bunnings and pharmacy giant Chemist Warehouse recently expanded their pet category.
Meanwhile, Coles just launched a pet specialty website.
This diversification by large retailers into various sectors became a growing concern for small business owners, who fear they may not be able to sustain their businesses longer.
The Senate inquiry, initiated by Nationals Senator Ross Cadell, aimed to scrutinise the practices of big retailers.
Other allegations included that the Wesfarmers-owned Bunnings has been treating its plant suppliers poorly.
Some suppliers allegedly reported that they were forced into giving discounts or not committing to minimum order requirements.
The inquiry's terms of reference could also encompass other major brands like Mitre 10, Dan Murphy's, and IKEA.
The Australian Competition and Consumer Commission (ACCC) has already expressed its concerns about the consolidation of market power, particularly in the pet retail space.
The ACCC has submitted to the inquiry and highlighted its limited power to control mergers, even where particular market share or capitalisation levels are met.
In response, the federal government proposed new laws that would require major merger and acquisition proposals to seek approval from the competition regulator.
Suppliers started feeling pressure from the aforementioned retail giants, with many fearing retribution if they spoke out.
ACCC Chair Gina Cass-Gottlieb noted that similar concerns extend beyond pet retail—from medical to liquor store acquisitions.
The inquiry should also examine the rise of exclusive brands, which could lock customers into purchasing from a single retailer and make it difficult for independent stores to compete.
Bunnings was 'surprised' by the allegations and reiterated that they allow suppliers to voice their concerns.
According to the retailer's Managing Director, Michael Schneider, Bunnings continues their guarantee for the 'lowest price on any item, or it will beat a competitor on price by 10 per cent'.
However, Metcash, which operates Mitre 10 stores, raised Bunnings' exclusive arrangements with suppliers, which they claimed to be detrimental to smaller retailers and consumers.
While the inquiry could shed light on the practices of these large retailers, no one knows yet what policies or laws could change.
The federal Labor government ruled out some changes to powers that could break up retailers that have become too big and powerful.
However, the inquiry could still influence public opinion and bring about greater awareness of the challenges small businesses face.
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