Coles and ‘The Market’

5 March 2026

Currently the ACCC is suing Coles over misleading advertising as their promotion logo ‘Down, Down’ was to show customers cheap goods, but some of these had previously had big rises, so that overall they had not fallen, or not fallen much.

When I did Economics 101 a long time ago, the first chapter of the book was about the perfect market, modelled on a European medieval village where each Saturday all the farmers came to the square and sold their produce to the villagers. The farmers all competed with each other, and could not really take their produce home. The villagers had just enough money, so chose wisely which products to buy. The farmers could not raise their prices more than the other farmers and knew roughly how much to bring, and the villagers had complete knowledge of the products that they were buying.

All the other chapters in the book were about how the market was distorted by cartels, oligopolies, innovation, scarcity, lack of knowledge, regulation and doubtless a few other factors that I have forgotten.

In the simple medieval world, people spent all their money on necessities and made rational decisions.  Now, a huge percentage of our expenditure is discretionary. Some people are battling to afford food, clothes, services and rent, particularly the last two, which have been badly affected by poor government policies over many years.

But the main area of interest to marketers is the people with discretionary income. Will they buy a branded product, believing it is better or more prestigious?  The ‘science’ of marketing at an individual level is a branch of psychology- working out motivations.  A marketer told me that people make decisions with their emotions, then justify them intellectually afterwards. This is true and it follows that the model of the rational villager is simply not what happens.

Big decisions, like moving to a more expensive suburb, buying a prestigious brand car taking an expensive holiday, or upgrading to a more expensive seat class, are a combination  of emotional and rational; you want this and you can afford that.

Airlines and some accommodations are interesting. If you try to buy an airline ticket online and fall off, when you go back a few minutes later, the fare you had is no longer there.  Did it really get sold in that moment, or did the airline find out who you were and up the fare?   Fares can vary wildly. I tried to catch a train from Stockholm to a northern Swedish city and the price varied almost tenfold depending on what time I wanted to travel. Were they just trying to even the load, or was there some gross profiteering there?

Some supermarkets charge more in richer suburbs than poorer ones. The products are the same. Presumably the rents in the expensive suburbs are more, but how much is that per item?  When Aldi came, I was amazed that the total cost of groceries was about 30% lower than the Coles/Woolworths duopoly. The range of products is less, but it is a big gap.  The duopoly lowered their prices on things that are easy to remember like milk and bread and made a great play of the fact that these were price-competitive, but frankly, most of the rest of the wasn’t and isn’t.

At least some good folk have kept a record of what was actually charged and when and it seems in Coles ‘Down, Down’ sometimes means ‘Up, Up’.

Years ago in the BUGA UP days (early 1980s) when they had an ‘Advertising Standards Council’ and you complained to it, absurd claims were dismissed as ‘puffery’ that no one believed, so of course it was OK to make them.  When the heat from BUGA UP and the consumers went off, the Advertising Standards Council simply disappeared and the nonsense continues unabated, (not that it ever was abated).  The ACCC (Aust. Consumers and Competition Commission) seems either to have collected the data or has had it collected for them, so is able to take action at last.

It might be noted that government-owned Sydney Markets at Flemington had cheap stalls and most retailers and the public went there to buy their groceries.  Liberal Premier Nick Greiner privatised the markets, putting the stalls up for sale based on their turnover. This created a huge overhead for the stallholders, who naturally had to buy their spaces for large sums.  All the market prices naturally had to rise, and the big supermarkets by-passed the markets, buying direct from the farmers and squeezing their prices down. This was a significant move from the previous free market, done so that the NSW government could flog off as asset. The duopoply and buying power of the supermarkets further distort the price structures.

Allan Fels was a former head of the ACCC and has written the piece below in the SMH of 4/3/26.  Late in the article he mentions one of the technologies that already exists, which is people simply visiting supermarkets, picking what they want and leaving, having been identified by face recognition and charged as per their card on a database.  An idea that he foreshadows is digital pricing, where the goods do not have a price, but the price can be set for each individual customer, presumably based on their profile.  Currently, there are loyalty schemes that collect our appearances, personal details, locations, shopping habits, and credit details.  Free apps want access to our contacts lists and photos, so our friends are all linked together, and now technology companies listen to our conversations and  can scan our emails.  All this data is saleable for marketing, security or anything else.  Presumably, as we come out of our future supermarkets with no prices on the goods, no checkout and no dockets but the bill visible on our phones, we can compare what we paid with strangers in the street, and see what their prices were compared to our own.  Then a bevy of lawyers can make a fortune arguing with the supermarkets who will allege that were not ripping some customers off, they were subsidising the poor ones.

It’s a Brave New World.

https://www.smh.com.au/business/consumer-affairs/our-supermarket-duopoly-needs-to-tell-not-just-the-truth-but-the-whole-truth-20260303-p5o6yk.html