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2015-07-07

Why are retail prices for many goods and services so high in Australia?

Comments on Caron Beaton-Wells "Supermarket monsters can be agents of change", 7/07/2015

We need to acknowledge that something is not working well in Australia retailing sector, given that its very high mark ups and the high prices for many goods sold in Australia as opposed to those in the US. In that context, notwithstanding the author's following quotation and statements, those two assessments (ACCC and Harper's) appear to be lacking in conviction or something is lacking and needs further research:

"Throughout, competition experts have stayed cool. Following its 2008 inquiry into retail grocery prices, the ACCC concluded that the sector was “workably competitive”. The 2015 report of the Competition Policy Review headed by Professor Ian Harper reached a similar conclusion. The sector is not unduly concentrated, the review panel concluded. Competition will work, it assured, as long as there are opportunities and incentives for entry.

While there is room for improvement in the regulation of planning, trading hours and liquor licensing, Aldi’s success suggests barriers to entry, and ultimately to growth, are not prohibitively high. Recent indications that another German discounter (Lidl) may be approaching our shores and South African-owned David Jones is considering launching upmarket food stores appear to strengthen such a case."

Why there are few indigenous Australia discount stores entering into the retailing sector as opposed to German discount stores such as Aldi and the other one considering coming to Australia and entering the retailing?

Perhaps any assessments or studies need to compare the Australia case with the US case, that is, including international comparison, so that Australia can become internationally competitive in the retailing sector.

Leaving aside the two major grocery retailers, the strange and funny situations with petrol stations seem to suggest that even the ACCC is not effective in overseeing competition policy in Australia. Of course those two major grocery retailers have their own petrol stations at which they have some discounts from their own sale docs.

There may be some fundamental shortcomings in the approaches in Australia. Every consumer will benefit from an effective competition regime and practice in Australia.

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