‘Coles and Woolies retail media reporting must change’: ACCC supermarket report
The ACCC has called for more transparency from Coles and Woolworths’ retail media arms, recommending new reporting and acknowledging some suppliers felt pressured into media deals.
The recommendation is one of 20 made by the ACCC in its final report, following a year-long investigation into the supermarket sector. The inquiry examined the pricing practices of the supermarkets, the relationship between wholesale and retail prices, and supplier contracts.
The final recommendation is that Coles and Woolworths should be “more transparent about how supplier funding contributions to their in-house retail media services are used.”
Both supermarkets operate inhouse media businesses — Coles 360 and Cartology — that charge suppliers to appear in their own branded magazines, digital screens, online advertising, and instore radio.
This is a lucrative and fast-growing business. Neither supermarket breaks out its retail media revenues, however Woolworths ‘digital and media’ division, which includes Cartology, turned over $675m in 2024, while Morgan Stanley estimates Coles 360’s 2024 income to be $450m.
The ACCC estimates revenue from Cartology has tripled since the 2020 financial year. The supermarket has said this is from a “very low” base.
The Australian Food & Grocery Council said such retail media arms can provide value to supplies but argued “there is unknown methodology for calculating the cost of using retail media, lack of transparency around the return of investment, and sometimes there can be very strong encouragement given to a supplier to use a retail media”.
This “strong encouragement” is of concern to the AFGC, who submitted that suppliers have “reported concerns they are pressured into using these services at markedly higher than market costs.”
In its submissions to the inquiry, both supermarkets said they “do not require suppliers to use retail media”. Coles said there are “many alternative marketing avenues open to suppliers”, while Woolworths says Cartology is managed by a separate team to its commercial division.
The ACCC notes: “Other suppliers have raised similar concerns about feeling obligated to use these services, and a lack of transparency about how funds contributed by the supplier are spent for the benefit of the supplier.
“Suppliers of fresh produce, who are sometimes restricted by Coles and Woolworths from applying their own branding to their produce, expressed concerns about a lack of transparency regarding how their contributions to retail media are used by Coles or Woolworths.”
Suppliers told the ACCC that “Coles or Woolworths request a monetary contribution toward the total spend on a campaign for a specific category of produce, but the supplier has no awareness of whether their contribution is proportional to that of other suppliers of the same category of produce. Nor do they have any awareness of how the funds are spent, beyond seeing the public promotions the supermarket undertakes.”
The ACCC is recommending both supermarkets provide each supplier that engages Coles 360 or Woolworths Cartology with an itemised account of how the money contributed was used.
If funding is used to promote a category, rather than a specific brand or brands of the supplier, the amount of funding contributed by other suppliers to each of these promotion must be provided – in aggregate as a single figure.
The AFGC further stated that “encouragement” of suppliers using in-house media services is “an increasing emphasis of supermarkets when negotiating commercial agreements.”
The ACCC agreed that Coles and Woolworths “are incentivised to encourage the use of these services, regardless of whether the supplier considers that the service delivers sufficient benefit to them to justify the expense.”
It concluded that many suppliers reported “feeling obligated to use the Coles or Woolworths services … in order to preserve their ongoing commercial relationship with the supermarket.”
The investigation also uncovered that Woolworths is well aware of these concerns from suppliers regarding their opaque spend through Cartology.
An internal presentation by Woolworths included statements from individual suppliers, including: “ROI is not clearly justified”, “it’s a waste of money, we see no return from investing in it”, and “cost of doing business increasing, ROI questionable.”
The report concluded that the pressure suppliers feel to take part in retail media is “a reflection of the bargaining power imbalance between the supermarket and the supplier,” which can be remedied, in part, through transparency.
“Such a lack of transparency is likely to impede efficient decision making by suppliers in relation to these spends,” the ACCC found, in regards to the current system.
“We consider that the benefit of greater transparency for suppliers about how this money is spent will outweigh any additional cost incurred by Coles and Woolworths in having to provide this information.”
Woolworths Group CEO, Amanda Bardwell, responded to the recommendation, saying in a statement: “We support improved transparency for suppliers, particularly fresh produce suppliers, and we stand by our previous commitment to the horticultural industry on this issue.”
Mumbrella has reached out to Coles for comment.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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Surely all it would take to hold Coles and Woolworths to account here would be a whistleblower from a supplier who can demonstrate (via email or other form of comms) that they are being coerced into investing in retail media
With the increased government scrutiny on these two, surely there’s never been a better time for this sort of information to leak?
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