Supermarkets

The two new working papers use novel methods to isolate Walmart’s economic impact—and what they find does not look like a progressive success story after all. The first, posted in September by the social scientists Lukas Lehner and Zachary Parolin and the economists Clemente Pignatti and Rafael Pintro Schmitt, draws on a uniquely detailed dataset that tracks a wide range of outcomes for more than 18,000 individuals across the U.S. going back to 1968. These rich data allowed Parolin and his co-authors to create the economics equivalent of a clinical trial for medicine: They matched up two demographically comparable groups of individuals within the dataset and observed what happened when one of those groups was exposed to the “treatment” (the opening of the Walmart) and the other was not.

Their conclusion: In the 10 years after a Walmart Supercenter opened in a given community, the average household in that community experienced a 6 percent decline in yearly income—equivalent to about $5,000 a year in 2024 dollars—compared with households that didn’t have a Walmart open near them. Low-income, young, and less-educated workers suffered the largest losses.

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But their analysis has a potential weakness: It can’t account for the possibility that Walmarts are not evenly distributed. The company might, for whatever reason, choose communities according to some hard-to-detect set of factors, such as deindustrialization or de-unionization, that predispose those places to growing poverty in the first place. That’s where the second working paper, posted last December, comes in. In it, the economist Justin Wiltshire compares the economic trajectory of counties where a Walmart did open with counties where Walmart tried to open but failed because of local resistance. In other words, if Walmart is selecting locations based on certain hidden characteristics, these counties all should have them. Still, Wiltshire arrives at similar results: Workers in counties where a Walmart opened experienced a greater decline in earnings than they made up for with cost savings, leaving them worse off overall. Even more interesting, he finds that the losses weren’t limited to workers in the retail industry; they affected basically every sector from manufacturing to agriculture.

Late last year, the company introduced a new framework to enforce an efficiency rate for picking of 100%. Workers who weren’t meeting the standard would be put into a coaching program. Some were directed to “stop all time wasting and non-productive behaviors”, according to warning letters seen by Guardian Australia. Failure to improve could lead to disciplinary action and even loss of employment. One worker described it as a “bullying” tactic.

Tim, who is over 60, said he was pushed to improve his rating. He got it to more than 80%, then 90%, then 100%, he said, but in his effort to work harder, faster, he was injured.

“You might get someone that’s … 20 years old and goes to the gym every day. And someone like me. I’m getting the average between him and me,” Tim said. “Obviously, I can’t keep up with him.”

“We’re going down the same path as Amazon,” said another worker, Ross*. “We’re not robots, we’re humans.”

A small Victorian milk company says supermarket giant Coles has removed its products from 65 Victorian stores in retribution for refusing to give the supermarket a bigger profit margin.

From next month, Gippsland Jersey milk will only be stocked in about 16 Victorian Coles supermarkets, leaving the business with two weeks to find a new home for thousands of litres of milk.

Sallie Jones, who started the company with dairy farmer Steve Ronalds in 2016, said the decision came as a shock.

"We've gone from being awarded Australia's best milk to then being removed off the majority of Coles shelves, which is super disappointing," she said.

This is from a few years ago, and fits with first-hand experience.

The class action comes as Coles faces legal action from the Fair Work Ombudsman (FWO) over alleged underpayment of its managers. The FWO puts the underpayment at more than $100 million between 2017 and 2020.

In a statement made after filing proceedings in the Federal Court last week, the FWO alleges one worker was underpaid $471,647 during the period.

Beneath those hard numbers are the personal stories of almost 8,000 Coles managers like Ms Macdonald, for whom the allegations represent not only underpayment but years of stress and anxiety while working for the supermarket giant.

[…] Adero Law principal Rory Markham, who is running the class action against Coles, says the company has vastly underestimated the underpayments.

"When you're paid a flat salary, as in the case of Coles managers, there's no allowance for overtime or excessive hours," he says.

He says information from the roughly 2,200 salaried staff who have signed up for the class action show they were working an average of 55 to 65 hours a week — well above their typical contracted roster of 40 hours.

In any big trial that attracts public interest, a defendant can hope to draw on public sympathy. Except in this case.

In 2024 the social licence of the big supermarkets is utterly broken — their reputations befouled, their brands synonymous with impersonal corporate rapacity. This is an awful time for them to be attempting to mount a defence to a major charge.

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I’m going to share a quote from Chief Justice of the High Court Stephen Gageler, one of Australia’s senior jurists, that ACCC boss Cass-Gottlieb recently highlighted in a speech. It talks about the definition of “unconscionable conduct” and points out that what is unconscionable must depend on society’s values.

“For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to conscience informed by a sense of what is right and proper according to values that can be recognised by the courts to prevail with contemporary Australian society,” she quoted him.

Contemporary Australian society is not interested in giving the supermarkets an easy pass. In this case a tiny fine will not satisfy the public. The customers of Woolworths and Coles include Australia’s most vulnerable people.

It's also worth remembering that supermarket employees include Australia's most vulnerable people.

Andrew Dunlop runs cattle on his property in southern New South Wales and has spent his career working in the red meat industry, including 15 years in Japan.

Last month, he returned to Japan to find Australian cubed beef for sale at $18.35 a kilogram, around $2 to $4 a kilo cheaper than in major Australian supermarkets.

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Mr Dunlop says it's another sign of concentrated supermarket power and increased profit margins from supermarkets.

"The Japanese retail industry is not concentrated like it is here," he said.

"Any individual retailer in Japan probably has at most a 10 per cent share of the market, although there will be some regional differences."

John Gunthorpe, chair of the Australian Cattle Industry Council, said Australian meat was well trimmed and presented without much fat or sinew.

"The prices and the quality of presentation of the meat are far better than anything that we get here in Australia," he said.

Pressed on whether it was a fair comparison to the beef in Australian supermarkets, Mr Gunthorpe said it was.

"It's beef off the same farms," he said.

"The real concern is the level of profit that Coles and Woolies are making in the domestic market relative to the profit that's being made by the Japanese in Tokyo."

Food is no ordinary commodity. It’s both indispensable and a precious, scarce resource. Ultimately, we need to bring food production and distribution under public ownership and control to end this irrationality.

Achieving that end-goal won’t be simple. We can’t simply take over a system as complex as our food system in one fell swoop. Socializing supermarkets, by contrast, would be relatively simple. It’s the obvious place to start.

Most of the popular discourse around food places the burden of change on individual consumers. However lovely local farmers’ markets may be, convincing people to frequent them isn’t going to cut it, especially as wages decline and working hours crawl up. For their part, government regulations can end the worst excesses of the market, but the problems with our food system require more than just regulatory nudges.

Solving these problems will require rational economic planning. In fact, supermarkets already plan our food system. But they do it for the sake of profit maximization rather than the public good and long-term sustainability.

Every year Australians waste about 7.68 million tonnes of food — that's about 312 kilograms per person.

And Australia's supermarket duopoly could be making waste worse, according to peak vegetable grower groups.

"Our biggest customer is the rubbish bin," one vegetable grower recently told the ABC.

They said they didn't want to be identified for fear of retribution from Coles and Woolworths. 

Those who refuse to have their bags checked can be fired, according to the Coles policy which was updated last year but only recently routinely enforced, according to worker representatives. It replaces a previous practice whereby staff bag inspections were only used after a genuine suspicion of theft.

“The reason they’re bag checking is because they know that their own workers are forced to think about stealing because they can’t afford food,” the secretary of the Retail and Fast Food Workers Union (Raffwu), Josh Cullinan, said.

“We have these ridiculous situations where workers may have their sanitary items and prescription medication, and they have to show it to their manager.”

A Coles spokesperson said bag check policies were standard across the retail industry.

“While the policy was paused for a short time, it has been at Coles for many years,” the spokesperson said.

Coles and rival Woolworths have enjoyed a period of bumper returns after raising grocery prices at a faster pace than inflation, leading to increased profit margins during a period of financial strain for many households.