Ritchies CEO: Grocery war could kill 40,000 jobs

Posted by Nicole Eckersley on 16th May 2011

Australia’s supermarket industry faces losing up to 40,000 jobs if the grocery war continues, according to Ritchies CEO Fred Harrison.

“Continued hacking away at prices by Coles to gain a market advantage is threatening the jobs of thousands of workers – particularly young people and women, who make up the bulk of the people in the sector,” he said.

Harrison said 65% of the cost of operating a supermarket was wages – and staff would be the first area to cut to maintain profitability.

“You can’t keep slashing prices and not expect a fallout in the industry,” Harrison said.

Ritchies employs 5500 people across Victoria, New South Wales, and Queensland. Harrison said his staff, and the staff of all independent supermarkets, were fighting hard to take on Coles and Woolworths.

“At then end of the day, every dollar we lose in profit translates to a 25% cut in wages,” Harrison said.

He said that just as concerning were the jobs losses that would occur in the farming and manufacturing sector as a result of the price war, and a major concern for shoppers should be the outcome of this war.

“Coles and Woolworths now control 75% of the supermarket industry. At the end of this war the major chains could emerge with an even higher market share, and that would mean a terrible outcome for consumers.”

Supermarket and Grocery stores have the largest turnover of any retail sector. Based on the 2010 Australian Bureau of Statistics (ABS) data, $63 billion was spent in supermarkets and grocery stores. This is approximately 17%  of the average household’s total yearly expenditure.

The Supermarket industry employs 256,500 or 22.5 per cent of the retail industry. 72.5% of the work force are aged under 45 years and 38.9% work full time.

Australia’s $102 billion food and grocery manufacturing industry employs more than 288,000 people and is four times larger than the nation’s automotive sector.