Independents still having a go amid stiff competition from Coles and Woolies
Independent supermarkets say they're struggling to compete with the major brands. (ABC South East SA: Josh Brine)
In short:
Regional independent supermarkets say they are finding it increasingly difficult to compete with major brands amid the cost-of-living crisis.
An independent set to open a new supermarket in Mount Gambier believes there is room in the market, but is urging shoppers to "support local".
What's next?
Owners and industry experts say "ultimately it rests with the consumer", who needs to shop around to encourage more competition and lower prices.
Independent supermarket operators in regional areas are urging people to vote with their feet as they struggle to stay competitive with the major brands.
The ACCC's supermarkets inquiry found two-thirds of Australia's grocery sales were at Coles and Woolworths, with the number of IGA stores decreasing since 2008.
In Mount Gambier, South Australia's second-largest city, there are two Woolworths, a Coles, Aldi and a few smaller independent supermarkets.
Sumeet Cheema, who owns one of the two IGAs in town, said the cost-of-living crisis had hit his business hard.
Sumeet Chema's IGA store is struggling with sales due to cost of living pressures. (ABC South East SA: Josh Brine)
"We used to have about six girls working full-time. We only have one now," he said.
"That is basically to do with the number of sales we are doing every week.
"That has dropped by 20 or 30 per cent on average."
Mr Cheema said it was difficult for stores like his to provide any competition to the big brands.
"The buying power is not there for us small stores, so we aren't getting the prices the bigger supermarkets are getting it at,"he said.
"Hence, we can't stay competitive for very long."
JP and Roger Drake run Drakes Supermarkets, which is expanding into Mount Gambier. (Supplied: Drakes Supermarkets)
Larger independents making a move
Another, albeit much larger, independent retailer is hoping to become a bigger player itself.
Drakes Supermarkets, which operates in SA and Queensland, will open its 69th store this year in Mount Gambier, in what was previously a Coles supermarket.
Despite the recent closure of a former Foodland supermarket in town, Drakes director JP Drake believed there was still room in the market for the new store.
"I hope [that closure] isn't a sign there for us, I hope that people are going to support independent operators,"he said.
"The only way you're going to have true competition is by supporting all the supermarkets."
Concept drawing for Drakes' planned new store in Mount Gambier. (Supplied: Drakes Supermarkets)
Mr Cheema said he was unsure whether there were enough customers in Mount Gambier for all the supermarkets.
"If there was, Coles and Woolworths would have already decided to open up another store," he said.
"But if Drakes thinks there is, there might be."
Burden on consumers to make change
Queensland University of Technology's Gary Mortimer is an expert in retail marketing and consumer behaviour.
He said while theoretically more competition would result in lower prices, it was challenging to create that competition.
QUT retail marketing and consumer behaviour researcher Gary Mortimer. (Supplied: Gary Mortimer)
Professor Mortimer said in areas where it was lacking, the ACCC recommended removing red tape around developing new stores.
"There was some discussion around improving and streamlining planning and zoning laws to make it easier for independent supermarkets to open up," he said.
But where there was already plenty of options available, Professor Mortimer said the only way to create competition and lower prices was for people to shop around.
"Ultimately it rests with the consumer," he said.
"If you want to create and stimulate more competition between players, you need to shop across all the players."
Coles and Woolworths dominate supermarket sales in Australia. (ABC News: Charlie McLean)
Mr Drake said it was difficult to get people out of the habit of shopping at the larger brands.
"So many people talk about supporting local … yet they don't," he said.
"You're going to need to vote with your feet to make a difference because we can't go into an area without the support of the local community."
Mr Cheema said the biggest change he would like to see was more competitive pricing from suppliers for small operators.
"There's no room to play around for smaller players, and it's just heading in a very bad direction," he said.