Woolworths CEO Brad Banducci has stated that the supermarket giant did not engage in land hoarding amid allegations that it used unfair business practices to eliminate competition.
Mr. Ramage said in some cases, the two supermarkets were willing to pay high prices that would not return them any benefit for many years.
According to his assumption, this was to prevent competition in certain regions.
During a Senate hearing on April 16, Mr. Banducci said his company was not involved in “land banking.”
“Land banking is where we buy a piece of greenfield land, and we don’t develop it. That would be the traditional land banking … we do not do that,” he said.
The CEO also explained that when Woolworths invested in new property developments, the company considered many factors, such as population growth, supply chain, and the right place to set up distribution centres.
“We would be looking for opportunities in growth corridors for industrial and retail ... and the lead time on those developments can take between five, seven, perhaps 10 years. So, there is a long lead time for doing that,” he said.
“All the land we acquire … to develop either as a distribution centre in the form of other industrial support infrastructure we need to put in or into growth corridors where we hope that we'll see a new Australian community that we will have the privilege to serve.
“We did not hold any site without a plan to develop it. That would not give us the right return on investment.”
Woolworths CEO Says Grocery Sector Is Very Competitive
At the same time, Mr. Banducci said there was a misconception among the public that Woolworths had dominant market power in the grocery sector.“People often conflate grocery and supermarkets. We are a supermarket, but the grocery business is much bigger,” he said.
“When you think about groceries, you find many other competitors competing for groceries. Supermarket is a format in terms of competing for grocery share. So our share of groceries is materially lower than that.”
According to the online data platform Statista, Woolworths accounted for 37 percent of the market share of the supermarket industry in the 2023 financial year.
The CEO also noted that Australian consumers were “very savvy” and cross-shopped with many other popular brands such as Reject Shop, Kmart, and Big W, as well as independent stores.
“If you look at it that way, our share, not including Amazon from the moment, is in the low 20s [percent],” he said.
Other companies, such as the German supermarket chain Aldi, Amazon, and retail pharmacy chain Chemist Warehouse, had achieved significant growth in recent years, Mr. Banducci added.
He gave the example of Aldi, which had grown to nearly 600 stores across the country after the company entered the Australian market in 2001.
Meanwhile, Amazon and Chemist Warehouse recently reported revenue of $6 billion (US$3.85 billion) and $8 billion, respectively.
In addition, Mr. Banducci said that many jurisdictions around the world with a larger population than Australia had a much higher market concentration in the grocery sector.
“In Texas, there’s a wonderful retailer called H-E-B … that would have a much higher share than we do, and it’s competing very robustly there with Walmart and Aldi. And if you went into Florida, you would find Publix, which does likewise.
Woolworths CEO Threatened With Jail
Mr. Banducci’s statement comes as the CEO locked horns with members of the Senate committee in a heated inquiry session.At one point during the hearing, Mr. Banducci refused to give a direct answer to questions about the company’s return on equity despite being asked by the committee multiple times.
Return on equity is a financial indicator that measures the profitability of a company.
Mr. Banducci’s refusal to answer caused Greens Senator Nick McKim, the Committee chair, to warn the CEO that he could be charged with contempt of the Senate and face six months of imprisonment.
Mr. Banducci eventually gave in and admitted that he did not know the data. He then asked the committee to take the question on notice.
