Woolworths: Cheap cheap, or bully bully?

Mark Hawthorne
December 19, 2014
The Age
Woolworths’ Christmas threat to suppliers
“Down Down” versus “Cheap Cheap”.
Welcome to the world of Australia’s supermarket duopoly, where the decades-long turf war between Coles and Woolworths dominates.
From advertising campaigns to fresh food claims, differences between the two chains are often barely discernable. Sadly, it seems that in how they treat suppliers, the two supermarket giants also share similarities.
Just days after Coles issued a mea culpa over its treatment of suppliers, and agreed to pay a $10 million fine, Woolworths has been hit with strikingly similar allegations of bullying, and now faces a probe from the corporate watchdog.
Under investigation is “Project Close the Gap” – what Woolworths insiders say is a “request” for $50 million of additional payments from suppliers in the lead-up to Christmas.
Inside Woolworths headquarters, they have always liked their project names.
Back in 1999 it embarked on “Project Refresh”, a supply chain shake-up implemented by then chief executive Roger Corbett that was the bedrock of the company’s success.
“Project Oxygen” has been less successful. That was the code name for the launch of Masters, the struggling hardware business. The aim was to suck the “oxygen” out of Bunnings. The project is instead suffocating Woolworths, leading to the latest demands from suppliers to prop up its bottom line.
In total 17 different suppliers have contacted Fairfax Media – representing scores of household brand names from across the supermarket shelves – to tell their story of Woolworths’ pre-Christmas cash grab. All tell similar stories of verbal threats.
Publicly, Woolworths has “categorically” rejected any suggestion it was acting “unconscionably”. Privately, however, even staff are asking questions about the latest project. “Do you really think we have broken the law?” one senior Woolworths employee asked Fairfax Media yesterday.
To answer that question, a new project team is being organised by the ACCC.