If FMCG manufacturers are so aghast at the supermarket practices, why don't they band together and build a third chain that stocks their quality products? There's nearly aways a market for a slightly upmarket offering. Look at Waitrose in the UK (altho they, too, have their own brand products).
http://uk.finance.yahoo.com/news/best-and-worst-performing-uk-shops-christmas-2012-152142517.html

Is the average australian consumer intelligent enough to recognise that the supermarket duopoly is sucking them in with lower temporary prices and reducing competition so that they can increase prices and profits in the future?

Remember if you cannot compare Apples with Apples, exactly, then how do you really know if you are getting a bargain? How do you know that the product you are buying is actually a good buy? Also Coles would have inflated the items in the first place to enable them to call on a price reduction. I cannot understand after all these years’ this practise by companies regarding discounting or putting items on Sale that the consumer still gets so sucked in?

They're only doing what the worlds best supermarkets are doing, and they're only just beginning to get fairly good at it. Tesco, Walmart etc have used the exact same tactics and it hasn't lead to catastrophe in their markets, just better prices on everyday essentials. If customers didn't like what Coles were offering they simply wouldn't buy it!

Stirred up a bit of a hornets nest!! But after a 40 year career in retailing I do understand margin management, return on investment and gross margin return on inventory amongst other measures of retail operations, and even profit. What I am not sure about is what is wrong with companies making and indeed maximizing profits. That is what they are ALL in business for, the fact that some do it better than others is no different to the competition in the AFL or NRL. Sure Coles and Woolies and to a large extent Kmart are vertically integrating, owning their brand and not being beholden to companies that own other brands. This allows them to effectively manage their ranging, stock levels, in stock position, pricing and profits (remember that is what they are there for all the rest is fluff to get us into the shop and give us a better experience than the competition). So perhaps it is time to congratulate the successful retailer who is doing it better then others instead of just hacking down the tall poppy.....and see I use my real name on my post.

Clearly Stephen Atkinson and Margie Osmond have no idea about retailers 'margin management', and what they do to achieve this. Yes, the likes of Coles & Woollies can afford to cut their margins on some products lines to attract customers, but then they make it up by the other higher margin items which goes into the 'customers basket'.How many customers leaves a supermarket awith only bread & milk? Margi is the CEO of an 'industry body' funded by their members like Coles and as such she will not nor is she allowed to speak out against them. All that needs to be done is to look at the reported profit results of Coles & Woollies, their profits are growing significantly. It is not about what the customer wants, it is about growing their market share and profit.
As their cost of doing business decrease, they can and they do employ less staff and make it extremely difficult for the smaller retailers to survive. Small businesses are still the largest employer group in the country and it is a sad state of affairs to see so many going out-of-business, due to large corporate's tactics.

The real crux of the issue is that the duopoly are increasingly pushing consumers towards home brand (read high profit with lower quality) items and away from more costly products with the consumer 'winning' because it costs less at the counter. We are constantly being pushed to accept lower quality as the trade off for price (mind you the duopoly are getting better margins on the home brands than they are able to achieve from full priced merchandise).

I prefer choice and quality as opposed to lower prices and crap.

I was under the impression that Australia has the the highest priced food in the developed world, if this is so, why would anyone complain if Coles make items cheaper. Overall it will lead to the reduction in food prices across the board, this can only be good for the consumer,after all isn't that what retailing is all about,"The Consumer".

This is a weird argument. I am guessing the usual 80% of the population will continue to do a large shop at a supermarket and only use local convenience stores for items that they have either forgotten or run out of. Everyone is aware that you pay more for convenience (Coles Express are generally in more convenient locations and goods generally cost more than normal Coles stores). If you want the “little guy” or “more convenient guy” to survive then spend more of your money there but don’t hassle any Duopoly company for lowering costs and passing on some savings to customers. If you really wish to be a thorn in their side then buy all the “at cost” products at the supermarket and use the savings to buy all your other goods elsewhere. Personally my time is money so I will continue to try to purchase all my needs in one large shop and top up locally if an when required.

quick lesson for you stephen... anti-competitive behaviour involves selling products below cost (or, if you believe the press, at cost in this case) to drive competition out of the market place. this is a very good example. what associations like AACS are saying is perfectly true... little guys who can't compete will eventually close their doors. will we be better off as consumers when competition is reduced? you can bet that we won't!

What a joke, Coles cuts prices and the competition cry foul. Ever gone into a corner store or convenience store? Found the assistand texting on their phone, you do not get any acknowledgement, and don't ask where something is ...err its over there I think...and the prices you pay are through the roof. There is pressure on corner and convenience stores because of this and because of the conmvenience and CHOICE you get in a supermarket. Secondly ever heard of the 80/20 rule, all Coles are doing is culling part of the 80% of the range that represents 20% of their sales. Does anybody seriously think Coles or Woolworths would cull items that sell well???