The recent period of high inflation has renewed concerns about the state of competition in the Australian supermarket sector, particularly in terms of the dominance of Coles and Woolworths. This paper assesses sales concentration and consumer inertia within local areas and at individual stores. The findings reflect the local nature of competition in grocery retailing.

Findings

• Sales are often very highly concentrated towards Coles and Woolworths at the local level.
• High concentration is not primarily driven by a lack of brand choice. Many local areas with high concentration have
  stores from all four major brands. There are exceptions to this, such as some local monopolies in regional areas.
• Consumers display long lasting inertia in their choice of supermarket – many do not vary the location of their largest
  valued shops month-to-month and that persists over long periods of time. This behaviour is likely to be reducing the
  degree of competitive rivalry between supermarkets.