Top Woolworths executives are on the offensive in Canberra, armed with a dossier of confidential research designed to convince politicians the supermarket giant is not as big and bad as everyone thinks.
The internal document obtained by BusinessDay - titled Overview of the Australian retail market - attempts to counter many of the claims being made by the competition watchdog against the supermarket giants, and argues that the company is under intense pressure from competitors, in particular German-owned global giant Aldi.
Key messages from the dossier include:
Only 7 per cent of Australians shop exclusively at Woolworths.
Woolies' market share has remained static since 2007.
Aldi's market share has grown 3 per cent in that time.
Aldi will have 600 east-coast stores by 2020, more than doubling in size.
95 per cent of Aldi's products are private-label, compared with 6 per cent at Woolworths.
Coles and Woolworths have been in the spotlight since the competition watchdog confirmed it was investigating potential breaches of competition laws, including "unconscionable conduct" and "misuse of market power".
The Australian Competition and Consumer Commission also stands between Woolworths and its plans to open 87 new stores in the next three years. The two sides clashed last year after the ACCC refused several acquisition applications from Woolworths, which then walked away from the ACCC's plans to create a fast-track assessment process.
The dossier was produced "in response to the issues raised last year around store approvals and market caps" and "refers to the broader debate around regulating store approvals, prices, range and market share", a Woolworths spokeswoman said.
The move comes as the federal government has been helping draft an industry code of conduct that could cover supermarkets and be enforceable by regulators, unlike existing industry codes.
But Woolworths' dossier warns that it faces aggressive competition from newcomers. It points out Aldi already has 289 stores in the eastern states and plans to expand this to 600 in the next seven years, while Woolworths has 690 and Coles 533 stores in the same region.
The document also puts Woolworths' market share at 28 per cent - a figure that was "often overstated because most estimates exclude specialists and non-supermarkets that we compete with".
In 2008 the competition watchdog estimated Woolworths' nationwide market share was about 45 per cent and Coles' was 33 per cent.
Sources at Woolworths said the ACCC ignored smaller shops, such as bakeries and greengrocers. Research by Nielsen shows 64 per cent of Australians shop at a mixture of supermarkets and specialist shops.
The main thrust of Woolies' argument against more regulation is that consumers are better off now than five years ago, and competition is tougher since Aldi's arrival in 2002. A spokeswoman for Aldi said it had a 7 per cent market share, according to Nielsen.
Woolworths says Aldi's arrival forced it to increase its range of private labels. According to the dossier "71 per cent of [Woolworths] sales in own brand come from Australian-sourced products".
A spokesman for rival Coles confirmed that 25 per cent of its stock was now private-label.
Meanwhile representatives from suppliers and supermarkets have been working with government on a new supermarket fair trading code of conduct, which was designed to improve the relationship between the two sides.
Last week the supermarkets presented their first draft of the industry code to the Prime Minister's Department, Minister for Deregulation David Bradbury and Agriculture Minister Joe Ludwig.
Mr Bradbury said the final draft code should "come to government shortly" and "needs to be strong enough to put a stop to the kind of behaviour that some suppliers are reporting".
"We also won't rule out taking further action to make sure that the large supermarket chains not only deal with farmers and suppliers fairly but that consumers also get the best deal at the check-out," he said.
A spokesman for Coles said it supports a voluntary code of conduct, but "we oppose a mandatory code like the UK model because all it does is embed an adversarial approach between retailers and suppliers and add an extra layer of cost and bureaucracy".
It is hoped the new code would be enforceable by the ACCC. It follows years of complaints that suppliers were exploited by large supermarkets or paid unsustainably low prices.