In recent years, the humble supermarket in Australia has evolved from a place to buy your groceries each week to an essential service that carried people through a global pandemic before landing at the centre of the current cost-of-living conversation.

It’s a word that can bring up notions of corporate greed, supply chain anxieties, and value deal trust issues.

This is because few industries touch Australians as frequently as supermarkets do. The average household visits a supermarket multiple times each week, meaning every price rise, promotion, stock shortage or checkout experience shapes perceptions that last beyond the shopping basket.

And Australia is a unique case in the world.

Goliath as Coles and Woolworths

Australia’s supermarket sector is one of the most concentrated in the developed world, with Coles and Woolworths collectively accounting for 67% of national grocery sales. Aldi has a 9% share, followed by Metcash-supplied supermarkets with 7%.

In an inquiry released by the Australian Competition and Consumer Commission (ACCC) in 2025, Coles and Woolworths were deemed an “oligopoly” – giving them extraordinary influence over pricing, suppliers and consumer expectations.

In one way, this scale is beneficial to shoppers, with Coles and Woolworths sophisticated logistics networks and national distribution systems helping keep shelves stocked across a large country, especially during the early panic of COVID lockdowns.

The ACCC concluded that while there was no evidence of systematic price gouging, the market provides limited incentives for vigorous price competition. It also found significant bargaining power imbalances between the major supermarkets and many suppliers, recommending reforms to improve transparency and competition.

Despite this, the regulator assessed three different profit metrics before concluding that Coles, Woolworths and Aldi “appear to be among the most profitable supermarket businesses globally”.

This is also combined with statistics that highlight that over the last 5 years, Australians have been faced with increasing prices across almost all goods and services, with grocery prices (as represented by CPI food and non-alcoholic beverages) rising the most in the category; about 24% compared to 22%.

Can we trust them?

In February of this year (2026) the ACCC sued Coles over their Down Down campaign for misleading customers and breaching Australian Consumer Law. The watchdog claimed that Coles would raise prices before “dropping” them. The items, which were promoted as part of the Down Down campaign, had reduced prices that were either the same as or higher than those previously advertised (ie, before the price increase).

ACCC head counsel Garry Rich SC said in his opening remarks, “What’s said on the ticket is a half-truth. It’s not fair dinkum to tell the customer the price has gone down.”

It isn’t only through misleading promotions that Coles and Woolworths are testing consumer trust, but also through using their monopoly position to squeeze farmers during price negotiations – leaving them with limited options to either sacrifice their own margins or face having their products pulled from shelves.

In 2025, the Ray Morgan Risk Monitor found that Woolworths and Coles recorded the highest distrust since the organisation began tracking brand trust in late 2017. In the ranking, Woolworths replaced Optus as the most distrusted brand in Australia, while Coles has followed closely behind as the second-highest level of distrust on record.

Roy Morgan CEO Michele Levine said at the time, “Distrust has a far more potent impact on consumer behaviour than trust. While trust creates loyalty, distrust can drive customers into the welcoming arms of more trusted brands. The reputational fall of Woolworths and Coles is a powerful reminder of the fragility of trust in today’s environment.”

The drastic fall of 239 places by Woolworths, and 237 places for Coles came after the brands earned record levels of trust during the onset of the COVID-19 pandemic.

“The pandemic placed the major supermarkets at the centre of Australian lives. But the goodwill they built during that period has been reversed by perceptions of too profit-motivated and unaffordable pricing,” added Levine.

What drives choice?

While trust plays a part in consumer choice, throughout our work with organisations and businesses like Brand SA, Renewal SA and GISA, we have found the key drivers of choice when it comes to supermarket selections are a balance of:

• Convenience, including store location, parking and online shopping.
• Value for money rather than simply the lowest price.
• Fresh food quality, particularly produce, meat and bakery.
• Availability, with shoppers expecting products to be consistently in stock.
• Rewards and loyalty programs, which increasingly influence shopping habits.

Many people expressed that they split their spending across the major players like Coles, Woolworths, ALDI, IGA, and Foodland, along with smaller local fruit and veg shops to maximise on value, quality and convenience – but that Coles and Woolworths featured heavily due to their prevalence, accessibility and variety.

New way to shop

Cost-of-living pressures have made Australians more deliberate shoppers, while access to apps like Uber Eats and the like have enabled shoppers to order from the comfort of their couch. Rather than unquestioningly filling a trolley, many customers are now actively trading between premium and private-label products, purchasing only promotional items, or changing supermarkets altogether when value perceptions shift.

Once again, the name of the game is ease.

The supermarket of the future is therefore competing not simply against another supermarket, but against an increasingly informed consumer.

The next decade will reshape Australian grocery retail.

Artificial intelligence will personalise promotions and shopping lists. Automation will improve supply chains. Digital pricing and loyalty ecosystems will become more sophisticated. Sustainability reporting will become more transparent. Alternative retailers will continue to chip away at traditional market share.

What will inform your choices?

Square Holes is a cultural insight studio.

We design mixed-method explorations of people and culture beyond the category, uncovering the patterns, tensions and shifts shaping behaviour to inform strategy, inspire innovation and enable confident decisions. Our studio model brings together the right mix of thinkers, researchers and specialists for each exploration.

If you’re navigating change, entering a new market, or seeking deeper understanding of people and culture – let’s start a conversation >