A Woolworths merchandise manager has admitted his team made an error and breached the supermarket’s internal guidelines when it sold a family pack of Oreos on its “Prices Dropped” program at $5 for three weeks instead of four.
In the fourth day of the consumer watchdog’s case against Woolworths over allegedly false discounts, the Federal Court heard of an agreed plan to sell the chocolate biscuits, which had been $3.50 for nearly two years, at a regular white-ticket price of $5 for four weeks. It would then return to the “Prices Dropped” program for $4.50 for 48 weeks.
However, Woolworths sold the Oreos at $5 for only three weeks, between November 28, 2022 and December 20, 2022.
“Can I suggest that even Woolworths’ own rules were breached in this case, because you couldn’t have a three-week establishment period if it had been on Prices Dropped for more than 18 months,” ACCC lead barrister Michael Hodge KC put to merchandise manager Barry O’Leary during the hearing Friday.
“You’re correct,” replied O’Leary. “The guidance was four weeks, and the team implemented a three-week period, which in hindsight, I imagine, is an error.”
O’Leary was the first of two witnesses cross-examined on Friday, marking the halfway point of the fortnight-long legal proceeding where the ACCC is arguing that Woolworths sold hundreds of products on its “Prices Dropped” program to millions of Australian shoppers for discounts that weren’t real. The judgment for a near-identical case against Coles, which wrapped in February, is reserved.
Other grocery executives have made similar admissions: Coles’ former head of commercial strategy, Rebecca Thompson, admitted Coles promoted discounts on Arnott’s Shapes as part of its “Down Down” program too soon after raising its price. The day prior, Coles’ lead barrister, John Sheahan, KC, had acknowledged that a seven-day price spike was a “mistake” and an outlier.
The court heard of email exchanges between O’Leary and Cormac Deery, Woolworths’ commercial director of non-food groceries, who appeared as the second witness of the day.
In one email exchange between the two, the court heard that Deery wrote to O’Leary: “Arnott’s has submitted a CPI on choc biscuit, which is a joke, but it’s literally just the starting phase.”
“Was it within your experience of him to be normal, for him to describe a cost price increase as a joke?” Hodge asked O’Leary, who replied that Deery had not previously shared cost price increases with him before that point. “I can’t say that would be normal language, no,” O’Leary said.
“His email, I guess, would have suggested to you that there was something about Arnott cost price increase that seemed peculiar or unusual,” Hodge continued.
“Mr Deery, yes,” said O’Leary.
“That didn’t prompt you to then query or investigate the nature of the cost price increase?” Hodge pressed.
“Not with regards to that comment, no,” O’Leary responded.
Later, Hodge asked Deery to explain why he had described a price increase from Arnott’s as “laughable”.
Deery said the comment had been made in relation to a separate cost increase sought by Arnott’s. “I can’t remember the exact specifics. I’ve not prepared for that question in relation to that, but I think it is potentially on the proposal that was being requested,” he said.
Woolworths’ defence has been that the discounts were legitimate and that the high-inflation environment led to a surge in supplier-led requests to be paid more for their products because their costs had increased significantly.
Deery, who has worked at Woolworths for nearly nine years, said the settings for the “Prices Dropped” program had become unpredictable as a result.
“I have significant experience in retail. I had never experienced anything like the level and volume of cost [increases],” he said.
On Thursday, senior Woolworths manager Sam Woodcock conceded price hikes and subsequent drops promoted as discounts were pre-planned at the request of product suppliers, and claimed that if the supermarket didn’t comply, it risked losing the products from its shelves.
The case continues next Tuesday.
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Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.