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Published 25 March 2013 10:44, Updated 26 March 2013 07:54
Woolworths’ marquee store at Neutral Bay in Sydney has become the latest site for the ongoing tit-for-tat battle between Woolies and arch-rival Coles. Photo: James Brickwood
The executive teams at Coles and Woolworths love to talk about how fierce competition is in the grocery market. How there is no room for complacency. How you can’t take your eyes off the ball for a second.
The reality might well be a bit different. Clearly there are some people within these giant companies with waaaaaay too much time on their hands.
What other inference can you draw from the revelations that Coles used a labyrinth of corporate structures to buy a shopping centre in the upmarket Sydney suburb of Neutral Bay, where Woolies is the tenant?
A cracking story by Fairfax’s Business Day shows that Coles splashed $40 million for the property – a whopping 30 per cent above market rates – to buy the centre, which is home to one of Woolworths most profitable stores.
Coles used a $10 company in the British Virgin Islands to help conceal the transaction from Woolworths, which says it is surprised by the revelation. Under the terms of lease, Woolies has to show its landlord its sales data, which you could imagine pleases the folks at Woolworths no end.
Now you might just say that all’s fair in love and business and indeed, there’s a bit of revenge in this; Woolworths evicted Coles from a centre in the Blue Mountains town of Katoomba in 2012 after buying the site in 2000. Coles was apparently so worried about revenge for its move in Neutral Bay that it assessed the risks of Woolies retaliating across 120 Coles stores.
But is this really how we expect two of our biggest corporate citizens to act? Splashing cash around on tricky games? Sneaking about with offshore shelf companies?
And for what? Payback appears to be the best description.
You do wonder where this all leads. What else would Coles be prepared to do, posing as another company entirely? What little advantage might it seek to gain next?
Coles wouldn’t comment on the story and I couldn’t find Coles’ corporate values on its website, but parent company Wesfarmers says it “adheres to four core values: integrity; openness; accountability; and boldness.”
Posing as an offshore company to buy a supermarket where your biggest rival is a key tenant definitely fits into the category of “boldness”.
But it’s to argue that it demonstrates “integrity”, “openness” or “accountability”.