Could community-owned supermarkets deliver fairer food prices to regional Australians? New research suggests they may be the solution to a broken system.
When the Australian Competition and Consumer Commission (ACCC) released its highly anticipated inquiry into supermarkets earlier this year, it confirmed what many Australians already know: outside our capital cities, choice is severely limited.
But in a move that could disrupt the status quo, the regulator has backed a bold rethink of how food is sold in these underserved areas.
The watchdog’s recommendation followed a submission from Monash Business School’s Digital Lab and Mutual Value Lab, developed in collaboration with the Business Council of Co-operatives and Mutuals (BCCM).
Drawing on new economic modelling and case research, the team’s submission argues consumer-owned co-operatives are a viable, yet overlooked, solution to regional Australia’s food affordability and access challenges.
So, could this model help balance a grocery sector dominated by two giants?
The submission’s authors, Digital Lab Director Chengsi Wang and Mutual Value Lab Director Paul Thambar, believe it can.
The high cost of low competition
The ACCC’s report paints a bleak picture of competition in Australia’s grocery sector, where two players – Woolworths and Coles – account for more than two-thirds of supermarket sales nationwide.
In regional and remote communities, options are scarce, constrained by high setup costs, low margins, and challenging logistics.
With little choice, consumers face inflated prices and reduced access to fresh, healthy food.
“In regional Australia, the lack of meaningful competition is not just an economic issue, it is a social one,” said A/Prof Thambar.
“This concentration of market power leaves communities vulnerable, with limited access and choice.”
Different Model, Different Mission
A/Prof Thambar said theoretical modelling by the Digital Lab suggests community-owned supermarkets would improve competition and consumer outcomes in regional areas.
“Supermarket coverage in regional areas is limited, and a co-operative and mutual enterprise (CME) supermarket could provide an alternative organisational model to improve competition and to broaden services to customers,” he said.
Because co-operatives are owned and run by their members, profits don’t flow to distant shareholders but are reinvested into the business or returned to the local community.
According to the research team, this ownership structure makes co-operatives more likely to operate in hard-to-reach areas and more attuned to local needs.
“CMEs are member-owned and democratically-governed organisational models that support economic and social goals,” A/Prof Thambar said.
“Profit is ‘for-purpose’ and to support economic and social goals, and there is no focus on ‘profit maximisation’ to benefit shareholders at the expense of customers and staff.”
Checkout the benefits
In their submission to the ACCC, the researchers identified three key benefits of consumer-owned supermarket co-ops.
First, they drive competition.
“Their presence increases competition in local markets, which leads to lower prices for consumers,” said A/Prof Wang.
Second, they broaden choice.
“Co-ops increase product variety by offering goods that are sufficiently differentiated from those sold by large supermarket chains,” he said.
The ACCC report reveals that consumers often purchase essential groceries from discount retailers and then visit larger supermarket chains for other items during a single shopping trip.
Third, they improve access.
“They achieve this by including consumers who might otherwise be excluded due to limited availability or affordability in the absence of a co-operative option,” he said.
‘Co-operatives should be formally recognised’
Despite these advantages, co-operatives remain underrepresented in the national grocery strategy. The research team is calling on policymakers to act.
“Government and local councils should actively promote the co-operative model in underserved regions, particularly where strong community leadership exists,” A/Prof Wang said.
“This could include providing educational resources, startup toolkits, and case studies to demonstrate the viability and long-term benefits of community-owned stores.”
Finance is another key barrier.
A/Prof Wang believes targeted funding, such as seed grants or low-interest loans, could make a real difference.
And for long-term change, co-operatives need recognition in regional development policy.
“Co-operatives should be formally recognised in regional development and competition policy frameworks as vehicles for addressing food security, local employment, and economic resilience,” he said.
“This would help ensure co-operatives are eligible for infrastructure, innovation, and community enterprise funding programs.”
