The diminished stakeholder: Examining the relationship between suppliers and supermarkets in the Australian grocery industry

Abstract

AbstractThis study examines the role of stakeholders in the context of the retail industry, specifically the Australian supermarket industry. Through the lens of stakeholder theory, it is argued that suppliers to the Australian supermarket duopoly (Coles and Woolworths) might be considered “diminished” stakeholders, that is, they lack in urgency, legitimacy, and power. Using a case study methodology, this study analyses two separate cases of Coles and Woolworths' treatment of suppliers during the period 2011 and 2014. In the two cases, Australian Federal Court proceedings were brought by the Australian Competition and Consumer Commission against both supermarkets for “unconscionable” behaviour towards their suppliers. The study also examines the impact of the relationship between Coles and Woolworths and their suppliers on consumers as the end‐user in the chain of consumption. The paper argues that the ethical treatment of suppliers by supermarkets will lead to better outcomes for both suppliers and consumers and contribute to the long‐term sustainability of the firm.