Can independent supermarkets actually lower Australians’ weekly grocery bill?

As soaring grocery prices continue to strain household budgets across the country, a growing number of independent supermarkets and discount outlets promise cash-strapped shoppers relief at the checkout.

But while new stores – such as controversial businessman Adrian Portelli’s discount supermarket, which opened in Melbourne on October 13 – attract plenty of attention, industry analysts warn challenging the nation’s ingrained supermarket duopoly requires far more than promotional spin.

Portelli’s LMCT+ supermarket is the latest in a series of business ventures that form part of his subscription empire, which now includes property, vehicles, technology, mobile apps, real estate, petrol, consumer brands and event investments.

An annual $99 LMCT+ membership is required to shop at the discount supermarket.

While Portelli has promised additional supermarket locations in the future, groceries are not the sole or even main focus of his brand.

So what will it take to truly challenge Australia’s existing supermarket duopoly?

Got a story? Contact Jo Abi at jabi@nine.com.au

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Retail analyst Gary Mortimer told nine.com.au Portelli’s discount supermarket venture is “unlikely to materially alter grocery prices” around the country due to the same challenges existing independent grocery retailers face.

“The economics of food retailing are fundamentally driven by scale,” he explained.

“Large supermarket chains operate on remarkably thin net profit margins. Coles’ and Woolworths’ net profit margin is around 2.6 to 3 per cent, while the major chains generally operate in the low single digits.

“This means there simply isn’t a large amount of excess profit available to ‘cut’ in order to dramatically reduce prices.”

Mortimer said the challenge isn’t opening a supermarket, but “building and operating the infrastructure behind it”.

“The major retailers have spent decades developing national distribution networks, warehousing, logistics systems, procurement relationships, inventory management technology and supply chain capabilities,” he said.

“These are multi-billion-dollar assets that allow them to buy, move and stock products efficiently.”

He said a single supermarket has “virtually no bargaining power with suppliers, compared with firms purchasing billions of dollars of stock annually”.

“Even Aldi, which is a global retail giant, took many years and substantial investment to establish a meaningful presence in Australia,” he added.

“The reality is that supermarket competition is won through scale, logistics and supply chains, not through the opening of a single store.”

Today money expert Joel Gibson said while he believes “the more supermarkets the better”, he agrees Portelli’s latest venture is unlikely to provide a solution to high grocery prices.

“Every inquiry into competition in Australia has said the same thing: consumers need more options to kit downward pressure on prices,” Gibson told nine.com.au.

“We already have independent grocers like IGA and subscription-style grocers like Costco, for example. And the more of them we have, the better it’ll be for shoppers, but they’re still businesses that need to turn a profit.

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“In this case, [Portelli’s] using subscription revenue to cross-subsidise grocery discounts and hoping the subscription will drive loyalty.”

How independent supermarkets stack up against Coles and Woolworths

Together, the Coles and Woolworths duopoly commands roughly 67 per cent across Australia’s $148 billion supermarket sector, with Aldi accounting for nine per cent.

Meanwhile, independent supermarkets operating under the Metcash wholesale umbrella, which includes local IGA, FoodWorks and Supa IGA stores, account for around seven per cent of national grocery turnover.

The remaining 17 per cent of the market is split among specialty grocers and alternative operators, including Harris Farm Markets, Costco, local fruit shops and ethnic markets, and emerging independent discount concepts such as Adrian Portelli’s LMCT+ market model.

Drakes Supermarkets, the nation’s largest fully family-owned supermarket chain, operates more than 60 stores across South Australia and Queensland.

In Western Australia, Tony Galati’s Spudshed operates 18 large-scale discount stores built around cheap fresh produce and low-cost staple items, serving as one of the state’s most prominent alternatives to national retailers.

Across regional and suburban communities nationwide, hundreds of local family-run grocers trade under national banner networks like FoodWorks, SPAR Australia and Friendly Grocer.

In South Australia, Foodland brand operates over 90 stores across South Australia and regional New South Wales.

Other notable regional operators include Western Australia’s Farmer Jack’s, Canberra-based Supabarn, and the inland New South Wales family network Bernardi’s.

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The verdict: Competition matters, but scale rules

While new entrants like Portelli’s LMCT+ market offer local novelty and member-driven discounts, industry analysts agree standalone stores face a steep uphill battle in shifting national grocery trends.

Without the multi-billion-dollar supply chains and immense buying power of the major duopoly, independent models remain regional alternatives rather than systemic disruptors.

However, for everyday Australians struggling under sustained cost-of-living pressure, any added choice at the checkout is a welcome shift.

Whether through suburban independent grocers, bulk warehouse networks, or new membership concepts, the growth of alternative options sends a clear signal to our retail giants: budget-conscious shoppers are more willing than ever to vote with their wallets.