In Australia's major grocery chains, the financial structure of a price-led promotion means the cost rarely lands where the planning model said it would.
With around 50% of products at Coles and Woolworths on promotion at any given time, promotional spend is one of the largest cost lines a packaged grocery supplier manages. It's also one of the least audited.
Not because suppliers aren't paying attention. Because the cost structure is designed in layers that a standard contribution model doesn't capture.
A standard promotional P&L captures the off-invoice discount and the agreed rebate. In Australian packaged grocery, that's not the full cost.
Federal Court testimony in ACCC v Coles (February 2025) confirmed that Coles sometimes made a higher profit from a discounted promotional price than from the regular shelf price — because per-unit supplier rebates more than offset the retailer's margin reduction. The supplier funded the price cut. The retailer finished ahead.
On top of that, retail media fees, charged separately, on the same event window, rarely make it into the event P&L. Woolworths' Cartology grew 19.5% in FY25. The ACCC found suppliers report being pressured to use these services, describing the broader rebate environment as "opaque, complex and not well understood."
Three cost layers. One model. The result will look better than it was every time.
The financial close on a promotional event arrives four to eight weeks after it runs. By then, the deduction claim, the retail media invoice, and the next trading terms conversation have each been processed separately, none aggregated against the original event P&L.
The ACCC's Final Report was direct: supplier rebates are "opaque, complex and not well understood." The AFGC told the same inquiry that retail media ROI "lacks transparency."
An anonymous industry participant told the Senate Select Committee in April 2024 that suppliers don't raise disputes "given the ongoing fear of retribution." The mandatory Food and Grocery Code came into effect 1 April 2025. The structural incentive to absorb rather than challenge didn't change with it.
A small number of packaged grocery suppliers now treat each promotional event as a standalone P&L, closed within 21 days, inclusive of the rebate, the proportionate retail media cost, and the supply chain impact of the volume movement. Reviewed by a CFO. Not buried in a quarterly aggregate.
Some cross-reference independent scan data against their own shipments to verify compliance rate and store coverage, creating a verification layer that doesn't rely solely on the retailer's claim.
The ACCC's transparency recommendations haven't been legislated yet. The information asymmetry remains. But closing the event on your own terms, with all costs on one page, changes what the number says, and who owns it.
The margin question will arrive regardless. The only variable is whether your model was built to find it.
When did your last promotion actually close?
Sources: ACCC Supermarkets Inquiry Final Report, March 2025 · ACCC v Coles, Federal Court testimony, February 2025 · AFGC Senate submission, February 2024 · Anonymous industry submission 138, Senate Select Committee, April 2024 · Mandatory Food and Grocery Code, April 2025 · Mi3, retail media revenue, August 2025