This week in digital trust » Episode 99

#99 Supermarket wizards – How tech entrenches dominance

5 March 2024

Supermarkets have been under intense scrutiny in Australia over a range of issues, including alleged profiteering in a cost of living crisis, and poor treatment of workers and suppliers.

In this episode, we explore how the use of advanced technologies and digital platforms by the two supermarket majors may be contributing to these issues, and further entrenching market dominance.

Listen now


This is an automatically generated transcript. We make our best efforts to check that it is an accurate reflection of the episode, but it may contain some errors and unedited content.

Welcome to this week in Digital Trust, elevenM’s regular conversation about all things tech policy, privacy, AI and cybersecurity. I’m Arj joining you today from Awabakal country.
And I’m Jordan joining you from Wirandjuri country in Melbourne.
And Arj today we’re talking about probably the most intensively surveilled environment that you’re likely to go in. You know in everyday life, one of the most intensively surveilled environments on the planet. Can you guess where it is?

I know the answer, but I would guess like, I don’t know, like, you know, heading into a police, you know, like a jail center or something like that.

Prison, airport, airport, you know, demilitarized zone between countries, borders. No, it’s your local supermarket.

Goodness me. Those are. You’ve got to keep an eye on those cheeky people that scan bananas as apples and what not.

We do, we do. And we’ve got to pile on to the recent dislike of supermarkets. Supermarkets are in a lot of trouble at the moment, aren’t they? They are.

Are you a Coles or a Woolies person?

I’m a Woolies person. We do online orders from Woolies.


Mostly. So, yes, it’s very convenient around the corner. But that’s, I mean, that’s the Core of the problem, right? Are you Coles or Woolies? Not like 50 years ago there were like 40 different supermarkets or something. And now there’s two.

Supermarkets are under a bit of spotlight at the moment. There was a Four Corners episode a couple of weeks ago that really kind of brought it all together, I think, because it’s sort of, there’s a few different fronts. There’s like obviously cost of living crisis and The community are very angry at these two supermarkets continually reporting kind of profit growth and, you know, this seemingly just passing on the increases in prices straight through to customers.
Um, so there’s some pressure from that end, but then there’s some focus on how they’re treating labor and, you know, and suppliers. So there’s been a bit of profile to this issue and we’re going to kind of pile in and bring a little tech policy twist to it.

Yeah. And there’s that recent Four Corners episode is a real highlight in that recent coverage, right? So we’ll bring the tech policy angle. You know, even just on competition, right, that Coles and Willys own almost two thirds of the whole Australian grocery market.
There’s a bunch of investigations and inquiries into food prices. There’s a Senate inquiry into food prices. The ACCC has just begun a government-directed inquiry into anti-competitive behavior in the supermarkets and prices. Rod Sims on this recent Four Corners episode about Coles and Woolies, Rod Sims’ former ACCC head says high prices are just a direct product of that concentration. It’s as simple as that. You can argue around the edges, but when you have that much market power, they can squeeze the suppliers. You’ve got no chance about the products up.

And then on the sort of labor front, which was also kind of given a bit of airtime in the Four Corners episode, there’s been a focus on kind of the conditions for workers. So I think one of the examples in that particular documentary was about sort of really, really hot conditions in warehouses and packing facilities, you know, in a throwback to one of our recent episodes around the sort of Luddites was the fact that this emergence of kind of the Uber model into everything that we do.
So it used to be just for transit and for, you know, maybe Uber Eats, but now Coles and Woolies are really leaning in on partnerships with Uber Eats and using them for home delivery. So again, that’s kind of this precarious gig work and they’re very much kind of bolting that into their workforce planning.
So a lot of focus on that and, you know, put that in the context of the fact that supermarkets are the largest private sector employers in Australia. So It’s not insignificant that we focus on how they’re going on the labor front.

Yeah, yeah. Their treatment of labor.
And then all of that supercharged by just this antagonistic relationship with customers, right? That a huge proportion of people are feeling the pinch of the cost of living crisis. There was one survey from a Monash Business School that said 50% of shoppers say that they feel they’re worse off financially than a year ago, half of people.
And three quarters of people who responded to that survey said they reckon they’re going to be in the same or worse financial position in 12 months’ time. Pretty grim outlook for a whole lot of people.
When you’re looking at grocery prices going up year on year and the supermarket’s making billion dollar profits, you can understand where people are dissatisfied.
I suppose that’s the context. The conversation today is Well, what does tech have to contribute to that? Right? How does tech enable this situation? How does it make it worse? How are the supermarkets using technology in that context? Right.

There’s been obviously a lot of attention, but maybe the technology hasn’t been given as much of a focus. It’s sort of a, you know, much more focus on like the CEOs and, you know, how are they running their businesses?
But There’s been a couple of really interesting pieces in the conversation over the last few weeks that have kind of honed in a little bit on the tech platforms and the tech decisions that these companies are making that very much enable, if not kind of, you know, supercharge some of these issues around labor competition and, and kind of customer choice and customer empowerment.
So we’ll put those in the show notes, but The conversation articles are by Lauren Kate Kelly at RMIT and Luke Munn at UQ, and we’ll probably reference them throughout this chat. But yeah, so what we might do now is just maybe step through actually some of that technology that we’re talking about.

Yeah, yeah. So and a lot of it’s surveillance, right? You know, hence the opening question. But, you know, there’s a lot of visible technology in supermarkets, right? You’ve got a bunch of CCTV cameras.
Woolies told Sydney Morning Herald that they’ve got an average of 62 cameras per store, uh, surveillance cameras, and then another like six to eight per terminal in the self checkouts and a lot of that’s like overt, right? You can see the camera in the roof. They recently introduced a camera in those self checkouts. That’s just pointing right at your face. Other than to say we are watching you, you know, security theater.
So there’s a lot of kind of overt cameras and smart gates out the front, you know, we’re going to lock you in if you don’t scan your items, right? So, you know, some very visible kind of surveillance technology there. Yeah.

And then, then some things that maybe are not as visible and some of this is sort of being trialed and you know, some of it’s kind of, you know, much more rolled out, um, than, than just a trial, but so smart tags. So these are things that beep when you leave the store.
But they also kind of have the whole data about where a product came from. So in case, you know, it’s later needs to be recovered as stolen goods.
You’ve got smart gates that now will only open if you’ve paid for products. So, you know, at the moment, you go through these self checkouts and you kind of can waltz straight out. But these gates that can actually lock you in the store unless you’ve paid trolleys with sensors that can tell if you’ve left through, you know, if you leave through a check in area and if you’ve actually paid for your goods.
In store, there’s all sorts of interesting stuff going on, like cameras mounted in shelves for undecided shelves to monitor stock. But with all of these things, it’s kind of like the premise I’m sort of setting out is a sort of anti-theft kind of context. But it’s about like what sort of behavioral analytics are you able to capture? What sort of information, like people’s faces are you capturing and how is that kind of being used?

Yeah. And they’re using these cameras as well to kind of track people through the store. Like part of that, you know, to make that gate work or to lock the trolley if you haven’t paid, you kind of got to track someone to say, okay, they’ve picked up some stuff and now they’ve scanned it. And you know, you’ve got ceiling cameras at the self checkouts that are looking at, are the things I just scanned as a carrot, you know, actually carrots or are they avocados or, you know, something else that’s more expensive and have I coded it right at the self checkout. So AI image recognition for that.
But yeah, it’s all tracking you through the store, which then gets you all this data on people and how they behave and, and so on as well.

The one that shocked me a little bit in the, in these articles was the one, the ceiling cameras, which assign a digital ID to people and track them, because I had seen something like that on Twitter maybe last year at some, some, you know, overseas store and, you know, it just shows all these people walking around and this number following them around.
And it definitely looked very much like a sort of surveillance sort of situation. And then to read that that’s actually kind of closer to home than I thought is, is a bit troubling.

Yeah. I, I can’t remember if we’ve had this conversation on a podcast or off a podcast, but the, you know, those Amazon stores where you can, you know, like, just walk in and grab a thing and walk out and it recognizes your face and charges it to your Amazon account. I always felt the trade-off there was the surveillance in the store for the convenience, but increasingly that level of surveillance is just being built into regular supermarkets. That’s the kind of stuff that you see in the store.
You’ve also got a couple back-end tech providers that are named after wizards largely like Aura and Palantir, right?

Aura is the New Zealand company, which is sort of a crime intelligence platform. It’s already reportedly is in 40% of Australian retail stores, and also by police forces. But the great claim to fame is that it can use AI to predict crime before it happens, which is just chilling to say that, you know, you’ve got a platform claiming that based on some set of behaviors or biometrics or whatever, is going to sort of predictively know you’re, you know, someone might be about to commit a crime.

Yeah, it’s, it’s super spooky to, you know, I encourage people if you want to, you know, bit of a spook, have a poke around on their website that yeah, there’s all these claims about predictive crime analytics and sharing and tracking reports of theft and stuff. I’m not sure any of these reports are verified, honestly. It’s just like a random supermarket manager reckons this guy looks like a criminal potential and so there’s a report. Now you’re tying it to the reports from other supermarkets and so on.
Yeah, look, as a privacy person, that creeps me out. And it’s kind of amusing that it’s Auras are, you know, if you’re not a Harry Potter fan, they’re like visiting world cops. So, you know, entertaining that it’s named after them. But yeah.
And then you’ve got Palantir, which is the other kind of side of it. So that’s not so much law enforcement, although Palantir is a, a US tech company that essentially they’re a data analytics company, but they’ve gotten a lot of very bad press over the years for working with pretty shady or Maybe not shady, but like unpleasant law enforcement and border enforcement work in the U S so, um, rated them as number four in their 40 most evil tech companies, uh, in Slate’s words, because of the company’s unapologetic technical support of menacing deportation practices by the Trump administration.
Yeah. And so, you know, there’s Coles has just signed a big contract with them to cut costs and redefine how they think about their workforce. And Coles reckons save about a billion dollars over four years. So yeah, Palantir is in with Coles to rationalize the workforce, trawl through their data, understand their data and, you know, squeeze as much as possible out of that 16 year old around the corner.

Yeah. And so I think this is the pointy end of it, right? So you’ve got all these cameras, you’ve got these trackers, you’ve got these sensors, you know, being increasingly placed through the stores, but now you’ve got this investment in these global scale platforms.
Like Palantir is, as you said, a platform designed for intelligence services and law enforcement to do, and used by big government agencies to do that kind of level of matching. You’ve got a supermarket using it now to kind of hoover up all its data and optimize its workforce.

There’s all this sort of tracking technology and there’s increasingly these data platforms. How does that actually play out into this mainstream conversation we’re having about are the supermarkets too powerful? Are they sufficiently caring about cost of living? Are they benefiting from inflation and gouging customers? How does it play into all of those things? And there seems to be it who has all the explore at least a bit of a clear line through in the use of tech and how it accelerates that stuff.

Yeah, there really is. And I can’t resist. I need to point out that Palantir are the magic seeing stones in Lord of the Rings. So that’s another fantasy reference. So the two big tech companies, we have to get that in there, but the two big tech companies are named after Harry Potter, wizard cops and seeing stones from Lord of the Rings anyway.
But yeah, so I mean, I mean, one of the first observation to just to make here is that this tech stuff is in part a product of the size of these companies and the market power and concentration, right? That like Palantir is someone who you can only engage with that level of that kind of scale where you have the cameras, you have the data, you have the tracking, you have all this stuff already. And then they can come in and put it all together. And probably charge you a lot of money for that data analytics view.
The technology that we’re talking about, I think, is really a product of scale and concentration. It kind of further cements the market dominance. Assuming that they do, you know, coal saves a billion dollars over the next four years with Palantir, that’s something that only Coles and Willys can do. You can’t do that if you have the supermarket around the corner.

Yeah. And that’s like an extension of, in some cases, like what we’re seeing in tech generally, like we’ve talked in the past about how even these AI solutions, you know, the development of them, like a company like a Palantir or whoever makes these AI products, they themselves are sort of able to do so because of their scale, you need a lot of compute power and you need the ability to hoover up a lot of data and then.
Then you’re looking to try to target the big end of town to sell these proprietary softwares at high rates and it’s the big end of town that can afford them. So in the context of a supermarket conversation, you know, we were always talking about, well, you know, your local grocers or the IGA being the sort of offset against the market power of Coles and Woolies, well, when they’re getting, you know, these global scale platforms to help them, it’s kind of not fair. And it’s, that’s where the entrenched market power is going to come from.

Yeah, yeah, for sure. There was another idea that I came across in this context that was actually new to me, this idea of refractive surveillance. So there’s this, which we’ll link an academic article about this in the show notes, but it’s kind of the idea that surveillance, we usually talk about surveillance in terms of like, one to one or like controlling behavior, right? Like Surveillance is about a powerful entity of government or law enforcement watching you in order to control your behavior. Right?
So I’m watching you don’t misbehave and so on. And that’s what the cameras in the checkout self checkout are about. Right? They’re like, we are watching you. Don’t nick our staff. But this idea of refractive surveillance is this idea that monitoring of one party can facilitate control over the person next to them or someone near them.
And so I think that’s a really interesting observation about the surveillance in these supermarkets where it’s largely directed at the customer, right? We’re watching you, we’re controlling the movement of our goods, but there’s staff who worked in this work in this surveilled environment as well. And their workplace is this like surrounded by cameras, surrounded by tracking of what products are going where and who’s going where and so on. And that creates this like really intensive monitoring of those workers, all of the data that Coles is using with Palantir to save all this money on its workforce is data that wasn’t actually produced, like it’s data that’s produced surveilling customers, not necessarily surveilling workers.
So I think it’s just a really interesting observation that tracking like this and technology like this is really often justified in terms of law enforcement or in terms of safety. Then the data is available and there’s other people in the data and it can be used to apply control or affect other people as well. So yeah, it’s used to squeeze their stuff.

And then to lean in a bit more on the customer side of things as well. The article in the conversation, for example, talks about the fact that these platforms, they’ll be used to sort of optimize the workforce, but they’re also, a platform like Palantir can also do something like identify high periods of spending that are coming up based on patterns and things like that.
And so you’ve got this powerful platform that’s kind of able to draw in kind of behavioral insights around customers and seasonal insights. And this plays into that whole market power thing. The whole premise, I think, we have in our framing of capitalism and choice and market theory is this idea that we will be on an equal footing as consumers to make choices and say, well, I don’t like the way this store is treating me based on its prices. I’m going to go over here.
But it’s an unfair fight when they’ve got, you know, Palantir level platforms that can kind of tune into sort of my needs and my behaviors based on data that they’ve collected, like millions and billions of data points. All that kind of fear around like, you know, discriminatory pricing and kind of leveraging those behavioral insights. It undermines some of that, like information, you know, like there’s like an asymmetry there.
It’s like this, this undermines that basic concept that, you know, that that’s one of the checks against this monopoly power is that we can go to another store, but having this platform just entrenches that kind of monopolistic power for that reason.

Yeah, no, it does. Right. And there’s like, putting aside the fact that going to another store is kind of a fiction because you can’t, it’s like bully, you know, you, you go to the red one instead of the green one or something, but, um, It also assumes that you’re making rational choices and you know about your preferences and you’re assessing prices and you’re doing all this stuff as an informed consumer. Woolies knows more about my shopping habits than I know about my shopping habits. There’s probably the most told anecdote or case study in data analytics and privacy is this you know, like Target in the US, knowing when a young teenager in the US was pregnant before her family did.
And they’re sending marketing materials because they picked the change in her consumption habits. And that just tells the story of it all, right? It’s not a fair fight in terms of rational consumer choices.
The last point that I wanted to hit on just the role of data and the engagement of Palantir is one that Luke munn makes really well in that conversation piece. And we’ll get to a quote there, but it’s this idea that the more you focus on data, the flatter your worldview. Like data is never a perfect representation of what’s going on. And as soon as you make choices about how to reduce something to metric or a piece of data that you can measure, you’re always losing context. You’re always losing the richness of the information in the real world.
And so, you know, there’s a, there’s a common kind of business quote that says that like, if you can’t measure it, you can’t manage it, but you know, the other side of that is, well, if you can measure it, then that’s the one thing you’re focused on and the whole context.

You measure it, you manage it. Is that the other?

Yeah, yeah, exactly. Yeah, you measure it, you do manage it, right? And that’s all you can see. And so this quote from from Luke Munn, which is great is, he says, what Palantir tells is fundamentally a way of seeing. Yet the data inevitably excludes significant social, financial and environmental information, the sweat of workers struggling to pack at pace, the belt tightening of consumers struggling to make ends meet, and the struggle of farmers to survive unexpected climate impacts.
Now I’m talking, that’s the end of the quote. They go untracked when you’re optimizing against metrics about performance, or we’re going to save a billion dollars in four years. Are we alienating the workforce? What are we, you know? Are we alienating the community? Are we taking into account the plight of farmers and all of this? Yeah.
Like that, that data centric view, that metric centric view, you know, it’s useful in some ways, but it, yeah, it’s a really limited view of the world.

It’s limited and it’s, but it’s that quote is so relevant to this particular context, this supermarket context as well, because I mean, it might be naive, but I always feel like these supermarkets are, you know parts of a community, like by definition, they’re your local, you know, there’s a local cause on the local Woolies you go to.
And so if anything, you know, if any store, you know, should have that connection to the sweat of the workers, because they’re the local workers, it’s the local kids who go to the local school and get their first job at the, you know, as a checkout person or stocking shells, or, you know, understand that the community you shop there are the local community.
It’s the supermarkets that should be kind of tuned into that. But if they’re going down this path of these kind of global platforms that are datafying and abstracting out the human picture down to elements, well, then they’re on the, they’re just on this trajectory to sort of, you know, go down this path of like, what can we do to reduce our cost base, which is our employees? And what can we do to get, extract the most out of our customers? And like, what’s the, where is the like limit to that level of thinking unless you’re grounded in the fact that you’re in a community and you have these kind of people that you’re connected to.
And the other thing is, to put it just again quickly into that tech context, is that I think the things that put checks on the sort of natural drive, in a kind of capitalist sense, to just drive down wages and drive up costs as much as you can is there are things like workers Um, are humans and they can organize and they’re collective and like the tech platforms increasingly, either automate those jobs away or isolate people through gig working so that they can’t do that.
So that check’s gone.
And then the other check on the customer side is this idea that, well, they’ll vote with their feet if, you know, if we priced them too high or we, you know, if we’re unfair and that’s increasingly kind of getting undermined by the fact that these platforms know more than we’ll ever know and can kind of, you know, as we’ve talked about you know, discriminatory pricing and all these things can happen in a way that we’re just not aware of, we don’t have the data and the ability to compute at the scale of a Palantir. So the natural checks and balances aren’t there. And that’s a concern. I think.

Yeah, for sure. Right. The technology drives that disconnection and that power imbalance. The other way the supermarkets have been pursuing the technology instead of the connection or the community is through stock loss and surveillance.
One of the things that’s happened in the last couple of years with the decreasing levels of satisfaction with supermarkets and increasing cost of living is that shoplifting has gone up like 20% each year on year for the last couple of years. The response is not, how do we connect back into our community make people feel like we’re part of that and lower prices or help people out. The response is surveillance. And that’s again, it’s the technology stepping in, pulling people apart that like going down the tech solution is kind of contributing to that kind of disconnect and that feeling that the supermarkets aren’t on our side.
How’s that for a pile on?

That’s a pile on. I’m going to get milk soon and I’m hoping I don’t get like scanned at the gate and just blocked because of some manner of surveillance that they’ve heard this podcast.

We’re gonna have horror profiles right? These guys are suspicious.

Yeah, predict if you’re gonna predict crime.

Most of the Four Corners crew I’m sure is on that list as well so we’re in good company.

Yeah, good one.
Alright, well we’ll leave it there.

Talk next week.
See ya.