For the past few years, Australia's supermarket debate has proceeded from a wonderfully simple story.

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You buy the groceries. Coles and Woolworths charge too much. Suppliers and workers get squeezed. The supermarkets pocket enormous profits. Shareholders win and everybody else loses.

There is just one awkward problem with this story: the accounts.

Instead of beginning with political rhetoric about "profiteering" and "price gouging", try something much less exciting. Take the supermarkets' audited financial statements and follow a dollar through the business.

The result is rather different from the popular caricature.

For every dollar of revenue Woolworths earned in FY2025, 72.5 cents went to suppliers. Another 15.5 cents went to employees. Occupancy, depreciation and other operating costs consumed 8.9 cents. Lenders received 1.2 cents and government took 0.6 cents in tax.

What was left for shareholders? Just 1.4 cents. At Coles, the figure was 2.4 cents.

The residuals were divvied up to more than 750,000 mostly mum-and-dad shareholders across both brands - not to mention the millions who hold shares indirectly through their super funds.

Before those shareholders saw anything, 98.6 cents of every Woolworths revenue dollar and 97.6 cents of every Coles dollar had already gone elsewhere.

That matters because much of the debate about supermarket profits rests on an assumed conflict between shareholders and everybody else. Profit is routinely presented as money extracted from workers, suppliers and consumers.

But the income statement tells a different story. Shareholders are the residual claimants. They get what remains after everybody else has been paid.

And running a national supermarket chain on a shareholder margin of 1.4 or 2.4 cents in the dollar hardly looks like discovering a licence to print money.

Both businesses turn over their inventory roughly 12 times a year. Stock remains on shelves, on average, for only a little over four weeks. When the final margin is a few cents in every dollar, mistakes in stock management, pricing or shrinkage can rapidly eat through the........

© Canberra Times