At the forefront of retail competition for over 100 years, grocery chains, the forerunners of supermarkets, began in Melbourne in 1881 when Frederick Cato opened a grocer's shop in North Melbourne, the first of 35 Moran & Cato's shops established in suburban Melbourne over the next decade. Independent operators responded to the advantages of grocery chains by forming buying groups such as Crooks National (1902), Crofts (1905), Nancarrows and the forerunner of the Foodland chain (1958), Melray, founded in East Prahran in 1932. In 1920 a former manager of Moran & Cato's, S.E. Dickens, established a grocery chain in Geelong. He introduced self-service in 1926 and, merging with Melbourne grocery wholesaler John Connell & Co. Ltd in the 1940s, was able to combine the competitive advantage of efficient wholesaling with limited self-service. The commercial landscape of shopping changed dramatically in the 1950s. Retail-price maintenance was almost singlehandedly destroyed in 1956 by Blackburn independent grocer Edgar Anstee, who engaged in aggressive price cutting in defiance of manufacturers' recommendations. Self-service grocers' shops expanded, accounting for 47% of metropolitan grocery sales in 1956-57 and 70% by 1968-69.
In 1960 G.J. Coles & Co., which had acquired the Dickens chain in 1948, opened Melbourne's first drive-in supermarket in Doncaster Road, Balwyn North, the precursor of its chain of New World supermarkets. An aggressive newcomer, the American Safeway, later in partnership with Woolworths, combined with a successful Pratt's Supermarket (with rooftop parking) in Frankston to launch the first of its chain in 1963. Represented in most of the new shopping malls, supermarkets quickly expanded their market share. Wholesalers no longer exclusively supplied confectionery and milk to milk bars and mixed businesses, and milk packaged in cartons appeared in supermarket dairy departments in 1969. Competition among supermarket chains was intense, however, as they scrambled for wholesale grocery price advantages and weekly price specials. The 7-Eleven and other convenience stores (1977) added to their difficulties. Safeway began campaigning for longer trading hours in 1971, arguing that it could reduce overheads if customer peaks could be smoothed out. Coles opened its first 24-hour supermarket on its original Balwyn North site in 1991.
The success of the Franklins chain's promotion of fresh food in the early 1990s forced Safeway, Coles and the few remaining independent chains to follow suit. In-house supermarket bakeries and butchers drew further patronage from the traditional strip-shopping stores. Some supermarkets stocked semi-prepared meals, in response to successful take-away food franchises. In the late 1990s the Franklins chain failed, its outlets being divided between Safeway and Coles, and the independents at last united under one IGA banner. Safeway also picked off some of the more profitable independent outlets that had traded under the Tuckerbag banner by making offers that could not be refused. After Coles responded to Safeway's discount petrol-selling by negotiating a deal with Shell outlets, the two titans settled down to a contest over the purchase of retail liquor outlets.