Milk is a poor example, as Colesworth sells Milk as a loss-leader to get you in the door.

Your local markets don't sell processed grocery items (think cereal, biscuits, sauces etc). When I lived in Melbourne, I made use of the Preston Markets. My sequence was Fruit/Vegies > Eggs > Cheese & Smallgoods > Nuts & seeds > Meat & poultry > Asian Supermarket. That took care of about 75% of my shop. I then went over the road to Woolies for the remainder. Yes, I bought milk at Woolies.

In all the above examples, the markets were cheaper than Woolies. Doing this took extra time, but I saved on average about ~~20%~~ (nah, it can't have been that much. It's been too long to remember. But it was a significant amount) on the items I bought at the markets.

I no longer have access to markets like this. I am very sad about that.

I'm not sure what that person meant by "local markets", but supermarket competitors are no cheaper for the people at the bottom buying the cheapest stuff (who are the ones actually at risk). Maybe in the middle and upper tier products you might start to see a difference but for homebrand/off-brand items Colesworth is as good as it gets.

If they meant wholesale/farmer's markets then I would definitely agree that you can save tons of money. Fruit and vegetables are the absolute worst, I would never buy those at Colesworth unless I was desperate. They are ridiculously expensive and often poor quality.

I’ve found that recently IGA and Foodworks are cost-competitive and in many cases cheaper that Colesworth.

Because they can’t get the contracts with larger producers, they often have better quality niche products from local independent producers.

The best tasting bacon I have ever had was purchased in a Foodworks and was from a piggery a few towns over.