The Wrap: Reaction from players to grocery Czar announcement

by | Jul 7, 2022 | News

This week the government announced its latest moves to bring more competition to the grocery sector. We survey the reaction from some of the players and commentators.

New Zealand’s $22 billion grocery industry currently has a market dominated by two major players Foodstuffs and Woolworths NZ. Meanwhile the government has embarked on a series of actions to open up the sector, including legislation banning covenants impeding new grocery stores.This week’s developments include a Grocery Commissioner to be appointed, and a consultation paper on the Grocery Code of Conduct released for feedback.

Foodstuffs: Up for change

Major grocery retailer Foodstuffs, which has the New World and Pak ‘N Save chains, confirmed their support for the establishment of a specialist grocery regulator to monitor compliance of a new code.

Managing director Chris Quin reiterated that the Foodstuffs co-operatives are working with MBIE towards a well-designed, mandatory Code that will “give clarity to the rules of engagement with our supplier partners to ensure the industry works well for customers – and we have indicated our support for a set of principles that we believe will make a difference in providing clarity, certainty, fairness, meaningful consequences, and opportunities for redress when the Code is not honoured”.

Night ‘n Day retail stores: Taking heart

As reported by RNZ, Matthew Lane, the head of the Night’N Day chain of small retail convenience stores, said he was pleased the government was keeping up momentum in reform. Suppliers in particular could take heart that change was coming to the sector, with a sector regulator and code of conduct two key parts of the change needed, he said.

Lane said he did not think the two big chains – Foodstuffs and Countdown – would give ground easily because they were well entrenched.

Online supermarket Supie: good for suppliers, but not for shoppers

Supie founder Sarah Belle commented that suppliers haven’t had a fair deal for a long time, and while the announcement is good for suppliers, it isn’t going to change prices at the checkout any time soon.

Having just past their first anniversary, Supie is currently using the investment platform Snowball Effect, seeking to raise up to $5m of growth capital. The goal is to fund technology development, marketing initiatives to drive membership growth and working capital to continue to fund expansion, inventory, people and operations for the next 18 months. Today Belle reported being blown away, that after only eight days, they had raised $1,800,000.

Over the past months Supie been also been seeking expressions of interest from retailers, community groups or other organisations who wish to access wholesale supply of groceries. “We need to be innovative and invest in the models that will deliver food and groceries from suppliers to consumers more efficiently. As far as I am concerned the recommendations by ComCom will not result in cheaper groceries across New Zealand, so that’s why we’re doing something about it”, says Belle.

Industry body: Feet to the fire

The New Zealand Food & Grocery Council says that establishing a grocery commissioner inside the Commerce Commission is a great move, and shows the Government is serious about dealing with what’s been happening in supermarket sector for shoppers and suppliers.

“If the experience of having the telecommunications regulator inside the Commerce Commission is anything to go by, the supermarkets can now expect their feet to be held to the fire over everything from pricing at the checkout to the egregious and stand-over tactics suffered by suppliers during negotiations over the past 10 or so years”, a spokesperson said.

Countdown: No comment

Countdown managing director Spencer Sonn declined an interview with Stuff reporters but said the company was continuing to engage positively with the Government.

Sonn has previously commented in an Stuff opinion piece that while inflation is real and painful, it’s misleading to suggest that supermarkets are causing higher prices, or to suggest that the supermarkets could “meaningfully control the kind of systemic cost increases and resulting price rises we are currently experiencing”.

Retailer advocate: Watching for fishhooks

Consumer NZ welcomed the announcement: “This is one of many moving parts in response to the Commerce Commission’s market study and we are impressed with the speed at which the Government is moving,” said Consumer chief executive Jon Duffy. In terms of real change and progress, Duffy notes one fishhook will be whether the Commerce Commission is adequately resourced to support the Grocery Commissioner and its new role under the legislation.

 

Photo credit: Joshua Rawson-Harris on Unsplash

 

 

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