Grocery sector report: swift action promised

File Image/SunLive.

Labour say they will act immediately on a Commerce Commission report on the retail grocery sector with National suggesting more must be done to address what they call a “cost of living crisis”. 

The report into the grocery sector has concluded that competition in the industry was not currently working well for New Zealanders.  

“We have found that the intensity of competition between the major grocery retailers who dominate the market, Woolworths NZ and Foodstuffs, is muted and competitors wanting to enter or expand face significant challenges,” says Commission Chair Anna Rawlings. 

Foodstuffs own the New World, PaknSave, and Four Square brands whilst Woolworths operate Countdown, Fresh Choice and Super Value - between them operating around 80 per cent of the market.

A growing fringe of competitors could not compete on price, product range or store location, found the report. 

Several recommendations have been made, including making more land available for grocery stores, improving access to wholesale supply and monitoring strategic conduct of the major retailers. 

Commerce and Consumer Affairs Minister David Clark says it is clear that the sector is not currently working for New Zealanders and that action will be swift on making adjustments.

“I know there is a desire to see us act swiftly on this too, and I want New Zealanders to know this will be the case,” says Clark. 

“From today, we will immediately progress work to address the Commission’s recommendations.”

Looking into a Code of Conduct between retailers and suppliers,  a dedicated regulator and land covenant barriers are of immediate concern, he says.

“When New Zealand supermarkets are making more than double what the Commerce Commission considers to be a normal rate of return on capital for grocery retailing, it’s clear there is a problem with competition that needs to be fixed,” says Clark.

“New Zealanders are paying more at the checkout than most. Out of 38 OECD countries we’re the fifth highest in terms of grocery prices. This report makes a serious case for change when it comes to competition in the sector, so kiwis don’t have to pay so much for the basics.”

National’s Commerce and Consumer Affairs spokesperson Andrew Bayly says whilst the recommendations are a step in the right direction more must be done across the board by Labour to address the “cost of living crisis” across the country.

“Kiwis are going backwards under Labour because wages aren’t keeping up with rampant inflation,” says Bayly.

“The cost of living crisis is sending the cost of basics like food, petrol and housing through the roof. Inflation is at a 30 year high and the average Kiwi family is worse off than they were 12 months ago. 

“The Government needs to explain how they will arrest the cost of living crisis in Budget 2022 – and they should start by making the tax adjustments National proposed on the weekend.”

Consumer NZ chief executive Jon Duffy says the recommendations should go further on a regulation front and is calling on Labour to take swift action.

“Food has become unaffordable for many consumers,” says Duffy. 

“In January 2021, our research showed six out of 10 consumers were worried about the price of groceries. By February 2022, this had risen to 98 per cent. 

“It is times like this that we need competitive markets producing good outcomes for consumers. The problems highlighted in the Commission’s report demonstrate strong regulatory intervention is required, and we will be looking to Minister Clark to address the problems in the sector as he considers the Commission’s recommendations.” 

 

Other recommendations from the Commission include a mandatory code of conduct for supply relationships, strengthening laws on prohibition of unfair terms in standard form contracts, consideration to collective bargaining, ensuring promotions and pricing are easy for customers to understand and requiring retailers to display pricing consistently.




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6 Comments

And about the groceries...

Posted on 09-03-2022 12:58 | By morepork

I can manage pretty well because I live alone and trade fruit and veg with my neighbours. But it suddenly occurred to me that a family with kids, is an entirely different story. Something HAS to be done about the profiteering and $20 billion profit per year is not acceptable for an industry that is life supporting. The proposed Code of Conduct is a step in the right direction, but when people who live in a food-producing nation are being gouged the way we are, it is time something was done about it.

I used to be apolitical.

Posted on 09-03-2022 12:52 | By morepork

I don’t have a lifetime dedication to either of the major parties and I have voted for Labour and for National in my lifetime. But not any more... I hear the points made in other posts here and I agree, but the single, most important, deciding factor for me, is that the current government has embarked on a secretive, divisive, and immoral attempt to destroy the Western Democracy we are governed by, and replace it with a tribal traditional (tikanga) style of government that brooks no dissent and suppresses protest. You do what the Boss says and you toe the party line. The He Puapua project continues, promoting "co-governance", and the appointment of an unelected elite on purely racial grounds, without ever having been put to the people, the right to a referendum has been denied by overnight Law changes behind closed doors. They must be stopped.

@ Kancho...crisis?...what crisis??..

Posted on 08-03-2022 22:11 | By groutby

....well, this is what we voted for it seems and what we have, may it end late next year..... "Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, it’s inherent virtue is the equal sharing of misery"... Winston Churchill............

Cost of living crisis

Posted on 08-03-2022 16:37 | By Kancho

Well Labour attacked National on a housing crisis and child poverty crisis these are worse now after years of Labour. Kiwibuild joke . So add a high inflation economy and another crisis to add to the pile. The last time Labour had two terms when they were voted out inflation was 7.6 percent another record. This hurts lower paid the most , not a good performance for a socialist government. National suggests changing the tax rates to help but Labour says no ! Time to vote them out again.

Not Going To Happen

Posted on 08-03-2022 15:50 | By Yadick

Labor will make a few adjustments and a ton of hollow promises until the problem finally, in their view, is forgotten. Jacinda made promises to regulate and control fuel prices . . . we’re now over $3pl on 98 (only speaking for the fuel I use). Murmurs from Labor blame the crisis in Ukraine which is nothing more than a wet excuse. Petrol prices were rising well before that and some places around BOP are more expensive than Auckland. Mobil Chapel Street prices were the best in the Bay but are now the worst. From great to disgraceful. Labor will make a few pretty tinkering for cost of living and a ton of hollow promises. Roll on elections - I will remember you.

Hollow promise

Posted on 08-03-2022 15:18 | By Kancho

Commentators are saying it’s easy for Labour as the suggested measures don’t actually amount to anything. Competition is lacking but not likely to change anytime soon. Another expensive but largely no teeth so ineffectual. Meantime some economists think inflation may go higher yet. Like buying petrol with tax paid wages then with excise tax and gst on that and rising prices means more gst on everything. Taking it in . Even worse in Auckland with extra levys

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