Two very different futures are being described to the Commerce Commission if it forces the supermarket chains to open up to competition: either an iwi consortium focused on health and community, or the budget big box stores being built by US giant Costco
Tomato sauce bottles are a Kiwiana icon – but the bottle produced at grocery competition hearings this week wasn't even Wattie's.
Entrepreneur Tex Edwards produced the bottle to illustrate the bottleneck in the supermarket supply chain – but also a new focus on local product and comparable carbon footprints that he says competition would bring to our stores.
The big supermarkets strongly oppose the "extreme" step of "confiscating third-generation family businesses" to make space for new entrants.
Foodstuffs (comprised of co-operatives of local supermarket and liquor store franchisees) and Woolworths (which both owns and franchises stores) highlighted their contributions to the New Zealand community yesterday, and warned of the danger of making them divest some of their stores to a new overseas player.
By portraying themselves as champions of local business, the supermarkets are trying to shift their conversation away from their market dominance – but the challengers have been quick to remind the commission of the big chains' recent behaviour.
Countdown cut back "essential" supplies to family-owned Night 'n Day at the start of the Delta outbreak; Foodstuffs North Island is deleting most of the range of iwi-owned Sealord, making more space in its freezers for Pam's Chinese-processed Alaskan pollock and Birdseye Australian-processed pollock/NZ hoki.
Online grocery retailer Supie and convenience store chain Night 'n Day both support breaking up the supermarkets' wholesaling and distribution networks to get better access to goods at fairer prices.
And Edwards, fronting a potential new market entrant named Northelia, suggests divesting 125 to 150 stores from each chain to sell to a new player, to give it the 15 percent share of the $22 billion grocery market he argues would allow it to be a meaningful competitor.
Newsroom has spoken with franchise owners of three supermarkets, trading under three different brands. Some were fourth-generation store owners; most wanted to express concern at the threat that the regulator might require their store to be sold from under them. However, neither Foodstuffs nor Woolworths would allow the store owners to speak publicly.
Edwards confirmed yesterday's Newsroom report of iwi interest in entering the supermarket business. He read a statement from an unnamed nationwide consortium of iwi, saying the grouping wanted supermarkets to remain in New Zealand ownership. "Supermarkets fit well with our values and a focus on health outcomes for Māori," the statement said.
The consortium had discussed public health outcomes, Edwards told the commission. "And they did discuss the Sealord success of Māori ownership partnership."
Commissioners are weighing up operational or structural separation of their retail, wholesale and distribution arms, but indicate that may not be enough. They are also discussing options like requiring Foodstuffs and Countdown to each divest 125 to 150 stores, as proposed by Edwards, or to sell off parts of their wholesaling and distribution networks, as suggested by online grocery retailer Supie and convenience store chain Night 'n Day.
However, this comes as international retail group Circle K opens three convenience stores (adding to its 16,000 worldwide) and American-owned Costco builds a massive warehouse outlet on three hectares in west Auckland, with plans for more in Wellington and Christchurch (adding to 800 warehouses globally).
Josh Gluckman, Woolworths' director of strategy and transformation, said the first three Costcos would together be the size of 18 Countdowns, and would have 40 percent of New Zealand's population within a 25km destination radius. "They will be supported by the global purchasing scale of the second largest bricks and mortar retailer in the world."
Woolworths NZ has kicked off a $1 million ‘Kete’ accelerator programme focused on helping encourage a more diverse supplier base in Aotearoa, including businesses owned by Māori, Pasifika, youth, women, LGBTQIA+ people and people with disabilities.
And Foodstuffs emphasises that all its franchises are locally owned. Foodstuffs North Island chief executive Chris Quin told the commission that “confiscation of privately-owned businesses and family stores would be unprecedented"; Foodstuffs South Island retail general manager Tim Donaldson reiterated that divesting stores would be "essentially a confiscation of private property".
After concluding hearings on Tuesday, the Commerce Commission will take one last round of written submissions before preparing its final report to the Government by March 8 next year.
