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RNZ News
3 hours ago
- Business
- RNZ News
Supermarket sector competition reports like Groundhog Day
Supermarket sector competition reports are like Groundhog Day. Photo: 123RF Analysis - Compare the following two statements: "Some of the signs I am seeing is that suppliers are very fearful of repercussion, there's a lack of trust." And... "My concern is that the power imbalance between the major supermarkets and small suppliers creates a reluctance among suppliers to push back." They are both from Grocery Commissioner Pierre van Heerden - the first from August 2024 , the second June 2025 . The nine months between the statements have produced another round of research, recommendations, and call for submissions with the aim of getting better deals for suppliers and consumers, forcing better behaviour and greater competition between the dominant Foodstuffs and Woolworths chains. The Commerce Commission's original market study was ordered in 2020, the final report published in March 2022, and law changes came into effect in 2023. The regulator looked to assist the transition through educating suppliers, offering them sample contracts to put to the supermarket chains, setting up a whistle blowing facility for those wanting to report bad behaviour, and a stern message to Foodstuffs and Woolworths to behave and play nice or risk the Grocery Commissioner's wrath. And yet the latest report concludes much as the first report - the grocery sector is not competitive and the duopoly keeps throwing its weight around, while the small suppliers remain intimidated. Grocery Commissioner Pierre van Heerden. Photo: The Grocery Commissioner has sought to engage with the two big chains and change attitudes. They have conceded most of the easy ground such as ending land banking, accepting the mandatory code of conduct, and agreeing to look at freeing up their wholesale arrangements. But clearly the original reforms have failed to cut through, hence the move to now strengthen the Grocery Supply Code to stop retailers charging suppliers for stocking shelves or for past-their-best by date groceries in the retailer's control; require retailers to reimburse suppliers if they buy stock at promotional prices, but later sell them at higher prices; and prohibit retailers from retaliating against suppliers who assert their rights under the code. van Heerden told RNZ that he had the resolve and the resources to take legal action when justified , but that bringing about change in the sector takes time. To date, the regulator has gone for the relatively low hanging fruit of misleading prices and advertising . The challenge now is to bring about real change in supermarket actions. A prosecution or two may be needed. The wild card in the supermarket debate is what will the government do. Finance Minister Nicola Willis entered the debate verbal guns blazing in March saying the government was looking at all options to bring greater competition to the grocery sector. She said that could be done either by encouraging a major new player into the sector or possibly a 'nuclear option' of breaking up or restructuring the existing chains. The government has issued a formal request for information (RFI) to accelerate improved competition, and advise on potential regulatory and legislative changes, and whether structural changes would be needed. That was an option which the Commerce Commission shied away from as being too difficult, commercially and legally. Going after supermarket chains assessed as profiteering from consumers reads well in headlines, but will the talk be turned into a walk? Or will it be down to van Heerden to make progress slowly, one supermarket aisle at a time? Gyles Beckford is RNZ's business editor. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
National Business Review
9 hours ago
- Business
- National Business Review
ComCom seeks crackdown on supermarket supplier rebates
Retail 3 mins to read 3 ComCom seeks crackdown on supermarket supplier rebates A draft report on the Grocery Supply Code finds Foodstuffs and Woolworths receive subsidies from their suppliers of more than $5b a year. The Commerce Commission report reviews the function of Grocery Supply Code since its introduction in 2023.
Newsroom
9 hours ago
- Business
- Newsroom
Crackdown on $15b supermarket giants' opaque pricing ‘doesn't go far enough'
Analysis: A Government attempt to break open supermarkets' chokehold on grocery wholesale 'hasn't worked as intended', the Commerce Commission admits. That may be an understatement. According to the general manager of the family-owned Night 'n Day grocery chain, it's failed dismally. Foodstuffs and Woolworths sold only $7 million of groceries to smaller retailers through the regulated 'fair price' wholesale scheme last year, Matthew Lane says. Night 'n Day wants to offer competitive grocery prices. It's grown from one corner store in Dunedin to a nationwide chain of 52 grocery and convenience stores. Lane says it's the third-biggest grocery chain in New Zealand, after the two big players – but it's not even close to being able to break the duopoly's market control. One of the biggest challenges for smaller retailers is accessing grocery supplies at a good price. Many dairy owners are forced to queue at the checkouts of the big supermarkets to buy their supplies at retail prices, then mark up those prices further to turn a dollar. To help address that, the previous government applied some arm-twisting, to get the big chains to open up their wholesale operations to smaller competitors. Finance Minister Nicola Willis now says she's turning her attention to the supermarket sector, and all options are on the table, including breaking up the big companies – either forcing them to divest some of their stores, or separating their wholesale and retail businesses. In a dramatic development on Thursday morning, Grocery Commissioner Pierre van Heerden has given the two big chains just 12 months to clean shop – or face regulation. Lane welcomes the preliminary findings from the commission's wholesale supply inquiry, recommending the major supermarkets expand their wholesale product range and pass on promotional funding to allow other retailers to access lower prices. Last year, as an example, Foodstuffs had sold just $1.3m worth of goods through the scheme. It approved only 41 wholesale customers to purchase from its wholesale service – and Night 'n Day was not one of them. So Lane's also cautiously supportive of Government attempts to woo one of the big foreign supermarket brands like German-owned discount grocer Aldi to these shores – but he says ministers should be looking closer to home. 'They shouldn't put all their eggs in one basket,' he says. 'If we can develop grocery competition locally, well, I think that's actually a better result for all parties – especially opening the door to someone that's already established in the market. 'We can control our destiny. We're here in the market, and we're wanting to grow.' The grocery commissioner says the current grocery market is not serving Kiwi consumers well. 'The status quo lets a few major players set the rules for the rest of the industry which is negatively impacting consumers, new and expanding competitors, and small suppliers.' Van Heerden criticises Foodstuffs, Woolworths, and some of the large national and multinational suppliers, whose significant market share allows them to influence the settings of the market. His draft report proposes to change the Grocery Supply Code to stop the supermarkets imposing a confusing array of charges on suppliers – they're typically forced to pick up the tab for supermarket costs like stocking shelves, setting up displays, and promoting their products. Van Heerden also wants to eradicate the $5b in rebates, discounts and promotional payments paid by the big suppliers to the supermarkets, to put their products 'on special'. 'Competing retailers can't negotiate similar levels of support due to their weaker buying power. 'Consumers lose out because prices jump around more. This can mean the average price is more expensive and it's harder for consumers to assess the value of products.' New Zealand cooperative Foodstuffs is the country's biggest player, with more than 500 Pak'nSave, New World, Four Square and Liquorland stores, as well as wholesalers Gilmours and Trents. It's at war with the Commerce Commission, taking court action to challenge millions of dollars of fines for anti-competitive land covenants, and to overturn the commission's ban on it merging its North Island and South Island businesses. Spokesperson Stefan Herrick says a well-functioning market must support efficient, productive outcomes – and that includes ensuring retailers can negotiate fairly to deliver value at the checkout. The co-op takes its obligations under the new Grocery Supply Code seriously, he says. Any supplier who has an issue should complain through the appropriate channel. 'In our view, the current code has already effectively set the 'rules of engagement' with suppliers. We regularly survey our suppliers to ensure we are working as partners, listening, and constantly improving.' Australian-owned Woolworths NZ, which has more than 185 stores and also franchises 70 SuperValue and FreshChoice stores, has mostly taken a more conciliatory approach. Interim managing director Pieter de Wet says wholesale is a new and fast-evolving area for the company. 'In just three years we've developed a business which provides grocery products to more than 100 retail sites and we have over 60 customers using our service to provide more choices for shoppers,' he says. 'We're working closely with suppliers and wholesale customers.' Both chains say they'll take time to read the draft documents issued by the Commerce Commission in detail, and promise to work constructively with the commission through the submission process.
Otago Daily Times
13 hours ago
- Business
- Otago Daily Times
Watchdog wants more rules for big supermarket players
Change is on the cards for the supermarket sector, as the Commerce Commission looks at ways to improve competition. It has released a draft report into the review of the Grocery Supply Code and a preliminary view into its wholesale market inquiry. The commission identified two commercial behaviours which it said reinforced the power of the major supermarkets - Foodstuffs and Woolworths - and the country's biggest grocery suppliers. Grocery Commissioner Pierre van Heerden said a key problem was the power imbalance between major retailers and small suppliers, meaning those suppliers were reluctant to push back and insist on better prices. He said small suppliers feared damaging relationships or losing access to shelves. "This leads to smaller suppliers taking on costs and risks that are best managed by the retailer." The commission has also taken issue with promotional payments in wholesale markets, where small retailers cannot compete for deals against big players. "The prices the major supermarkets pay suppliers are subsidised by around $5 billion in rebates, discounts, and promotional payments," van Heerden said. "Competing retailers can't negotiate similar levels of support due to their weaker buying power." The commission recommended four changes to the Grocery Supply Code, including adding a requirement that if a retailer bought groceries at a discount for a sale period, and then sold the product at a higher price after the sale period, they had to pay the difference to the supplier. It would also prohibit retaliation against suppliers exercising their rights under the code. In the wholesale market inquiry, the commission recommended two changes, including major supermarkets expanding their wholesale product range and putting in systems to pass promotional funding through to their wholesale customers, so that other retailers could access cheaper prices. It also recommended suppliers reduce their reliance on promotional funding, or allocate the funding to more retailers. The commission has sought submissions on the draft Grocery Supply Code and would consider those before a final report due by the end of September. It said changes proposed for the wholesale market would be voluntary for now, but if there was no "meaningful progress" in a year, it would decide whether it needed to change regulations. It said a final report on its wholesale supply inquiry would likely be completed in 2026. Supermarkets respond In a statement, Foodstuffs North Island said it would review the commission's draft report and recommendations, though it maintained its support for the status quo. "We support the existing intent of the code and the dispute resolution process," a Foodstuffs North Island spokesperson said. "We are open to working with the commission on ideas to lift awareness and understanding of the code, particularly among smaller suppliers who may need additional support." Foodstuffs said regularly surveyed its more than 2000 suppliers "to ensure we are working as partners, listening, and constantly improving". "Any supplier who has an issue should raise it through the appropriate channel - either with us directly or through the Commerce Commission." Woolworths New Zealand interim managing director Pieter de Wet said the company had positive relationships with its 1400 local and international suppliers. "We support the Grocery Supply Code because we feel that consistent rules hold everyone to the same high standard and help businesses of all sizes to grow and succeed," de Wet said in a statement. "We're working closely with suppliers and wholesale customers to further improve and develop our wholesale business." Woolworths New Zealand would work constructively with the commission through the submission process.
Scoop
14 hours ago
- Business
- Scoop
Supermarkets Slammed For Bad Behaviour
Another day, another report that reveals how badly the duopoly supermarkets of Woolworths and Foodstuffs are treating their customers and suppliers to benefit themselves. 'Kiwi consumers deserve so much better than this. We are still paying some of the highest prices on the planet to put food on the table and we have known this for more than three years,' said Grocery Action Group chair Sue Chetwin. Today's report from the Commerce Commission slams the supermarket duopoly sector for the way it treats its suppliers by making unrealistic demands of them and asking them to wear costs the supermarkets should be covering. The Commission also says this is a significant issue for any potential competitors who face an insurmountable battle to get wholesale groceries at a reasonable price. 'The report reveals the supermarkets suppliers are being subsidised by around $5 billion in rebates, discounts and promotional payments. Competitors just cannot compete with that power inbalance. 'It doesn't work for consumers either because prices bounce around so much they no longer know what a fair price might be,' Chetwin said. 'The report shows once again that despite the Commission and the Government calling out this appalling behavour the incumbents continue to treat consumers and suppliers as if they own them,' Chetwin said. 'In many respects they do. Foodstuffs and Woolworths hold more than 80% of the market. This lack of competition means consumers have no to little choice about where they shop.' Grocery Action also notes the large suppliers are complicit in this play because the lack of competition also helps keep their prices high. GAG is concerned improvements to the supply and wholesale codes proposed by the Commission, including prohibiting retaliation against suppliers who assert their rights will not be enough. 'The Commission is asking the duopoly to 'voluntarily' change the wholesale code over the next 12 months – that's like politely asking the greedy to stop being greedy. It won't work. 'We have already seen the duopoly play by its own rules. The industry has been on notice since the Commission released its Supermarket Study in 2022, which said supermarkets were making excessive profits and that a lack of competition meant we were paying some of the highest prices in the world for food, but nothing has changed. 'Hopefully this latest report will assist the Grocery Minister Nicola Willis, to conclude that forced divestment of the supermarkets to allow more competition needs to happen now, not in some distant future. Consumers will thank her.' Grocery Action background The Grocery Action Group was formed to bring down the prices of groceries for all Kiwis. Our vision is to influence government, the regulators and other parties to deliver a competitive and consumer-focused grocery sector in New Zealand. Our board is made up of consumer, industry, supplier and Māori interest experts. For more info visit
