Latest news with #GrocerySupplyCode
NZ Herald
5 hours ago
- Business
- NZ Herald
Time to take action over supermarket competition
The Commerce Commission completed its market study on the grocery sector in March 2022. THREE FACTS The Commerce Commission took another incremental step towards cracking down on the supermarket sector this week with its proposal to tighten up the Grocery Supply Code. Grocery Commissioner Pierre van Heerden is worried about the power imbalance between the major supermarket chains and suppliers.
Yahoo
a day ago
- Business
- Yahoo
NZ watchdog mulls tightening grocery rules to create fairer playing field
New Zealand's competition regulator is proposing measures to create a fairer playing field between emerging grocery producers and the major supermarkets. In a two-pronged initiative, the Commerce Commission is also concerned that smaller grocery retailers face a disadvantage over their more dominant counterparts when it comes to securing competitive prices from large suppliers. The Commission presented its findings today (5 June) following a review of the Grocery Supply Code and is reaching out for feedback before it publishes its final report in September. "If the Commission doesn't see meaningful progress in 12 months, it will decide if regulations should be changed," the regulator said in a statement. Grocery Commissioner Pierre van Heerden explained: "We know 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." He added: "These major players are the three main supermarkets and large national and multi-national suppliers. Their significant market share allows them to influence the settings of the market. This limits the ability for competing retailers to enter and grow in the market and often results in smaller suppliers getting an unfair deal." The draft recommendations to the Supply Code include curbing the circumstances in which supermarkets can bill suppliers for routine retail tasks, such as shelf stocking and display arrangement. Van Heerden highlighted the issue of a power disparity, saying that a "power imbalance between the major supermarkets and small suppliers creates a reluctance among suppliers to push back on supermarket demands or behaviour for fear of damaging relationships or losing access to supermarket shelves". New Zealand's grocery market is dominated by Foodstuffs and Woolworths. "The major supermarkets are the largest customers for most grocery suppliers," van Heerden said, controlling 82% of the market. The proposed modifications by the Commission would mandate supermarkets to keep records on how they are complying with the Code when undertaking "certain activities", including "negotiating promotions with suppliers and making deductions to payments without written consent". Looking into the wholesale supply of groceries, the Commission pointed out that promotional payments and rebates are generally inaccessible to newer or smaller retailers. 'A significant issue new and expanding supermarket competitors face is securing access to cost-effective groceries from large suppliers," Van Heerden said. "Competing retailers can't negotiate similar levels of support due to their weaker buying power." He also noted that the prevalent high-low pricing strategy used by New Zealand's major supermarkets is more extreme than in other countries, and a reduction in promotional dependence would result in more consistent and lower prices for consumers. 'The best option is for large suppliers and the major supermarkets to voluntarily change their behaviour. If they don't, we'll have to consider our other alternatives,' van Heerden said. "NZ watchdog mulls tightening grocery rules to create fairer playing field" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
NZ Herald
2 days ago
- Business
- NZ Herald
Supermarket duopoly: Grocery code shake-up gets mixed reaction from supermarket industry players
Supermarket industry players have had a mixed response to the Commerce Commission's plans to tighten the Grocery Supply Code, with one saying the changes will help 'create a more transparent and equitable food system', while another questioned whether the commission's approach was balanced enough. The regulator announced this morning that
National Business Review
2 days 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.
Otago Daily Times
2 days 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.
