The same grocery product can cost considerably more depending on where in New Zealand it is bought.
New analysis from online supermarket Paddock to Pantry claims the difference for some staple products sold under the same supermarket brand can reach 32 percent depending on location. That is a striking number, but it does not automatically mean there is something wrong with the pricing.
There are perfectly reasonable reasons why prices differ. Freight costs more when products travel further, smaller stores cannot always generate the same volumes, and operating costs vary considerably between locations. A supermarket in rural New Zealand is not operating under the same conditions as one surrounded by competitors in Auckland.
Grocery Commissioner Pierre van Heerden acknowledged exactly that when Mike Hosking challenged him on postcode pricing this morning (Thursday, 27th August 2026). Hosking's argument was straightforward: once a product has to be transported to a smaller, more difficult market, its price will inevitably be higher. Van Heerden agreed, but said competition gives consumers a way to determine whether they are getting good value.
That is where the discussion gets interesting. A higher price caused by freight is one thing. A higher price that can be sustained because there is nowhere else for the shopper to go is another, although separating the two is not necessarily easy.
The Commerce Commission has already established that grocery competition differs substantially according to where people live. Its detailed geographic analysis found the major supermarkets held 71 percent of the Auckland market compared with 88 percent across the rest of New Zealand.
While 90 percent of New Zealanders lived within a 10-minute drive of a major supermarket, only 79 percent had a choice between Woolworths and a Foodstuffs store within that distance.
Its June 2026 report showed that the national picture had changed little. The major operators still held more than 80 percent of the retail grocery market, although the Commission pointed to increasing activity from specialist and alternative retailers, particularly in Auckland.
Auckland therefore provides an interesting test. Costco, Asian supermarkets, independents, specialist food retailers and expanding alternative formats are taking pieces of the grocery basket. They do not necessarily replace a Pak'nSave, New World or Woolworths weekly shop, but they give customers another place to spend money.
Smaller towns present a different commercial equation. If one supermarket is the only realistic full-range grocery option, the shopper cannot respond to an unattractive price by driving five minutes down the road. At that point the competitive pressure that normally tests a retailer's price becomes considerably weaker.
That still does not mean the local operator is overcharging. Consumer NZ's regional work last year provided an important qualification. It found relatively small differences when it compared prices between New World stores in places such as Wairoa, Waimate and Hokitika and comparable New World stores elsewhere. The bigger disadvantage was the absence of another banner, particularly a lower-priced option such as Pak'nSave.
There is also the question of whether technology can start breaking down those geographic boundaries. Van Heerden pointed to Paddock to Pantry, which now delivers groceries nationwide and maintains consistent product pricing across New Zealand, as an example of a smaller operator creating another competitive option.
Online grocery could become important here, but it is not a complete answer. Delivery charges, freight times, perishability, range and minimum order values all influence whether an online competitor genuinely substitutes for the supermarket down the road. Paddock to Pantry offers different delivery options and timeframes by postcode, even though its product pricing is consistent nationally.
Price comparison technology is also making regional differences much more visible. New Zealand services increasingly allow shoppers to nominate individual stores rather than compare national averages, because New World and Pak'nSave prices can differ between locations. Woolworths also operates zone-based pricing rather than a single price on every product across every store.
That transparency could eventually exert competitive pressure of its own. It is much harder to maintain a significant local price difference when a customer can see what the same product costs 20 kilometres away before leaving home.
But Hosking raised another point that should not be ignored. Consumers do not choose supermarkets solely on price. Convenience, loyalty programmes, promotions, range and giveaways can all influence where the basket goes. Van Heerden referred to the current grocery market as a "confusopoly", arguing that the sheer number of specials, rebates and promotional prices can leave shoppers unsure what the normal price of a product actually is.
Perhaps there is no single normal price. Grocery has always responded to local costs, competitors, promotions and customer behaviour, and there is nothing inherently wrong with that. A nationally mandated price for every product would remove some of the very flexibility retailers use to compete.
What deserves greater scrutiny is the point at which location stops reflecting the cost of serving a market and starts reflecting the lack of alternatives within it.
Competition may be discussed nationally, but shoppers experience it locally. If one postcode provides four realistic places to buy groceries and another provides one, those households are not participating in the same grocery market, however similar the logos above the stores may be.
The challenge is not to eliminate local pricing. It is to make sure every retailer, wherever it operates, has a reason to keep sharpening the pencil.
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