I grew up in a household where grocery shopping followed a pretty familiar routine.
Mum would do a big grocery shop once a week. She’d have a big list and spend a couple of hours filling the trolley.
Then brown paper bags full of food would be crammed into the boot and backseat of our car. By the time everything was unpacked at home, the pantry would be chocka.
Mum went to the same store every time, simply because there weren’t a lot of choices. There was less fresh convenience, very few international products, and the idea of premium, food-to-go, or specialist offerings hadn’t been developed yet.
In the 1970s, that’s the way it was. New Zealanders didn’t have the variety we take for granted today, and certainly didn’t have multiple formats competing for different parts of their household needs.
It’s hard to imagine now because we live in a time where there is so much choice, many competitors for different parts of our grocery needs, and it’s all happened so quickly, particularly in larger urban areas where there is the population to support more stores, and diverse grocery offerings.
Grocery has always been an industry that moves fast. It responds daily in real time to how people live, what they value, and how they want to shop. That adaptability is one of the reasons it continues to attract new entrants with different ideas about how to serve customers.
In just the past few years, bulk-buy retailers like Costco are appealing to households looking for value at scale. Discount and general merchandise players such as The Warehouse are expanding their grocery ranges.
Specialist retailers are focusing on premium, organic, or hard-to-find products. Ethnic supermarkets are growing quickly, reflecting both changing communities and broader customer tastes.
Pharmacies like Chemist Warehouse and Bargain Chemist have also become part of the mix, capturing a share of everyday spending that might once have sat elsewhere. This is why we see households shopping over five times a week in three to four different brands as the real level of competition for the grocery budget.
Each of these businesses is doing something slightly different, and collectively they are giving customers more options about where and how they spend their grocery dollar. And like our owners, there has not been a barrier to entering and having a go, it just needed them to take the risk and invest their capital and have a go.
This choice is changing the way people shop. Unlike mum’s once-a-week, “main basket shop” approach, people today are shopping more often, and they are spreading their spend across a wider range of stores and channels, including online. Actively hunting for the best deals is part of that shift.
And with that choice comes something else: people can and do, every day, vote with their feet. There is a remarkable level of competition in a market the same size as Japan, with 135 million fewer people.
If there’s a sharper price, a better promotion, or a product they prefer down the road, they won’t hesitate to go there.
In any given four-week period, 93 percent of New Zealanders buy grocery items outside of a traditional supermarket. That might be a quick trip to a dairy, a visit to a butcher or greengrocer, a bulk shop at a warehouse retailer, or an online order to fill a gap.
That behaviour points to something important: grocery competition is not confined to a single format or a single type of store. It’s not just about more, bigger supermarket chains. It’s playing out across a broad and growing range of options.
The two New Zealand co-operatives and the Australian corporate supermarkets remain a significant part of that picture, but now accounting for around 77 percent of total food and grocery spend – which is less than a lot of people think. The remaining share - spread across convenience, specialty retail, hospitality-linked outlets, and pharmacies – continues to grow faster.
Within that, Foodstuffs’ co-operatives - which operate New World, PAK’nSAVE and Four Square stores - account for around 49 percent of the total market, across more than 500 family-owned and locally operated New Zealand stores.
Each of those stores is competing not just with other supermarkets, but with the full range of alternatives customers now have at their fingertips (and being individually owned, they compete hard against each other too).
It’s worth acknowledging that this level of choice is not uniform across the country.
In smaller and more remote communities, there may still be only one full-service supermarket. In those places, the priority is making sure stores remain viable - investing in them, employing local people, and supporting the communities they serve.
Our co-operative model – where warehousing, buying and distribution are shared among a number of local family-owned stores to achieve scale - plays an important role in making that possible.
We’ve long said that new investment follows population and demand, and it’s encouraging to see the extent to which that is happening in New Zealand’s larger centres. We earn a return of less than 4c in the dollar, in an industry that is capital-heavy, like an airline
What sits underneath all of this is a country that is becoming more diverse, in its people, its tastes, and its expectations. The grocery sector is reflecting that - evolving quickly, thanks to new entrants, new formats, and changing customer expectations. People have more choices than ever before, and they are using them.
That is a sign of a market that is active, responsive, and competitive - and it’s a good place for it to be.
By Chris Quin, CEO, Foodstuffs North Island
