The Commerce Commission has released its third Annual Grocery Report and second Supplier Survey Report, providing a temperature check of grocery competition and supplier sentiment.
Grocery Commissioner Pierre van Heerden said that reports confirmed what many Kiwi shoppers have been feeling at the checkout, with reforms needing more time to bed in to see significant improvements in the market.
“The major supermarkets have kept hold of over 80 percent of the national retail market, margins and profitability were relatively flat, and retail prices increased. There are some regional changes, particularly in Auckland, but nationally, things have stayed consistent,” he said.
“Regulatory changes are starting to bed in, with the environment becoming more enabling for the entry and expansion of other grocery retailers, which will support an increase in consumer choice.”
The most significant being the introduction and refinement of the Grocery Supply Code, and the ongoing removal of restrictive land and lease covenants. These regulatory changes have made it easier for retailers competing with the major supermarkets to secure suitable land and a reliable supply of grocery products.
While it will take time for other grocers to significantly change the industry-wide metrics, the Commission has observed that new stores have bene opening and several speciality grocers have been expanding their footprints, particularly in Auckland.
“We’re seeing some new, smaller, and alternative retailers grow their range. Greengrocers and butchers are incorporating new product categories into their offerings, and stores that aren’t traditionally grocery stores have seen their sales of groceries increase significantly,” he added.
“I know many people are eager to support small and Kiwi-owned suppliers and grocery retailers, and changing up your buying habits is a good way to do this. Many new retailers start with a smaller offering, but with support from consumers, they can grow to buy from more suppliers and offer a bigger range.”
We know the weekly shop may be the only option for some customers, but if you’re able, mixing up where you get your groceries from will help competitors grow.
The Commission’s scrutiny of the sector is essential to identify where changes could be made to improve competition and ensure that barriers to entry, such as access to land and product supply, don’t re-emerge.
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