Foodstuffs has reaffirmed its support for the Commerce Commission’s vision.
To achieve a more competitive, transparent, and fair grocery market in New Zealand, the co-ops want to recognise the efforts of their 39,000 team members in driving progress toward these goals.
The Commission’s Annual Grocery Report reiterated its goal of increasing grocery competition and outlined various regulatory options.
“We fully support the Commission’s vision of a grocery sector that delivers value to New Zealanders at the checkout, keeps food pricing under control, and makes sure this small market is working as well as it can for New Zealanders,” said Chris Quin, Chief Executive of Foodstuffs North Island.
“In two years, our industry has transitioned into a highly regulated sector where we are increasingly scrutinised and held accountable. We’ve responded quickly and comprehensively to a new and complex landscape.”
Work continued across the co-ops’ 500+ New Zealand stores, their supply chains and support centres to deliver the best value to customers, and Quin said that they had been making good progress.
The Foodstuffs co-ops have kept grocery prices below Stats NZ’s official rate of food price inflation for 24 of the last 27 months, based on a basket of goods comparable with Stats NZ’s basket. This was despite the grocery supply chain facing its highest cost pressures in 30 years.
Mary Devine, Chief Executive of Foodstuffs South Island, added that people have risen to the challenge, done incredible work, and delivered significant change. Progress in keeping prices below food price inflation or expanding wholesale supply to other retailers has demonstrated the sector’s commitment to its shared objectives.
Since March this year, Foodstuffs' average rate of retail price increases has remained under one percent year-on-year for that basket.
New Zealand now has one of the OECD's lowest food price inflation rates. This achievement has been helped by the co-ops' commitment to absorb the higher cost increases from suppliers, typically one or two percent higher, rather than passing the difference on to consumers.
In addition to its pricing efforts, Foodstuffs has also taken steps to improve transparency and remove barriers to competition.
This includes reporting on the overall rate of supplier cost increases via the Infometrics-Foodstuffs NZ Grocery Supplier Cost Index (GSCI), offering wholesale supply to other retailers, supporting small suppliers and innovative new products, investing in new stores and innovations, and consistently delivering value and pricing transparency through initiatives like PAK’nSAVE’s Top 50 Price Check.
Quin supported the Commission's plan to explore changes to planning rules and remove barriers for investors to increase competition. He believed that new investment in the grocery sector was the most effective path to substantially increasing competition.
“It’s important that investors, in New Zealand or overseas, see a market that is receptive to innovation and technology, has few barriers to entry and where investors see an attractive level of opportunity and financial performance.”
The Commission’s report clarified that more work must be done. Foodstuffs have been committed to controlling food price inflation and working towards a strong, fair and competitive grocery market.
