Monopoly Watch New Zealand (MWNZ) and the Grocery Action Group (GAG) said that the pathway to cheaper groceries and improved competition outcomes for consumers looks clearer today.
The Commission's 2022 market study into the retail grocery sector raised structural separation as a potential remedy for a market it found was not delivering competitive outcomes for consumers. Until now, that has remained a live idea without a costed, mechanical answer to ‘how’.
The latest announcement committing to the purchase of 120 existing supermarkets and the establishment of new distribution centre capacity is the first proposal MWNZ and GAG have seen that goes directly at the actual constraint.
The right target: distribution, not store count
MWNZ’s research has consistently pointed to distribution infrastructure, not shelf count, as the structural bottleneck in this market. The Commission’s own analysis has found evidence of overbuild in store numbers and floor space across the sector, which means the answer was never going to be building more supermarkets.
This proposal reflects that: it targets the distribution centres and distribution economics that actually determine whether a new entrant can compete, rather than adding storefronts to an already oversupplied retail footprint.
Five areas the announcement puts into sharper focus
Beyond the headline divestment mechanism, MWNZ and GAG said the announcement has sharpened debate on five consumer-facing issues:
- Data property rights: Consumers’ own shopping and loyalty data should remain theirs to control and share, rather than becoming a proprietary asset that entrenches the advantage of whichever retailer collected it first.
- Nutrition competition: A genuinely competitive grocery market should reward retailers for competing on the nutritional value of what they sell, not only on headline price.
- Sustainability competition: Waste reduction and supply chain sustainability should be a dimension retailers compete on, rather than a cost each incumbent can pass through unchallenged.
- Māori stewardship of assets: Any restructuring of grocery retail and distribution infrastructure is an opportunity to embed genuine Māori governance and stewardship in the ownership of the resulting assets, not an afterthought to be addressed later.
- Commerce Commission power and funding: A structural remedy is only as effective as the regulator's capacity to monitor and enforce it. This announcement rightly pairs the structural change with a commitment to strengthen the Commission’s powers and funding.
“What makes sense here is that this isn’t policy people arguing for more supermarkets, when the Commission has already shown this market is overbuilt on stores and square metres," said Tex Edwards.
“The proposal goes to the actual heart of the problem: distribution centres and the economics of distribution. That's the structural constraint we've been pointing to for years, and it's the first time we've seen a mechanism that addresses it directly rather than play around the edges.”
MWNZ and GAG’s focus from here during the election season is on the evidence, not the politics: testing the published proposals, their cost assumptions, their implementation mechanics, and their likely effect on consumer outcomes.
"Everyone agrees we have a problem: that is, Kiwis are paying too much for their groceries; what today presents is a plausible answer to bringing those prices down,” said GAG chair Sue Chetwin.
Rather than meaningless discussion about detail and the fantasy of building yet more supermarkets with an easier Resource Management Act and Overseas Investment Office approval path, when it’s been proved there is no business case for more supermarkets.
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