Grocery Group Calls for Breakup of Supermarket Duopoly to Lower Prices

Consumers may not experience lower food prices until the government addresses the ongoing supermarket duopoly, according to the Grocery Action Group. The coalition has announced plans to expedite the inclusion of new supermarkets, aiming to foster competition in the grocery sector.

Sue Chetwin, chair of the Grocery Action Group, stated that while expanding options is a positive step, the current market structure keeps prices elevated. “The problem isn’t a lack of physical bricks and mortar supermarkets; the problem is the ownership of them,” she explained. Chetwin emphasized that the duopoly formed by FoodStuffs and Woolworths maintains high prices. Without the emergence of a third significant operator, consumers will continue to face steep grocery bills.

The comments follow Nicola Willis, the Economic Growth Minister, announcing that Costco has expressed interest in expanding its operations beyond its sole store in west Auckland. While Chetwin acknowledged that Costco has made a “small effect” in the region, she noted that its presence alone is unlikely to provide sufficient competition. “While we would welcome Costcos being in other centres in New Zealand, you won’t see them in a Blenheim or Te Anau,” she said. Chetwin believes that Costco will likely focus on larger urban areas with significant populations, limiting its impact on overall grocery prices.

Chetwin also welcomed the government’s discussions regarding potential market-led solutions for the duopoly. She pointed out that former National Minister Stephen Joyce has been appointed to the FoodStuffs board, where he has previously suggested that splitting up PAK’nSAVE and New World could resolve the supermarket pricing issue.

The government is currently conducting a cost-benefit analysis of various restructuring options, although no timeline has been provided for when Cabinet will evaluate these proposals. Chetwin expressed cautious optimism, stating that consumers’ expectations for price relief could not be much lower given the ongoing pressures of living costs. “Willis does appear to be taking the issue seriously,” she remarked, noting the minister’s commissioning of reports on the matter.

Despite these developments, Chetwin acknowledged that meaningful change takes time. “While I would like them to happen overnight, they do take time, and she has committed to moving this as fast as she can,” she stated.

For now, shoppers hoping to reduce their grocery expenses have limited options. Chetwin suggested focusing on seasonal shopping and utilizing local produce markets as viable strategies to lower costs in the interim.

As discussions continue, the Grocery Action Group remains focused on advocating for a balanced market that can ultimately benefit consumers.