Countdown in $500m expansion drive as food prices fall

Six Countdown stores are to close across New Zealand. Waihi has already closed, Rangiora will follow but the others have not yet been named.

One of New Zealand's biggest supermarket chains is planning to spend $500 million on a big expansion plan, opening about three to four new shops every year for the next few years.

Dave Chambers, chief executive of the 184-store Countdown business owned by Australia's Woolworths, told about 500 people this morning in Auckland of ambitious plans.

But also he also noted how food prices were dropping.

"Last year, we opened eight new Countdown stores, two replacement stores and four new franchise stores. Over the coming three years we expect to open three to four new stores per year. We will also be accelerating our refurbishments of existing stores. Our total investment in New Zealand is planned to be around $500 million over the next few years and with a goal firmly in place to continue to grow our store numbers throughout New Zealand," Chambers told supermarket suppliers, gathered this morning at the Vodafone Events Centre in Manukau.

Chambers acknowledged a recent announcement saying six Countdowns would close.

"In New Zealand, I have undertaken our own review since returning and we identified six supermarkets that could be closed before the end of their lease terms. We had already planned to close one store this financial year, Rangiora Central, and that's because there's a brand new store around the corner, Rangiora East. With the other stores, we will work through the various commercial discussions that need to take place, and make announcements when we have more certainty," Chambers said.

Countdown is second only to the co-operative locally-owned Foodstuffs, whose brands include Pak'nSave, New World, Liquorland, Gilmours and Four Square.

Foodstuffs is also expanding fast and a new Pak'nSave is about to be opened in Tauranga but a string of store refurbishments are now under way. Foodstuffs is also about to launch a new on-line offering, although Chambers noted how Countdown had offered this for many years.

He also told suppliers how food prices were dropping.

"Countdown Supermarkets food prices showed deflation of 0.3 per cent, with lower prices across most categories," Chambers said of the 2016 financial year.

"Countdown tracks the prices of a basket of 100 of the most commonly purchased items in our supermarkets. Every month we report this to the market, and this basket continues to come down.

"As at July, the price of this basket was 1.9 per cent cheaper than a year ago and 3 per cent cheaper than the year before that. And it's not just us observing this effect. Statistics New Zealand reported a 1.3 per cent decrease in total food prices for the year to July, with grocery food down by even more than this," Chambers said.

Statistics NZ said that last year, fresh milk prices dropped 14 per cent, and breads and cereals dropped in price. Meat, poultry, and fish decreased 3.8 per cent and chicken prices were at their lowest level since January 2008, it said.