Foodstuffs working to make wholesale groceries available to co-op non-members

Photo / Foodtsuffs

By RNZ

Foodstuffs is starting moves to open a wholesale grocery operation to competitors.

The company is asking rival retailers that might want supplies to get in touch so it can assess demand.

The two major operators - Foodstuffs and Woolworths - are under pressure from the Government and smaller retailers to open up the wholesale grocery market to bring greater competition in the supermarket sector.

Foodstuffs - which operates New World, Pak'nSave, and Four Square chains - North Island general manager Chris Quin said wholesaling groceries to non-members was not going to be easy.

"There's a lot to work through to make this offer work well for retailers who aren't co-op members, but we're building it with urgency.

"Wholesaling groceries to retailers who aren't members of our co-op isn't as simple as opening the doors of our distribution centres and letting trucks roll up."

Quin said it would be asking major suppliers if they would supply wholesale grocery products to non-members on the same terms as Foodstuffs' co-op members get, while it had already had four expressions of interest from possible customers.

He said supplier cost prices made up the biggest proportion of the shelf price "so willingness to work with us on this is critical. For each dollar on the supermarket shelf, supplier costs make up 68c".

Quin said Foodstuffs had existing technology infrastructure and processes which meant it was not starting from scratch.

The Government has said it will move to ensure competition in the wholesale grocery sector if the two major operators do not make progress, while it has already moved to change the law to stop the big two from imposing restrictive covenants on properties to thwart competition.

The two chains have already said they were ready to sign up to a code of conduct, which would provide better and more even-handed treatment of rival retailers as well as to food suppliers.

Meanwhile, Quin said it has been doing what it can to hold down food prices with prices on its goods rising 4.7 per cent in May compared to a 6.8 per cent food price inflation.