Does Napier need another supermarket? The two Countdown supermarkets in Napier. Photo / NZME
Does Napier need another supermarket? The two Countdown supermarkets in Napier. Photo / NZME
The draft commerce commission report into competition in the retail grocery sector is being welcomed by Hastings and Napier District Council mayors, for different reasons.
The report, published on Thursday, found that competition was not working well for consumers.
In November 2020, the government asked the Commission to look atwhether competition in the $22 billion a year grocery industry was working well and, if not, what could be done to improve it.
The Commission's draft findings are preliminary and subject to consultation prior to its final report being published in late November.
Commission chair Anna Rawlings said the preliminary view was the core problem was the structure of the market.
"In competitive terms, the major retailers, Woolworths NZ and Foodstuffs, are a duopoly, and while there is an increasingly diverse fringe of other grocery retailers, they have a limited impact on competition," Rawlings said.
"This is because they are unable to compete with the major grocery retailers on price and product range in order to satisfy the widespread consumer demand for a main shop at a single store."
Hastings mayor Sandra Hazlehurst she welcomes alternative supermarkets locating in Hastings. Photo / Paul Taylor
Hastings mayor Sandra Hazlehurst the direction of the commissions draft report on competition within the grocery sector, was welcome in the community.
"There are many families in our district who are currently facing increasing costs such as high housing rents and mortgages as well as struggling with the affordability of healthy food," she said.
"Our council welcomes alternative supermarkets locating in Hastings which would create a different shopping experience and hopefully in turn lower food prices.
"We make provision in our District Plan for suitable sites for supermarkets."
The report's findings were concerning for Napier mayor Kirsten Wise.
"The findings of the draft report are concerning, particularly when we know many of our residents are struggling with the increased costs of living across many areas, not the least of which being ever increasing market rents and large mortgages," Wise said.
"I look forward to seeing what the government does with this report from the Commerce Commission, and that it leads to the best outcomes possible for our community."
As a grower and supplier Yummy Fruit Company general manager Paul Paynter said the report's findings were "too harsh" about supermarket's treatment of suppliers.
"Major supermarkets are friendlier to suppliers than they used to be," he said.
"Supermarkets here do have a limited amount of competition, so there's no real drive to keep prices cheap.
"If they bring in three players, it's still probably not going to change the dynamic a whole lot."
He said the report process would create discussion and debate.
"There is a power imbalance between smaller suppliers and the gigantic supermarkets. There are some young Turks out there that are a touch too radical," Paynter said.
"In the end the report will create a better world, though not dramatically better."
He said supermarkets quite often bore the brunt of consumers' scorn for hiking up prices, but they were not all to blame.
"We've had an increase in labour cost, with increases in minimum wage, and the dire shortage of labour in the country is starting to bite," he said.
"In the first three months of this year our wage bill has been $2 million more than budget. It's the cost of labour and poor productivity.
"I haven't got a single finger pointed at supermarkets for that problem, I have one pointed at the government.
"You have to wonder whether it's the tyranny of the supermarkets or deficiencies of the government that is the causing the problem."
