Buy-up could be boon to shoppers

Chris Gardner
Shoppers at Hawke's Bay's Woolworths and Countdown stores may get lower grocery prices after an Australian supermarket giant struck a $2.67 billion deal to swallow the chains.
Cheaper petrol, discount stores and large supercentres - direct competition for discount retailer The Warehouse - are also possibilities after the deal, which creates one of the world's biggest food operators.
The Australian Woolworths company, until now unrelated to the New Zealand supermarket which shares its name, yesterday agreed to buy local supermarket operator Progressive Enterprises from its Australian owner Foodland, with a number of Australian supermarkets.
Progressive owns Woolworths, Countdown and Foodtown supermarkets, and the SuperValue and FreshChoice franchises. It has Woolworths supermarkets in Napier and Waipukurau, as well as accompanying convenience stores at Gull petrol stations in Napier and Hastings. It also owns Countdown branches in Napier and Hastings.
Together the chains employ about 4000 workers and last night their union said talk of the deal had unsettled staff.
Local management refused to comment on the effects of the the deal on local shoppers, when contacted by this morning. Progressive Enterprises managing director Richard Umbers was unable to talk either.
Woolworths chief executive Roger Corbett said his company would be the biggest food operator in Australasia, selling about $37 billion of groceries and other goods a year.
With huge buying power and the introduction of Woolworths' efficient technology and distribution systems to its new business, Australian analysts said the deal meant grocery prices would fall.
Mr Corbett said the takeover would bring benefits to local shoppers.
"This will result in a more competitive market in New Zealand - to the advantage of New Zealand consumers."
But Consumers Institute chief executive David Russell said the move could be a double-edged sword for shoppers.
Woolworths was known for its aggressive pricing, which could increase competition and knock dollars off the shopping bill. But its ability to do that was created by dealing with a limited number of suppliers. This could see brand choice reduced.
"Its really a wait and see situation, but the clout Woolworths has is potentially good news in terms of prices."
The "wildcards" of The Warehouse and German discounter Aldi were also likely to impact on the competitive nature of the traditional two-horse grocery business in New Zealand.
Mr Corbett said the new Woolworths chain might also offer cheaper petrol. Although Progressive and its competitor, Foodstuffs, already offer discounts on petrol for shoppers, those schemes are still very small. Woolworths had found the widespread petrol discounting scheme it operated in Australia appealed to customers there.
"I daresay it will have some appeal in New Zealand," Mr Corbett said.