Two supermarkets in Napier. Another Countdown store is located close by. Photo / Warren Buckland
Two supermarkets in Napier. Another Countdown store is located close by. Photo / Warren Buckland
More competition within the supermarket industry would mark a "win-win for everybody" in Hawke's Bay but a shake-up to the industry is still a long way off.
The Government announced this week a string of initiatives largely aimed at encouraging more competition in the supermarket industry, to help make groceriesmore affordable.
It followed a report by the Commerce Commission earlier this year which highlighted the current duopoly - of Foodstuffs and Woolworths NZ - was "not working well".
That duopoly refers to Foodstuffs (New World and Pak'nSave) and Woolworths NZ (Countdown) owning the major supermarkets in New Zealand.
The commission's report estimated Woolworths NZ and Foodstuffs were making excess profits of about $430 million a year - more than $1m a day.
The Government's plans to encourage more competition were dealt a major blow this week when it was revealed that Aldi, a major discount supermarket active in Australia, has no plans to enter the New Zealand market.
That was despite Deputy Prime Minister Grant Robertson claiming the company was interested.
It comes amid high inflation and a living-costs crisis which is forcing more and more people to seek help through food donations in Hawke's Bay.
A charity, Nourished for Nil, which gives out food donations to hundreds of people each week in Hastings and Napier, says it has seen a clear increase in people seeking help during the past few months, including families on a double income and pensioners.
Nourished for Nil serving food packages. Photo / Warren Buckland
"Inflation is hitting people really hard," Nourished for Nil founder Christina McBeth said.
"People are saying 'do I spend money on the car or do I go to the supermarket', because they have to cut somewhere."
McBeth said increased competition in the supermarket sector would certainly help reduce costs for people.
"Absolutely. I think it is a win-win for everybody," she said.
"I think everybody is bound to benefit from some competition in the supermarket field."
Nourished for Nil gives away food that would otherwise go to waste, and supermarkets are among the groups that donate to the non-profit.
Hawke's Bay financial adviser Nick Stewart, of Stewart Group, said reports had been released previously by the Government aiming to increase competition in the supermarket industry.
The Government is actively trying to encourage more competition in the supermarket industry. Photo / Warren Buckland
However, he said while those reports and initiatives like the ones announced this week had good intentions, there was a big problem.
"In reality you can only increase competition by having more market participants."
He said no new major supermarkets were likely to come to Hawke's Bay for a long time yet to enhance that competition.
"Increased competition is really important but it will happen well down the track.
"For example, Costco, and if one day we do get Aldi in, they will be in the major centres first because logistically that is where one would focus," he said.
"For someone like us in Hawke's Bay we are one of the largest regions by land mass, and we have the twin cities with lots of little support villages and towns around it.
"We would be last cab off the rank, unfortunately."
He also said while much had been made of supermarkets' excess profits, rises in the minimum wage and high inflation for rent meant their prices had to increase.
"A huge portion of their expenditure is rent for their premises and staff wages. They are the two sectors that have had huge inflation in recent times."
New World (owned by Foodstuffs) currently has plans to build another supermarket in Hawke's Bay, to be opened in Flaxmere.
