New Zealand's supermarkets will be the focus of the Government's second market study, launching on Tuesday, to ensure Kiwis are getting a fair price at the checkout.
"Supermarkets are an integral part of our communities and economy, so it's important to ensure that Kiwis are getting a fair deal at the checkout," Minister of Commerce and Consumer Affairs, David Clark, said in an announcement on Tuesday.
"Groceries are one of our most regular expenses, so we want to make sure pricing is fair. New Zealand has one of the most concentrated retail grocery markets in the world and there are indicators that competition in the sector has weakened over time."
The average Kiwi household spends roughly 17 percent of its weekly expenses on food, a statistic that continues to increase year-on-year.
This year has been particularly difficult for many New Zealand families amid the ongoing SARS-CoV-2 pandemic, the country plunged into two restrictive lockdowns to combat the spread of the virus. Businesses were forced to shut-up-shop, many unable to survive the stringent measures. A wage subsidy scheme was launched by the Government as employers struggled to scrape enough money to pay their staff.
In September, Statistics New Zealand estimated that one in 14 Kiwi workers expected to lose their job by the middle of 2021. A report by the department earlier this month showed the unemployment rate had risen to 5.3 percent in the September 2020 quarter.
"It's been a tough year for many Kiwis and launching this study is an early fulfillment of a Labour Party campaign commitment to make sure we're not paying more than we should during the weekly shop," Clark said.
Supermarkets were overloaded throughout the lockdowns, implemented in March and August respectively. Amid the uncertainty, Kiwis flocked to supermarkets in a panic-buying frenzy to store up on essentials - toilet paper in particular - leading to extended hours for workers and heightened pressure to maintain a continual supply of stock for concerned customers.
"I was impressed with the sector's measured approach to managing supply issues during the lockdown," Clark said.
However, he acknowledged claims of price-gouging during that precarious time, particularly around masks and hand sanitiser. A number of Kiwis alleged that supermarkets and other small businesses had attempted to capitalise on people's fears by intentionally raising the prices of in-demand products.
"While there were some allegations of price-gouging during this time, the study… isn't primarily about the conduct of supermarkets in relation to those concerns," Clark noted.
The analysis will look at whether the sector is as competitive as it could be, potentially leading to recommendations that could reduce the cost of the weekly shop.
Clark added that some of the country's supermarket chains have said there is a healthy degree of competition in the sector already, but the Government wants to test those claims.
Market studies are typically undertaken to improve consumer outcomes in industries where competition is suspected to be under par.
"If issues affecting competition are identified in the study into supermarkets, the Government will consider the necessary changes to bring about better outcomes for consumers.
"I look forward to seeing the outcome of the study."
The analysis, launching on Tuesday, follows the Government's market study into the retail fuel industry last year, which found motorists were paying high petrol prices due to a lack of competition. This led to improvements, including a move to make pricing more transparent by requiring fuel prices to be displayed on forecourt boards.
The Commission is required to publish its final report on the study by November 23, 2021.