Election 2023: Labour wants to help bring new supermarket competitor to New Zealand

It wants to go further than it has already.
It wants to go further than it has already. Photo credit: Getty Images.

A re-elected Labour Government could support new grocery retailers trying to break through in the New Zealand market by providing financing, making regulatory changes or making land available.

The party wants to proactively remove barriers to potential retailers to help with increasing competition in the grocery sector and bring food prices down. The Labour Government has already taken several actions - like setting up a Grocery Commissioner and establishing a code of conduct - after the Commerce Commission found a lack of competition in the sector.

It announced on Monday that if re-elected, it would invite potential new entrants to the market and others wanting to increase their scale to "express their interest in establishing new or expanded supermarket offerings". 

"We will then work with these selected potential supermarkets to establish the tools, resources, and rules they need to become established and in turn, ramp up competition in the sector," a Labour policy document said. 

"We will provide assistance to a credible chosen supermarket competitor to enter or expand their presence in the New Zealand market, through help such as finance, land availability or regulatory changes, incubating innovation in the sector and accelerating a competitive market for groceries."

It said the addition of Aldi to the Australian grocery market has had a positive effect there on competition and prices. 

"The arrival of Costco into New Zealand last year has created growing demand for their offering in Auckland, with moves to expand to other parts of the country.

"We have seen retailers such as The Warehouse expand their grocery offerings following the Government response to the grocery market study, and become a price-setter in the industry in key lines such as butter and Weet-Bix.

"These are the kind of actions we want to see more of, and Government-backed facilitation will do just that."

Labour said the power of the current supermarket duopoly of Woolworths NZ and Foodstuffs made it hard for new players to break through.

"Existing players generally have access to the best land and locations, the best-equipped stockrooms and well-established loyalty schemes and customer bases, which can act as inhibitors to greater competition."

In a statement, Labour's Commerce and Consumer Affairs spokesperson Duncan Webb said the party knew it was "tough right now for many people and the high cost of living isn't helping".

"The inquiry we ordered into competition in the grocery business showed the two big companies who control the grocery industry in New Zealand were making excess profits of around $1 million a day. We need to go further than we have to date to force the type of competition shoppers overseas experience."

Pierre van Heerden, the former head of Mojo Coffee, was earlier this year appointed as New Zealand's first Grocery Commissioner. He is tasked with keeping the current supermarket duopoly honest and blowing the whistle on any suspected issues. 

On top of setting up the Commissioner, Labour has also required major grocery retailers to open wholesale offerings so other grocery retailers have direct access to a range of wholesale groceries at competitive prices.

Restrictive land agreements that locked new entrants out of the best locations have also been banned.