Fast Track for New Supermarkets
The Government will remove barriers preventing competitor supermarkets from launching or expanding in New Zealand with a series of urgent legislative and policy changes Economic Growth Minister Nicola Willis says.
“We’re creating an express lane for new supermarkets to boost competition and deliver better deals for Kiwi shoppers.
“Earlier this year we ran a Request for Information (RFI) process asking what would help challenger supermarkets take on the current duopoly.
“The responses revealed widespread frustration with restrictive zoning, slow consenting, and cumbersome regulations that make it extremely difficult for new competitors to gain a foothold in the New Zealand grocery sector.
“In response to this feedback the Government has agreed to:
“The responses to the RFI revealed five prospective new domestic competitors and credible growth aspirations among several existing grocery retailers.
“Ultimately those businesses will make their own investment decisions about whether and when to launch new supermarkets – the Government’s policy changes are intended to give them more confidence to do so.
“We have been in talks with Costco about its plans to open more stores in New Zealand. Costco is a major international grocery player whose annual revenue exceeds New Zealand’s GDP. Their single West Auckland store has already markedly changed competitive dynamics in that local area and has provided a major export-pathway for New Zealand food producers.
“Costco has confirmed the Government’s express lane consenting approach will assist with their future expansion plans. They have also confirmed they can see opportunities for new stores to be built in New Zealand in the next few years.
“It is disappointing that other major international retailers such as Aldi and Lidl opted not to take part in the initial RFI. It’s possible that the changes we are announcing today will encourage them to take a more serious look at New Zealand.
“I note that many responses to the RFI reinforced the importance of work to ensure existing fair trading, grocery and competition legislation is adequately promoting the interests of consumers and effectively deterring anti-competitive behaviour.
“The Commerce Commission is progressing a number of enforcement actions under existing law and is investigating stronger protections for suppliers under the Grocery Supply Code.
“The Government has completed consultation on changes to promote consumer interests by strengthening enforcement and penalties under the Fair Trading Act. Potential changes will shortly be considered by Cabinet.
“Some respondents to the RFI argued that the only way to truly improve supermarket competition is for the Government to forcibly break up Foodstuffs and/or Woolworths due to their entrenched market positions.
“A decision to restructure the supermarkets is not a decision that would be taken lightly. It would be a significant intervention that would carry costs and risks that would need to be rigorously weighted against the potential benefits to shoppers.
“A cost-benefit analysis is underway on specific options for restructuring the duopoly and will inform future advice I intend to take to Cabinet on whether further legislative changes are required to improve competition.
“Our objective is a more competitive grocery market that delivers better prices and more choice for Kiwi shoppers. We remain open to potential market-led solutions that may be put forward by the major incumbents.
Notes to Editors:
https://www.beehive.govt.nz/release/express-lane-new-supermarkets