Coronavirus: Supermarket spending up 60 per cent in preparation for lockdown

Monday, 30 March 2020

The Government has created a reporting mechanism, pricewatch@mbie.govt.nz, so that members of the public can flag instances of price gouging by retailers.

Spending in supermarkets and dairies soared in the week before the coronavirus lockdown as Kiwis got ready to hunker down during the pandemic.

New Zealanders spent almost 60 per cent more cash at the tills in the seven days to March 22 compared to the same time last year.

Panic-buying has occurred following most major announcements by officials on coronavirus, despite Government assurances that supermarkets are an essential service and will not have supply issues.

Shoppers flocked to the supermarkets in recent weeks to stock up in the wake of the coronavirus crisis.

There had been warnings the demands on supermarket supply chains from such spending could trigger price increases, but Prime Minister Jacinda Ardern moved to shut down the possibility of price gouging on Monday by creating online form to report the practice.

There was controlled entry At Albany Pak 'n Save in Auckland last week, with police called at one point.

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* Coronavirus: Shoppers spending large in supermarkets as politicians call for calm**

Christchurch NZ senior economist Peter Fieger said it was an 'unprecedented situation' in the shopping landscape.

Despite efforts of political and retail bosses, Kiwis have flocked to supermarkets more than usual in recent weeks.

'Ultimately, if there continues to be increased shopping it will have an impact on prices - supply and demand will ultimately force prices up,' he said.

'There may potentially be supply line issues that certain goods, those coming from abroad for instance, will be in short supply, which will ultimately potentially also drive up prices. Where this is going to go is anyone's guess, really.'

In the week to March 22, consumer spending across the country was up 16.5 per cent, despite transaction numbers only rising 0,4 per cent – suggesting people were stocking during trips to the supermarket.

One supermarket in Christchurch reported shoppers spending up to $1500 during a single visit, and politicians and retail leaders have repeatedly appealed for calm and urged people not to bulk-buy.

'As expected, New Zealand-wide supermarkets and dairies saw an increase of spend of 59 per cent from the same week last year, and other food was also up, by 45 per cent,' Fieger said.

'A similar picture is painted for Christchurch for the week to March 22, with total consumer spending up 12 per cent and spend on food, liquor and pharmacies up 53 percent on the same week last year.'

General spending in Christchurch in the same period was up 13 per cent.

The effect of coronavirus on the region's shopping psyche became apparent in February, when spending on groceries and liquor grew seven per cent to $160 million, compared with the same month in 2019, much higher than the two per cent annual increases of both December and January.

Despite the rush, shoppers have often observed rules about social distancing.

'Increased pressure on supermarkets due to panic buying is likely to have an effect on spend, employee numbers, share prices and more,' Fieger said.

Economists found:

- Between February 2019 and February 2020, $2 billion was spent on groceries and liquor – 36 per cent of all spend in the greater Christchurch region.

- Spend in supermarkets in the area grew 7 per cent in February compared to the 2020 monthly average of 3 per cent.

Supermarkets and groceries employed 7360 people in Christchurch last year, representing three per cent of all employment in the area, the same proportion as nationally.

'As supermarkets grapple with a surge in demand created by Covid-19 the demand for staff is likely to increase which is likely to be reflected in the numbers in the coming months,' Fieger said.

'With an increase in demand for supermarket goods and increased input prices for suppliers due to pressure on logistics means there is also a risk that prices for supermarket goods will rise.'

Fieger also said that excessive buying and hoarding did not yet appear to have led to significant increases in the value of major supermarket businesses.