Countdown's online sales jump 28% in year marked by Covid

Wednesday, 8 December 2021

Commerce Commission chairwoman Anna Rawlings presents the commission's draft report into the grocery sector in July.

Supermarket group Countdown’s annual profit has edged up to $205 million as the Commerce Commission mulls what measures it might take to improve competition in the industry.

Results posted with the Companies Office by Woolworths NZ, which trades as Countdown, also showed a big swing towards online orders during a year marked by Covid-related precautions in its stores.

Countdown’s profit for the year to June 27 was up 1.5 per cent, or $3m, the results showed, consolidating a 10 per cent profit rise in the year prior.

The higher profit resulted from the price it paid for groceries falling at a slightly faster pace than its own revenues declined.

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Countdown’s online orders are up 28 per cent and in-store sales are down 4 per cent as Covid speeds up changes in supermarket shopping habits.

The Commerce Commission is making its own calculations of the company’s profitability and that of rival Foodstuffs, which are based more on measures of their return on investment than their accounting profits.

Countdown’s online sales – which include both home delivery and ‘click and collect’ – jumped by 28 per cent to $861m, accounting for just over 12 per cent of the supermarket group’s total revenues of $7.1b, while the value of goods sold through its tills fell by $241m, or 4 per cent.

The figures suggest Countdown continues to be well-placed to benefit from the trend towards online grocery shopping, which both Countdown and rival Foodstuffs have argued could place an additional competitive restraint on their businesses.

A Countdown spokeswoman said that it saw more customers move their shopping online when communities went into lockdowns but it was also experiencing good underlying growth in online sales as a result of its ongoing investment in its digital and e-commerce channels.

The latter included the opening of its Auckland “e-store” which is dedicated to online sales.

The commission is expected to soon release what may be the final competing arguments from the chains and from critics of the supermarket duopoly, as they have their chance to respond to points made during a seven-day conference in October.

The commission is expected to announce by early March at the latest whether it will recommend the Government breaks up their wholesale and retail businesses to help pave the for a third competing chain, or instead recommends some lesser interventions.

Foodstuffs North Island dug in its heels on major structural reforms on Tuesday, with chief executive Chris Quin stating that its final submission would include additional information and analysis to show why the separation of its wholesale business or forced divestments of its retail stores were not justified.

“On profitability, we have provided additional information with support from expert economists to demonstrate that our returns are less than half of what the commission’s draft report states,” Quin said.

Foodstuffs continued to maintain that the commission should have compared the prices of groceries overseas using a measure rejected by the commission in a draft report in July that adjusted prices to take into account the local purchasing power of different currencies.