Consumer NZ outlines its wishlist for supermarket change

Monday, 7 March 2022

Commerce Commission commissioner John Small said in July last year that the regulator was not playing a game with supermarkets.

Consumer NZ is hoping the Commerce Commission directs supermarkets to stop discounts that are only available to loyalty cardholders and requires more monitoring of retail prices and supermarket margins.

The Commerce Commission will release its final report from its market study into the $22 billion groceries sector on Tuesday. Its draft report found a lack of competition was costing consumers.

Consumer NZ chief executive Jon Duffy said the release of the final market study provided a “once in a generation opportunity” to bring change in the sector.

“We’ve been campaigning for much-needed change in New Zealand’s highly concentrated supermarket industry.”

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Consumer chief executive Jon Duffy says the release of the final market study provides a “once in a generation opportunity” to bring change in the sector.

The draft report suggested a raft of potential changes, including the option of breaking up some players if required.

Consumer NZ has listed ten key areas of change.

“With only two main players there is a distinct lack of competition that is contributing to high prices and higher than acceptable profit margins,” Duffy said.

Consumer NZ submitted as part of the study, and highlighted what it believed needed to be done to fix the industry.

It had listed ten key things that could be implemented within the next year, Duffy said.

It wants a mandatory code of conduct and a Supermarket Commissioner appointed.

Duffy said collective bargaining on behalf of suppliers was needed, as well as requiring supermarkets to supply other retailers with groceries at competitive wholesale prices, and preventing supermarkets placing restrictive covenants on land use.

It also wanted a consumer information standard on supermarket price displays and promotions, prevention of supermarkets offering price discounts only to loyalty cardholders, monitoring of retail prices and margins, and increasing Fair Trading Act penalties for misleading pricing.

The introduction of mandatory unit pricing, which enabled consumers to quickly compare products of different sizes and brands in order to work out which one offers the best value, was key, Duffy said.

The Australian Competition and Consumer Commission already has a mandatory unit pricing for grocery retailers with more than 1000 squares metres of floor space who sell the minimum range of food-based grocery items and online retailers who sell the minimum range of food-based grocery items.

Mandatory unit pricing enabled consumers to quickly compare products of different sizes and brands in order to work out which one offered the best value.

It also had a voluntary Food and Grocery Code, which governs certain conduct by grocery retailers and wholesalers in their dealings with suppliers.

Aldi, Coles, Woolworths and Metcash Food and Grocery are signatories.

“We hope to see positive and impactful recommendations for change by the Commerce Commission tomorrow,” Duffy said.