The Warehouse 'seriously considering' move into grocery sector with low priced items

Monday, 11 April 2022

Basic breakfast staples at The Warehouse are cheaper than at supermarkets.

Buying grocery staples from The Warehouse could save shoppers money - and the bargain retail giant is considering stepping back into the grocery sector in a bigger way.

The bargain retailer has sold essential grocery items including health and beauty and pantry staples since 2006. But its initial attempt to seriously take on the supermarket duopoly with “one-stop” Warehouse Extra stores was initially unsuccessful due to a lack of scale.

Some items sold at The Warehouse now are significantly cheaper than supermarkets. A comparison of basic breakfast items found they were $8 cheaper at The Warehouse compared with other retailers.

A 500g block of Tararua butter was $4, while at Countdown it was $7.30, or $6.79 at New World.

Commerce Commission chairwoman Anna Rawlings and commissioner John Small insist proposed supermarket industry reforms will make a difference, even though they are making no promises they will lead to a third entrant.

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A 1.2kg box of Weetbix was $5, compared with $7.80 at supermarkets.

A 900g packet of Harraways Oats was $3.50 at The Warehouse and $7.70 for a 1.5kg packet at Countdown, while Greggs special blend instant coffee was $1, compared with $2.49.

Chief executive Nick Grayston said it had some of the cheapest prices in the country.

“We work hard on building direct relationships with our partners and suppliers to make sure we can offer the best range of affordable products for our customers.”

The Warehouse had also launched its own brand range called Market Kitchen, which included products such as flour, dried fruit, nuts and sauces, with wider range of new products to be launched in the coming months.

The Warehouse stocked 200-300 essential items which it had assessed as being vital for Kiwis and it tried to keep the prices low, Grayston said.

The essentials also included children’s clothing, workwear, bedding, blankets, heaters and kitchen appliances such as toasters.

Grayston said the recent Commerce Commission report on supermarkets was very clear that competition was not working well and the business was “seriously considering” a move into the sector.

“So we are interested to see the action that the Government will take that will make a difference to New Zealanders and allow other players like us to enter the grocery market.”

The Warehouse would become involved in the sector if there was access to supply on fair commercial terms and a regulator that was appropriately resourced to prevent anti-competitive behaviours.

“We are also interested in whether the Government may consider a move to mandate the major grocers to provide a wholesale solution and supply chain for supply to new grocery retailers, with a government agency installed to govern the offer.

“This would go a considerable way to creating a level playing field for new grocery operators, giving them the ability to use other elements of the retail mix to determine sources of competitive advantage.”