Why didn’t Costco expand out of Auckland? That’s the crucial question as Nicola Willis woos supermarkets
Wednesday, 27 August 2025
The Government is opening a “express lane” for supermarket developers looking to set up shops in New Zealand. But will that drive down your grocery bill? Political reporter Glenn McConnell explains.
ANALYSIS: Finance Minister Nicola Willis has laid out a sensible plan to try and entice a third national supermarket chain into the country, but it is far from certain whether it will work.
That uncertainty hangs over the coalition Government like a thunderhead. Cost of living pressures in 2023 saw the coalition Government elected, but if they are unable to reduce those costs then they will have a weak argument for re-election when they pitch to voters next year.
Similarly, while Willis was upbeat about the supermarket measures - she did not go so far as to promise, guarantee, or say with any certainty that they would actually work.
“Choosing to invest in a new supermarket is ultimately a commercial decision for individual businesses to make. All sorts of factors will influence their thinking. The Government is not proposing to fund them,” she said.
She said the Government would be “monitoring closely to see whether new entrants use these measures”. And if they don’t? Well then, she said the Government may need to consider “specific structural options”.
The “specific structural option” is the direct attack against the Foodstuffs/Woolworths duopoly. It would be to forcibly break it into separate parts. And Deputy Prime Minister David Seymour has effectively ruled that out. That nuclear option is not happening this side of the election.
The coalition has been able to find consensus on the need to “cut red tape”, roll out the “welcome mat”, and, as Willis said, turn around the “big fat stop sign” to show supermarket developers a “big fat go sign”. But even Labour, on Wednesday, could agree to all of that.
When Barbara Edmonds came out to respond to Willis’ announcement on Wednesday, it was a short press conference where she effectively shrugged and said ‘get on with it’.
“The announcement around resource consents and fast tracking, that was actually a recommendation in the 2022 Grocery Commerce Commission Report. Labour had started the groundwork for that,” she said.
The Government branded that fast-tracked resource consent an “express lane”, allowing supermarkets which could prove they were increasing competition to get a quick approval. Willis said it was taking up to four years, but usually 18 months, to get paperwork done to build a supermarket.
She also said the Government would look to stamp out “predatory pricing” from the duopoly, and make it clear in the Overseas Investment Act that New Zealand really wants new supermarkets to open here.
But if all of that doesn’t work, the Government may need to consider other more radical solutions. The rising of cost of living must be brought under control.
Chief among the cost pressures are basic necessities, grocery staples like butter, which is 42.2% more expensive since this time last year, and mince (up 15.6%).
New Zealanders are rightly outraged that they are being rinsed at the checkout for buying the very products New Zealand is famous for exporting.
Bizzarely, Costco - the American megastore - has managed to drive down the cost of New Zealand butter and New Zelaand mince in West Auckland. It opened in 2022 and, as the Commerce Commission noted in 2024, it led to supermarkets in West Auckland lowering their prices.
Willis said she hoped this “express lane” could repeat the Westgate effect elsewhere.
“When you get these competitor brands turning up, whether it's Aldi, whether it's Costco, everyone pulls up their socks. Because the thing is, every supermarket has choices about their margins,” she said.
The question is, why didn’t Costco expand?
Its only New Zealand site has been hugely popular. Three years after its arrival, there are still traffic jams caused by people funnelling in to get their cheap butter.
Willis said Costco had raised concerns with the Government about how hard it had been setting up that Westgate shop.
“They laid out really clearly the headaches they faced when they opened their store in West Auckland. They compared our processes with those in Australia and pointed out how much more expensive and cumbersome they are here,” she said.
She said the “express lane” was designed to make that process more seamless, faster, and cheaper. That’s good news for anyone wanting to start a supermarket to compete with Foodstuffs and Woolworths.
But it doesn’t quite explain why Costco hasn’t set up another New Zealand store.
Because in Rolleston, near Christchurch, the Selwyn District Council has already issued resource consent for a business it thought was going to be Costco. That happened back in 2022.
Rolleston Industrial Holdings Limited was given consent for a mega-store which was widely expected to be Costco. At the time, then Commerce Minister David Clark received a briefing which stated Costco had permission to set up in Rolleston.
Publicly, Costco never confirmed or denied its plans to set up in the South Island. It only ever said it was looking at options across all of New Zealand.
While the stories about four-year-long waits to get approval to set up a supermarket are alarming, the consenting process is not the only barrier. For Costco, the third largest retailer in the world, there appeared to be another issue.
What was that? We asked Costco, but it didn’t respond after the minister’s announcement on Wednesday.
Hopefully it’s taking note of the Government’s eagerness to get some supermarkets built, unlike Aldi and Lidl - which just never responded to the Government’s invitations to chat about setting up in New Zealand.