Woolworths shows its data over claims Kiwis get cheaper groceries than Aussies, Brits

Friday, 16 May 2025

Woolworths wants New Zealanders to think they are getting a good deal on their groceries, however, it appears the supermarket giant thinks prices will have to rise so it can restore profitability.

“If you go to any country today, and you ask people are you paying too much for groceries, you're going to get an answer that says, ‘yes’,” says Woolworths New Zealand’s interim managing director, Pieter de Wet.

“Globally, it's such a big issue for people and every day you go into supermarket and you spend money it feels like you're spending too much money,” he said. “I completely get that.”

The supermarket boss was responding to disbelief at claims from both Woolworths and rival Foodstuffs that New Zealanders were getting a better deal on their groceries.

Woolworths claimed in a “public paper” on Friday morning last week that once sales taxes were removed (food in the UK and Australia is exempt from sales tax, unlike food in New Zealand), Kiwi supermarkets were cheapest.

Earlier in the week Pak‘nSave owner Foodstuffs claimed its prices were the lowest of any major supermarket chain in New Zealand, Australia or the UK.

She says shoppers have waited 'too long' for competitive grocery prices.

But most people appeared to be sceptical of the claims. An online poll from Stuff suggested around 85% of people believed New Zealanders paid more for groceries than Aussies or Brits, two countries with higher per capita incomes.

The Woolworths’ public paper was light on detail to back up its value assertions.

But de Wet said a much fuller version had been sent to the Government in response to its “Request for Information” (RFI) calling for parties interested in getting government help to set up a supermarket chain to take on the Woolworths and Foodstuffs (the owner of Pak‘nSave, New World and Four Square brands) to contact it.

In that was the data from a pricing exercise in the week of April 28 in which Woolworths collected prices from three major supermarket chains for a 20-item basket reflecting a typical household grocery shop.

The items were white flour, canned tomatoes, full cream milk, Royal Gala apples, carrots, beef mince, Weetbix, tea bags, white sandwich bread, full-fat block cheese, frozen peas, penne pasta, white sugar, salted butter, toothpaste, dishwashing detergent, shampoo, hand soap, toilet paper, and rubbish bags.

The supermarket chains were Woolworths, Coles, and Aldi in Australia; Tesco, Sainsbury’s, and Asda in the UK; and Woolworths New Zealand, Pak’nSave, and New World in New Zealand.

The prices used were shelf prices only, excluding loyalty or promotional discounts, with the prices converted to New Zealand dollars using the 12-month average exchange rate.

For each product, consistent pack sizes were used where available, and the survey prioritised nationally available consumer packaged goods (CPG) brands for packaged items, and supermarket-own brands for fresh food (e.g. apples, carrots, beef mince). Where branded alternatives were unavailable, own brand equivalents were used, specifically for rubbish bags in the UK and selected items at Aldi in Australia.

To address variation in available pack sizes, prices were normalised by unit volume, weight, or item count.

This is what Woolworths’ April price check looked like, with the green items being products on which sales taxes are not charged in Australia and New Zealand.

Woolworths released a summary of the methodology and the headline pricing data it collected to The Post, and may release the raw data at a later stage, but de Wet didn’t expect the public to be convinced easily.

“I don’t think even with us sharing what is completely factual information is going to change that feeling overnight for customers, and we’re not expecting it,” he said. “All we’re trying to do is to make sure that what is out there is factually correct.”

In 2022, the Commerce Commission came to quite a different conclusion to Woolworths about New Zealand supermarket prices.

A lot had changed since then, de Wet said.

Pieter de Wet, Woolworths New Zealand’s interim managing director, says he understands why people feel they are paying too much for groceries.

“We’ve invested heavily in price over the last three years,” he said.

Woolworths had also invested in upgrading its infrastructure in New Zealand, he said.

As a result, Woolworths had seen its net profit after tax for the last three years drop to below many, although not all, major supermarket chains overseas.

What Woolworths' public paper claimed a basket of 20 basic grocery items could cost, if sales taxes were equalised, in New Zealand, Australia and the United Kingdom.

Now, he said: “If you go back to the Commerce Commission results at that point in time, we were at a similar level to our global peers. We’ve now dropped significantly below them.”

“We think our prices are appropriate for where the customer and the market is. We’re trying very, very hard to make sure that we address consumer concerns and needs,” de Wet said.

However, when asked whether grocery prices would have to rise here to see profitability lifted, he said: “We need to over time address that.”

Woolworths’ public paper claimed major interventions in the supermarket sector would hit the incumbents’ profits, and result in them having to charge higher prices, as much as 6% higher.

Woolworths had suggested there were other methods it could use to improve competition, rather than helping another major supermarket chain set up.

That included making it easier for the supermarket chains already in the country to open new stores.

“I’ve got a fantastic example that I'd like to share with you. It's quite staggering,” de Wet said. “We've been trying to get a store open in Halswell in Canterbury for four years now at a cost of $3 million just to get resource consent.”

He said the complexity of planning laws and processes meant, on average, it took Woolworths 20 months to get resource consent at a cost of $1m per site.