NZ supermarket competition little better despite years of reform: Commerce Commission report

Tuesday, 2 June 2026

The supermarket industry isn’t going to become significantly more competitive overnight, Economic Development Minister Nicola Willis has warned in the wake of a report that her Labour counterpart Arena Williams described as “frustrating reading”.

Nearly four years after Jacinda Ardern announced she would “unlock the stockroom doors” of Woolworths and Foodstuffs and more than a year after Willis said she would inject more competition into the sector, the supermarket duopoly is about as strong as ever, the annual report from the Commerce Commission confirmed.

It found Foodstuffs and Woolworths’ share of the retail groceries market had been essentially unchanged over the past five years, amounting to 82% last year.

“There has been little observable change in core competition metrics over the year,” with the industry remaining “highly concentrated” the competition watchdog concluded.

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Food price inflation had also picked up over the year, rising to 4.6%, it said.

The developing conflict in the Middle East was expected to “place additional cost pressures on grocery products globally” this year, it also warned.

The commission noted that since 2022 successive governments had taken a number of steps to try to improve competition.

These included banning restrictive land covenants, introducing new rules to protect supermarket suppliers, streamlining consents for new supermarkets and the introduction of a regulated wholesale regime.

But while these had created a “more supportive environment” for rivals to Foodstuffs and Woolworths to enter the market or expand, under current regulatory settings it would “likely take several years to see a significantly more competitive market”, it said.

The volume of groceries that Foodstuffs and Woolworths reported wholesaling to rivals remained “very modest”, valuing only $22m in the two years to August last year.

Margins and profitability had remained largely stable, “suggesting that competitive pressure is not meaningfully increasing”, the commission’s report said.

“While Foodstuffs North Island and Woolworths experienced small margin decreases, Foodstuffs South Island’s margins rose across both fresh and non‑fresh categories.”

Overall, Foodstuffs maintained strong profits and continued to “sit at the top end of international profitability benchmarks”.

“These patterns are not what we would expect in a market experiencing increasing competition,” the commission said.

Willis said the two major supermarket groups occupied “entrenched positions”.

“But, as the Commerce Commission notes, regulatory changes are making it easier for new players to enter the market and get established and there are some pockets of increased competition,“ she said.

“Work is continuing on options to speed that process.”

Grocery commissioner Pierre van Heerden said the report and another into supermarket suppliers that was also released today “confirm what many Kiwi shoppers are feeling at the checkout”.

Reforms needed more time to “bed in”, he said.

A brighter spot was some increase in competition in Auckland, where Foodstuffs and Woolworths’ market share stood at 71%, the commission said.

“We are seeing new stores opening and several specialty grocers expanding their footprints, particularly in Auckland,” van Heerden said.

Foodstuffs said in a statement that the industry was “continuing to evolve, with growing competition in larger centres and ongoing investment needed to support smaller communities”.

“Significant progress has been made, and we’re committed to continuing that,” Foodstuffs North Island chief executive Chris Quin said.

“Over the past few years, the grocery landscape has shifted. As the report notes, in larger urban areas in particular, customers are seeing more choice, more formats, and new ways to shop, which is a positive development.”