Supermarket Debate Shift ‘encouraging’ As Labour, National Campaign On Reform

Giles
Dexter Political reporter

Consumer NZ is pleased
the political debate on the grocery sector has shifted
towards finding solutions and away from debating whether or
not there is a problem.

On Sunday, Labour revealed its
plans to increase competition in the grocery sector by
focusing on
the wholesale side.

It follows National and New
Zealand First’s plans to split
up Foodstuffs, and the Greens’ policy to create a
state-owned KiwiMart.

If elected, Labour would
force Foodstuffs and Woolworths to run their wholesale arms
independently from their retail arms.

The party would
give smaller stores guaranteed access to wholesale products,
preventing wholesalers cutting off supply.

It would
also remove restraint of trade laws that prevent smaller
retailers such as Four Square from lowering prices if they
want, or from choosing to go independent.

Labour
leader Chris Hipkins said when even The Warehouse was
struggling to access wholesale, it showed something needed
to change.

“There are small businesses up and down the
country that want to really compete, that want to give a
better deal to their consumers, who can’t at the moment
because they can’t access the wholesale that allows them to
do that.”

Announcing the policy at Plenty Foods grocer
in Upper Hutt, Labour’s commerce and consumer affairs
spokesperson Arena Williams said Labour would essentially
create a “different team, under a different model” to
incentivise wholesalers to “go out and win”
customers.

“We want the wholesalers to behave like any
other business. To win retail customers like this grocer, to
make sure their deals work for a grocer like
this.”

The policy, Williams said, would see more
“small, hard-nosed, tough” businesspeople getting into the
grocery business, offering more products and
competition.

The policy has found tentative support
from the Greens, and vehement criticism from
ACT.

National is pointing to advice commissioned by
the previous Labour government as to why the policy would
not work.

Foodstuffs and Woolworths, meanwhile, are
watching closely, while insisting they are already doing
what they can to support competition.

Consumer NZ
encouraged by debate shift

While Hipkins and Williams
were confident Labour could achieve its reforms in its first
100 days in government, advocacy group Consumer NZ did not
think any of the proposals political parties had put forward
could be done quickly.

But its chief executive Jon
Duffy said it was clear there needed to be structural
intervention.

“What is really encouraging is that we
seem to be now not having a debate around whether the
government needs to step in and do something about this
sector, it’s how they should do that. So that means the
debate has really moved forward to implementing solutions
rather than still debating whether there’s a problem. So
that’s a good thing.”

Duffy said creating two
independent wholesalers looked like a good idea, but he
wanted to see more detail on its structure.

“In order
for those entities to be genuinely independent of the retail
arms, there’s going to have to be pretty firm structures in
place separating them out. So I’m interested to see the
detail on how that would work.”

Greens
‘stoked’ at more supermarket policies

Green Party
co-leader Chlöe Swarbrick said she was “stoked” to see both
Labour and National wanted to force structural change to
increase competition.

Swarbrick said the Greens, which
earlier this month announced they would create a state-owned
KiwiMart to force a third player, had “put on the agenda”
the need for more affordable groceries.

“A lot of it
does feel, albeit like clearly a step in the right
direction, none go as far as securing the future of
affordable groceries as introducing that third player owned
in the public interest for and by New Zealanders in the form
of KiwiMart.”

In April, New Zealand First proposed
splitting Foodstuffs in the same way as
National would pursue, but without a Commerce Commission
review first.

National
warns of consequences

National is campaigning on
pursuing splitting up Foodstuffs, subject to a Commerce
Commission review.

If re-elected, National would
legislate to break up Foodstuffs so Pak’nSave became one
chain and Four Square and New World
another.

National’s deputy leader Nicola Willis said
Labour’s policy was light on detail, with the idea already
having been examined and rejected as complex, costly and
high-risk.

Willis pointed to a 2022 market study by
the Commerce Commission warning that separating wholesale
and retail operations was not “necessary or desirable” and
would create “practical challenges and transaction
costs”.

“The commission warned that government
facilitation of a new independent wholesaler would be
‘complex, potentially expensive’ and carry a ‘high risk of
failure’,” she said.

“The subsequent independent
assessment commissioned under the previous Labour government
went further, finding wholesale ownership separation was
‘fundamentally flawed’ and warning that forced divestment
could cause significant disruption and impose costs that
could ultimately be borne by consumers.”

Willis said
Labour was announcing an intervention first “and the
consequences are worked out later”.

Labour’s Williams
acknowledged that the Commerce Commission had identified
“potential problems” with the separation, but said Labour’s
policy would fix them by ensuring small grocers had a
guaranteed route of access to a range of essential goods “on
fair terms”.

“Prices don’t rise in the short term
under this model,” she said.

ACT
takes aim at bureaucracy

The ACT Party, which earlier
came out swinging against National’s plan to pursue a
Foodstuffs split, was similarly critical of Labour’s
proposal.

Leader David Seymour said he felt a sense of
déjà vu, and that the policy was unworkable.

“It
would take an army of bureaucrats to decide what a fair
price is, larger than the army that we currently
have.”

With four parties now campaigning on major
structural change, Seymour said the campaign was descending
into hysteria.

“As soon as it becomes acceptable to
attack a legitimate business for short-term political gain,
the only question left is, who’s next?”

Seymour said
ACT’s plan was to make it easier to get a consent for a new
supermarket, which he admitted was “more subtle” than what
others were proposing but “more honest”.

Foodstuffs
and Woolworths respond

A Foodstuffs spokesperson said
Foodstuffs would take time to consider the detail of
Labour’s announcement.

“As we’ve said previously, we
support any discussion focused on improving outcomes for
grocery customers at the checkout. The key questions for any
proposal are whether it will deliver lower prices, better
choice and better service for New Zealanders, how long any
benefits would take to flow through, and how those benefits
would be achieved in practice,” the spokesperson
said.

“Both Foodstuffs cooperatives are already
committed to expanding and strengthening their wholesale
offers, and we continue to look for ways to improve choice
and access across the grocery sector.”

Woolworths said
it remained committed to a competitive and sustainable
grocery sector, and it understood the cost-of-living
pressure Kiwi families were under.

“We have worked
constructively with the government and the Commerce
Commission for a number of years to implement significant,
structural changes across our business to support greater
competition. This includes working with the Grocery Supply
Code and establishing a dedicated wholesale business, New
Zealand Grocery Wholesalers, to provide wholesale grocery
items to a growing number of independent retailers,” a
spokesperson said.

“We will work through these
policies carefully and continue to engage constructively and
transparently with the Commerce Commission and the
government to ensure that they have all of the information
they need as they consider these issues. As shared
previously, any proposal aimed at lowering prices for
customers needs to consider all of the factors that impact
the cost of
groceries.”

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