Consumers to benefit from a more competitive retail grocery market

New Zealanders will soon benefit from a much more competitive grocery sector as a result of market study findings unveiled by the Commerce Commission today.

“The report is clear: competition in the retail grocery sector is not working. Consumers could get better prices, range and quality if action is taken,” Commerce and Consumer Affairs Minister David Clark said.

“We made a manifesto commitment in 2020 to address the rising cost of groceries and to make sure shoppers are paying a fair price at the checkout. It’s especially important as the economy recovers from the impact of COVID-19.

“This is the second of three market studies commissioned, to help Government continue to deliver on our promise to ensure hard-working kiwis are getting a fair deal for the things they buy and consume.

“I know there is a desire to see us act swiftly on this too, and I want New Zealanders to know this will be the case. From today, we will immediately progress work to address the Commission’s recommendations.

“This includes exploring how a Code of Conduct between major retailers and suppliers could be developed and looking at the role a dedicated regulator for the grocery sector could play.

“The Commission’s findings indicate that restrictive covenants over land are a major barrier to supermarkets accessing new sites, so I want to ban these covenants being used to stop competition.

“The report sets out a clear justification for change in the grocery market. The status quo will not deliver fairer prices for consumers and a better deal for producers and suppliers, and I hope the sector will constructively engage in the changes that need to be made.

“Given the importance of achieving healthy levels of competition in our retail grocery sector I have not ruled out some of the other options that the Commerce Commission tabled while developing its report, if consumer benefit is not achieved from the changes recommended in the report.

 “When New Zealand supermarkets are making more than double what the Commerce Commission considers to be a normal rate of return on capital for grocery retailing, it’s clear there is a problem with competition that needs to be fixed. 

“New Zealanders are paying more at the checkout than most. Out of 38 OECD countries we’re the fifth highest in terms of grocery prices. This report makes a serious case for change when it comes to competition in the sector, so kiwis don’t have to pay so much for the basics,” David Clark said.

The report is available on the Commerce Commission’s website.