‘Su­per­mar­kets need to open their books’

Marlborough Express - - FRONT PAGE -

It’s time for New Zealand’s su­per­mar­ket sec­tor to show it’s not rip­ping off shop­pers, an­a­lysts say.

Prime Min­is­ter Jacinda Ardern said this week that she would ‘‘not be sur­prised’’ if the Com­merce Com­mis­sion con­ducted a mar­ket study into the su­per­mar­ket sec­tor, once leg­is­la­tion al­lows it to.

The Com­merce Amend­ment Bill will give the com­mis­sion the abil­ity to com­pel com­pa­nies to pro­vide in­for­ma­tion to prove they are be­hav­ing com­pet­i­tively.

New Zealand’s su­per­mar­ket in­dus­try has two main play­ers: Food­stuffs and Count­down.

A Count­down spokes­woman said the gro­cery in­dus­try was very com­pet­i­tive.

‘‘If the leg­is­la­tion is passed and a mar­ket study rel­e­vant to us was un­der­taken, we’d co-op­er­ate fully.’’

Food­stuffs said it had no com­ment to make.

But com­men­ta­tor Shamubeel Eaqub said, as a du­op­oly, it was ex­actly the sort of mar­ket that the Com­merce Com­mis­sion should look at.

Con­sumer NZ head of re­search Jes­sica Wil­son said New Zealand had one of the most con­cen­trated gro­cery mar­kets in the world.

‘‘That con­cen­tra­tion comes with a risk con­sumers will pay more than they should. ‘‘

Uni­ver­sity of Auck­land Busi­ness School head of mar­ket­ing Bodo Lang said New Zealand was ‘‘re­ally ex­pen­sive’’.

‘‘If you look at in­ter­na­tional prices it’s ob­vi­ous that our prices are out­ra­geous. Su­per­mar­kets are pretty prof­itable even though when an in­quiry starts they say their mar­gins are small. It al­ways de­pends how they cal­cu­late the mar­gins.’’

He said the su­per­mar­ket re­tail­ers took lit­tle risk but re­ceived am­ple re­ward.

The bar­ri­ers to en­try in the New Zealand in­dus­try were high, he said, which lim­ited the com­pe­ti­tion that was pos­si­ble.

But Jonathan Elms, the Sir Stephen Tin­dall chair in re­tail at Massey Uni­ver­sity, said there were other fac­tors at play, such as New Zealand’s geo­graph­i­cal iso­la­tion. That pre­sented chal­lenges in get­ting prod­ucts on to shop shelves and the size of the mar­ket pre­vented buy­ing at scale.

Some things were no­tice­ably ex­pen­sive such as dairy prod­ucts, the prices of which were ‘‘ex­cru­ci­at­ingly high’’, and out-of-sea­son fresh pro­duce.

An in­ves­ti­ga­tion would be wel­come, he said, but any find­ings were un­likely to be black and white.

‘‘I do think there’s a place for a third op­tion to en­ter the mar­ket­place.’’

Econ­o­mist Gareth Kier­nan, of In­fo­met­rics, said the Com­merce Com­mis­sion should not have al­lowed Wool­worths and Count­down/food­town to merge in 2002.

‘‘It seemed fairly ob­vi­ous at the time that the shift from three to two main chains would lead to a re­duc­tion in com­pe­ti­tion. How­ever, it was very rare for any­thing to be turned down by the Com­merce Com­mis­sion back then.’’

He said the two play­ers were both buy­ers and sell­ers in the mar­ket­place.

‘‘I would ar­gue that their mar­ket power as a buyer is pos­si­bly more prob­lem­atic given the re­ports I’ve seen of them plac­ing pres­sure on sup­pli­ers to re­duce the prices at which they sell to the su­per­mar­kets,’’ he said.

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