Supermarkets in battle to restore trust

Recent supermarket price promotions are an attempt to restore falling customer trust, but more work needs to be done to win shoppers over, experts say.

In May, Countdown froze the price of 600 essential items, and Foodstuffs, which owns New World and Pak’nSave supermarkets, ‘‘rolled back’’ the price of some of its top-selling products.

The promotions came after a government-ordered Commerce Commission report on the supermarket sector said the duopoly was making more than $1 million a day in excess profits.

On Wednesday, Commerce Minister David Clark outlined plans for a mandatory supermarket code and announced he would appoint a grocery commissioner, based within the Commerce Commission, to hold the industry to account.

Jon Duffy, chief executive of Consumer NZ, which helped with the code, said Wednesday’s announcements were an important step towards a fairer market but would not result in immediate price reductions.

The biggest change to pricing had been recent voluntary price promotions by the supermarkets, he said. The supermarkets would have felt pressured to act because of unwanted attention they had been receiving from the public and Government, he said.

‘‘They realise that they have lost their social licence,’’ Duffy said.

The supermarkets could see that public trust in them was plummeting, he said. Consumer NZ hoped that sustained pressure on supermarkets would help bring prices down further.

Recent Consumer NZ research found that 32% of people do not trust supermarkets, compared to 17% last year. Of the 15 industries measured, supermarkets had the most significant decline in trust since June 2021.

A Countdown spokesperson said a drop was to be expected because of the impact inflation was having on food prices and all the talk about supermarkets over the past year. Foodstuffs did not respond by deadline.

Duffy said ideally the code would create the conditions for other players to enter the market.

Sergio Biggemann, an associate professor at the University of Otago business school’s marketing department, said restoring public trust would not be easy for the supermarkets. Increased competition via a third player entering the market could help improve the public perception of supermarkets because they would no longer be seen as ‘‘two old friends’’ supporting each other in a duopoly, he said.