In its third annual grocery report released last week, the Commerce Commission shows there has been scant movement in the makeup of the sector.
The two Foodstuffs chains (New World, Pak’nSave and Four Square brands) and Woolworths New Zealand (Woolworths, Fresh Choice and Super Value) have 82% of the market, a figure which has changed little in recent years.
The latest grocery report has not been good news for shoppers in the South, with Foodstuffs South Island’s margins increasing in both fresh and non-fresh departments, whereas Foodstuffs North Island and Woolworths NZ both saw their margins decrease between 2024 and 2025.
They are still making profits higher than many of their overseas counterparts. The report showed both North Island and South Island Foodstuffs’ operations were second and third to Canada’s Loblaws chain at the top of an international comparison before interest and tax.
They were above Woolworths Australia, Coles, Walmart and Tesco.
Woolworths New Zealand was 13th on that list. The report said its margins had fallen while the company invested in its transformation, but earnings were likely to rebound this financial year.
The commission’s report draws attention to such measures as the prohibition of land banking to inhibit retail grocery store development, The Grocery Supply Code which applies to the major grocery retailers dealing with suppliers, easier processes for developing land for supermarkets, mandated display of clear unit pricing and the Consumer Complaints Disclosure Standard which requires publication and display of refund policies, disclosure of price-integrity issues, promotional errors, and unit pricing issues to the commission.
According to the commission, together these measures have created a more supportive environment for market entry and expansion, and for consumers to compare value and resolve issues.
‘‘However, the grocery industry (both retailers and suppliers) is still adjusting to being regulated and under current regulatory settings it will likely take several years to see a significantly more competitive market in New Zealand.’’
It is hard to take this seriously. These measures, while welcome, have been mere tinkering around the edges of the problem.
We have always been sceptical there was a big supermarket chain desperate to unleash itself across the country if only we did not have so much red tape.
As Monopoly Watch’s Tex Edwards said several years ago, it would take about 20 years for a newcomer to build a portfolio half as good as the incumbents and it would cost billions of dollars for it to have enough clout to get existing chains to alter their prices.
The existing big players have their own wholesale networks and replicating those would be too expensive.
The current government has shown no enthusiasm for separating the retail and wholesale businesses, nor for making the big three divest some of their brands.
New Zealand First has announced a policy which includes breaking up the Foodstuffs chain, but there is little detail on that yet. Forcing a split between wholesale and retail is not on its agenda.
With the grocery lobby remaining a powerful force, it is hard to see if the party would be able to get anything over the line in any coalition with National and Act New Zealand.
The Labour Party, while it has used the commission’s report to thunder about the government and its failure to do anything meaningful about the cost of living, has not offered any solutions.
In the meantime, the best shoppers can hope for is that the Commerce Commission will be on the case to ensure prices are not increased unreasonably during the Middle East crisis.
The commission expects when that international debacle is resolved, prices will come down and it will be watching to see that happens, ready to act on anything of concern.
It is little comfort.
