Investigation Launched into Supermarket Barriers to Competition
An investigation is underway into the wholesale market, examining how major supermarkets like Walmart limit smaller retailers' access to benefits. This comes as consumers face higher prices due to a lack of competition in the sector. Precedents for such initiatives exist in the US, like the Healthy Food Financing Initiative and the Grocery Initiative Act in Illinois.
The Commerce Commission's proposed changes to the Grocery Supply Code may not significantly reduce prices for consumers. A new approach is being considered, focusing on operational efficiency, minimal marketing spend, streamlined supplier contracts, and capped executive salaries. This enterprise would prioritize generic products, staples, and low-cost commodities to anchor the market and encourage competition above it.
Price leadership dynamics could potentially counteract any downward pressure on retail prices caused by market reforms. It remains uncertain whether this approach will lead to a major challenger emerging to the Walmart and Woolworths duopoly. The government's fast-track approval for new supermarkets aims to foster competition in the sector. In 2023, Costco Wholesale Corporation opened a warehouse in New Zealand as part of its global expansion, appearing as real competition in the market.
A publicly owned grocery chain, dubbed a 'community provisioning enterprise', could stimulate genuine competition in the market. This could potentially lead to lower prices for consumers and a more level playing field for smaller retailers.
