Critics hoping for sweeping changes to the supermarket sector to bring down the cost of groceries are unimpressed with the Commerce Commission's final recommendations.
File pic Photo: 123RF
Its final report into the $22 billion industry out today said Foodstuffs and Woolworths have been making profits at the expense of consumers, small food retailers and manufacturers.
The commission's report highlighted that New Zealand's retail grocery prices appeared comparatively high by international standards and the profitability of major retailers also appeared high.
The government is not ruling out forcing supermarket chains to sell stores if the recommended changes fail to reduce prices for consumers.
The Commerce Commission's preliminary report floated some big ideas - forcing the big two supermarkets to sell some stores, and even possibly government intervention to get a third operator into the market.
But its final recommendations out today are much tamer - making more land available for new stores and improving access to wholesale supply for third party retailers.
'The feeling of being doomed' - social service provider
He Korowai Trust provides housing and social services in Kaitāia, and chief executive Ricky Houghton said the outcome was weak - abandoning those doing it the toughest.
"Just the feeling of being doomed, doomed and damned, and we've had it," he said.
Tinkering with the system would not achieve anything, and the government needed to force the supermarkets to take regard of people, not just profits, Houghton said.
"It's now or never for the government to stand up and take a very strong leadership role on behalf of the people that are just hanging in there by the skin of their teeth."
Ricky Houghton is urging the government to introduce robust reform of the supermarket sector. Photo: RNZ / Dan Cook
Green Party commerce and consumer affairs spokesperson Ricardo Menéndez March said the party wanted a KiwiSupermarket - sort of like KiwiBank.
"Explore creating a publicly owned competitor to ensure that people have access to food on their table," he said.
Health Coalition Aotearoa board member Dr Lisa Te Morenga said inaction disproportionately affected Māori and Pasifika whānau.
That was because they were more often dependent on corner stores within walking distance which could have overpriced food, in part because of the margins by the big supermarket chains, Te Morenga sad.
"We think it doesn't go far enough in breaking those monopolies of the big companies, which we think artificially keep food prices high."
National Party deputy leader Nicola Willis said the Commerce Commission's report would not change what it called the underlying cost of living "crisis".
"With 6 percent inflation that is the major driver of increased grocery costs, and the government continues to not only deny the existence of that crisis, but is failing to put forward any real solutions for Kiwis struggling to get ahead."
Woolworths and Foodstuffs control about 80 percent of the market, and both said they supported the recommendations and were committed to working with the government to make changes.
Changes may not reduce prices - Food and Grocery Council
Meanwhile, Food and Grocery Council chief executive Katherine Rich said the changes tipped the balance back towards suppliers.
"Certainly over the last 20 years we've just seen a shift of risk and cost onto suppliers and profits to the retailers and bad behaviour with that as well."
Ideally, there would be four or five major players in the sector rather than the duopoly, Rich said.
Until there was genuine competition there might not be much movement on prices for consumers, she said.
And the government is not ruling out forcing supermarket chains to sell stores if the Commerce Commission's recommended changes fail to reduce prices for consumers.
Commerce and Consumer Affairs Minister David Clark said he unequivocally accepted the findings, but would go further if needed.
He told Checkpoint that as a result of government pressure, the supermarkets had promised to make their pricing more transparent, end land banking and look at introducing a code of conduct.
"Those things weren't happening before, the supermarkets have accepted them ...and that will mean that people get fairer prices and a more competitive sector."
He expected that if the supermarkets acted immediately on recommendations such as making loyalty programmes and promotions easier to understand, it would lead to cheaper prices.
Asked why the government did not force the main two players to sell some of their assets so that a third retailer could be set up, he said it was not something that could be achieved overnight.
A new big player would need to have access to the wholesale suppliers who were working with Woolworths and Foodstuffs at present. Clark has asked for a new regime to be set up so that this could happen.
Clark denied that the final report meant that Labour had broken a pre-election promise to break the supermarket duopoly and fairer food prices.
"There is a very big sea change in the way those supermarkets are behaving."
He expected to have a new law introducing changes before Parliament this year.
"This stuff is too important not to get right for consumers."
David Clark says the government will go further than the Commerce Commission's recommendations if necessary. Photo: POOL / Stuff / Robert Kitchin
The supermarkets respond
Woolworths said it was good to have clarity about the path ahead.
Managing director Spencer Sonn said it supported the recommendations.
"Like the government, we want New Zealanders to be confident that our supermarkets are good places to shop, and that as a business we are good to work with.
"As we've heard through the market study process, we know that some changes are not only required, but expected of us."
Foodstuffs North Island chief executive Chris Quin said competition could work better for consumers.
"As a result, we accept that the sector does need to change and we are committed to our role in doing that.
"Work to implement the recommendations in the final report is a priority for us and has already started.
"We've been clear throughout this process that [Foodstuff's] strategy is to become one of the most customer driven retailers in the world. This process has shown that we need to do more and we will continue to focus on improving value for customers, investing in innovation and delivering on our customer promises."
