Breaking up the supermarket duopoly.

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OldGeek

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#304540 13-May-2023 14:43

With this back in the news currently there is one solution mentioned frequently - that Foodstuffs and Woolworths NZ (Countdown) should be forced to divest supermarkets. Never mentioned is that Foodstuffs are a co-operative and don't own their retail outlets. Forcing some stores to leave the co-operative has serious property rights implications for the store owners.

I am assuming that Woolworths NZ owns at least some of their stores so not an issue there unless the company-owned stores number less than the number of stores required to be divested.

So how can this be done equitably?

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#3075990 14-May-2023 11:51

They should never have been allowed to become a duopoloy in the first place. What genius let that one go ahead?

Anyway, I guess that's all water under the bridge, so the task is to fix it now. It won't be easy though.

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#3076002 14-May-2023 12:26

The report makes a point if a breakup is done some prices are likely to rise in the short term until the market stabilizes with new competitive participants in retail and wholesale. Imo there are potential competitors in place and waiting, The Warehouse for example is slowly expanding lines carried.

Rikkitic

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#3076003 14-May-2023 12:33

Why can't Foodstuffs be forced to divest 4-Square? That is already a competitor in waiting. If they could buy it, they can sell it.

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#3076004 14-May-2023 12:34

OldGeek: So how can this be done equitably?

I imagine along the lines of non-exclusive supply agreements allowing them to buy from whoever they want vs tied too closely to a single supplier.

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#3076005 14-May-2023 12:36

Pak an Save for example, retail branding and franchise association membership with national advertising and so on is something that can continue independently of wholesale.

OldGeek

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#3076059 14-May-2023 13:43

Rikkitic:

Why can't Foodstuffs be forced to divest 4-Square? That is already a competitor in waiting. If they could buy it, they can sell it.

4-Square is a brand and style of store (large Dairy). Every store is independently-owned so Foodstuffs dont own them. Store owners would have to be forced out of the co-operative.

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mattwnz

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#3076067 14-May-2023 14:23

quickymart:

They should never have been allowed to become a duopoloy in the first place. What genius let that one go ahead?

Anyway, I guess that's all water under the bridge, so the task is to fix it now. It won't be easy though.

I recall that when it was allowed, someone involved justified it by saying it wouldn't lesson competition or cause prices to be higher as a result. But there doesn't seem to be any accountability. The warehouse looks like it is gearing up to become a third player, and guessing they hope they get some help from government, but may of their prices are more expensive, apart from possibly some loss leaders.

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#3076069 14-May-2023 14:32

There's no way I could complete a weekly supermarket shop at The Warehouse if I wanted to. I'd guess some suppliers are working with them and some are not. Recently they added a few fruit and veg items. I've found it useful to pick up items now and then.

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#3076071 14-May-2023 14:35

mattwnz:

quickymart:

They should never have been allowed to become a duopoloy in the first place. What genius let that one go ahead?

Anyway, I guess that's all water under the bridge, so the task is to fix it now. It won't be easy though.

I recall that when it was allowed, someone involved justified it by saying it wouldn't lesson competition or cause prices to be higher as a result. But there doesn't seem to be any accountability. The warehouse looks like it is gearing up to become a third player, and guessing they hope they get some help from government, but may of their prices are more expensive, apart from possibly some loss leaders.

Whoever that someone was, their comments did not age well 😠

Rikkitic

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#3076099 14-May-2023 16:12

I remember there used to be a Three Guys competitor. Whatever happened to them? Did Countdown and Foodstuffs tie a concrete block around their ankles and drop them into a lake?

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#3076100 14-May-2023 16:15

I seem to recall Foodtown, Countdown, Woolworths and 3 Guys were all separate competitors back in the day. Then some genius decided to let them all merge, 3 Guys was dropped entirely and the only brand they decided to retain was Countdown. I think that was the beginning of the end really.

I believe that the supermarkets located near Costco in West Auckland have lower prices than everywhere Costco isn't, so competition is certainly alive and well - just not everywhere 😕

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#3076106 14-May-2023 16:48

I recall when telecom was a monopoly, experts were saying how much that had cost the economy. So if NZers are overpaying by well over $1 million dollars a day, that could be many billions since the duopoly started, where that money hasn't been spent on other things.

mattwnz

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#3076108 14-May-2023 16:50

quickymart:

I seem to recall Foodtown, Countdown, Woolworths and 3 Guys were all separate competitors back in the day. Then some genius decided to let them all merge, 3 Guys was dropped entirely and the only brand they decided to retain was Countdown. I think that was the beginning of the end really.

I believe that the supermarkets located near Costco in West Auckland have lower prices than everywhere Costco isn't, so competition is certainly alive and well - just not everywhere 😕

The building materials sector is just as bad, if not worse. Means we end up paying some of the highest prices for new homes.

OldGeek

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#3076114 14-May-2023 17:34

quickymart:

I seem to recall Foodtown, Countdown, Woolworths and 3 Guys were all separate competitors back in the day. Then some genius decided to let them all merge, 3 Guys was dropped entirely and the only brand they decided to retain was Countdown. I think that was the beginning of the end really.

Foodtown was the original supermarket in NZ - Tom Ah-Chee opened one in Takanini in 1957. That was the start of Progressive Enterprises. Countdown was an independent operator in the South Island only. 3-Guys was opened by Albert Gubay when he emigrated from Ireland. Progressive Enterprises was taken over by Woolworths NZ (itself owned by Woolworths Oz). Progressive also acquired 3-guys and Countdown at some point. I recall that one of these mergers (probably Countdown) was in the early 2000s and resulted in the duopoly we have now.

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mattwnz

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#3076126 14-May-2023 18:25

OldGeek:

quickymart:

I seem to recall Foodtown, Countdown, Woolworths and 3 Guys were all separate competitors back in the day. Then some genius decided to let them all merge, 3 Guys was dropped entirely and the only brand they decided to retain was Countdown. I think that was the beginning of the end really.

Foodtown was the original supermarket in NZ - Tom Ah-Chee opened one in Takanini in 1957. That was the start of Progressive Enterprises. Countdown was an independent operator in the South Island only. 3-Guys was opened by Albert Gubay when he emigrated from Ireland. Progressive Enterprises was taken over by Woolworths NZ (itself owned by Woolworths Oz). Progressive also acquired 3-guys and Countdown at some point. I recall that one of these mergers (probably Countdown) was in the early 2000s and resulted in the duopoly we have now.

I seem to recall the commerce commission originally objecting to it due to the risk of it lessoning competition. But it was such a long time ago now. I do wonder if the supermarkets are currently trying to make hay while the sun shines, because at the moment they can price thigs on what people will pay. So much wastage however must be occurring though with highly priced fresh produce. I see tiny rotten avocados on the shelves being sold for $6, which are just going to end up in the landfill.

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