Supermarket Excess Profit Petition

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gzt

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#2959517 25-Aug-2022 19:37

Opening wholesale could have interesting effects. Many years ago the difference between the price of a supermarket trolley and a local mart trolley was not a killer. Opening wholesale could lead to more local shopping if the price differential reduces.

tdgeek

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#2959630 26-Aug-2022 07:16

mattwnz:

You mean like what happened in the electricity market space.

IMO what the government has announced looks like it is just kicking the can down the road to the next government to deal with. Seems too hard and very difficult to unwind the current situation. They should have never allowed it get into a duopoly situation because they were warned this would happen back then.

Electricity? All that was , was a Govt owned provider of everything, to allowing anyone to be a retail ticket clipper. Which added another layer of profit.

What would you do with supermarkets, given that 5 million in a country the size of UK is too small to support a raft of chains. If you regulated to reduce the size of the duopoly, thats harsh. Governments then set a precedent to control businesses, goodbye innovation and risk taking to enter a market. Replace the missing one third with someone else, so all three have lower economies of scale. If they were all pressured to reduce prices then they reduce margins. Staff are reduced so that when its busy its short staffed, like call centres. The squeeze would be to the product providers such as canned goods, fruit and vege, and everything else they sell. Then you replace the consumer paying too much to the grower/manufacturer being paid too little.

tdgeek

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#2959632 26-Aug-2022 07:22

gzt: Opening wholesale could have interesting effects. Many years ago the difference between the price of a supermarket trolley and a local mart trolley was not a killer. Opening wholesale could lead to more local shopping if the price differential reduces.

For me, fruit and vege suits that, where the typical grocery shop is to New World then the local fruit and vege market/store. For other stuff, a mart could buy wholesale from new World, but given the low margins NW has and a small mart cannot sustain, they will still cost more. IMO that still leaves them as the dairy/BP model, where we dont buy there, but if we need one item of food now we happily go there and dont mind paying more, for ONE item. I guess they could cherry pick vaguely complimentary products to add to the fruit and vege

The main need is that a small mart can go to Watties/brocolli grower and buy equally, none of this "you are a Foodstuffs supplier, you cannot sell to anyone else"

Kyanar

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#2959681 26-Aug-2022 10:14

tdgeek:

The main need is that a small mart can go to Watties/brocolli grower and buy equally, none of this "you are a Foodstuffs supplier, you cannot sell to anyone else"

Is there any evidence that supermarket chains are currently using exclusive supplier contracts in this way? We know that Foodstuffs franchisees are required to purchase stock from the co-operative, but I can't say I've ever heard of the co-operative itself dictating that a supplier cannot sell to the competition.

Small retailers don't get contracts with the likes of Heinz-Wattie's because Heinz-Wattie's doesn't want to deal with small retailers, not because Foodstuffs and Woolworths told them not to. That's why Foodstuffs already has an open access wholesale division (Gilmours, Toops and Trents) - so those small retailers can access reasonably priced bulk product (I said reasonably priced, not cheap).

tdgeek

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#2959693 26-Aug-2022 10:41

Kyanar:

Is there any evidence that supermarket chains are currently using exclusive supplier contracts in this way? We know that Foodstuffs franchisees are required to purchase stock from the co-operative, but I can't say I've ever heard of the co-operative itself dictating that a supplier cannot sell to the competition.

Small retailers don't get contracts with the likes of Heinz-Wattie's because Heinz-Wattie's doesn't want to deal with small retailers, not because Foodstuffs and Woolworths told them not to. That's why Foodstuffs already has an open access wholesale division (Gilmours, Toops and Trents) - so those small retailers can access reasonably priced bulk product (I said reasonably priced, not cheap).

Only what Ive read in the media from growers and other suppliers. No doubt Heinz-Watties is different, given their size. And often mentioned of exclusive deals. We went to Trents once, waste of time price wise. If any supermarket or smaller store can buy all products freely, with no exclusivity, then there is no issue. Its probably like price fixing as Air NZ was done for with freight, its not a contract, that example was a cartel.

Speedy885

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#2960487 28-Aug-2022 16:12

tdgeek:
mattwnz:

You mean like what happened in the electricity market space.

IMO what the government has announced looks like it is just kicking the can down the road to the next government to deal with. Seems too hard and very difficult to unwind the current situation. They should have never allowed it get into a duopoly situation because they were warned this would happen back then.

Electricity? All that was , was a Govt owned provider of everything, to allowing anyone to be a retail ticket clipper. Which added another layer of profit.

What would you do with supermarkets, given that 5 million in a country the size of UK is too small to support a raft of chains. If you regulated to reduce the size of the duopoly, thats harsh. Governments then set a precedent to control businesses, goodbye innovation and risk taking to enter a market. Replace the missing one third with someone else, so all three have lower economies of scale. If they were all pressured to reduce prices then they reduce margins. Staff are reduced so that when its busy its short staffed, like call centres. The squeeze would be to the product providers such as canned goods, fruit and vege, and everything else they sell. Then you replace the consumer paying too much to the grower/manufacturer being paid too little.

Id just like to point out that for a long while Countdown seem to have drastically reduced their Staff count. Sometimes they'd rather have 2 hovering around the self serves and NO regular lanes open. I no longer shop there because their Stores are gross and the instore Bakery is extremely sub par. New World on the other hand is the polar opposite, they have nicer Stores in general and have cheaper pricing (on the items I buy) than CD. It would also seem the pay must be alright too as sometimes there are 2 on each Checkout, one to scan and another to pack the items. I visited a large Warehouse Store recently and they actually had no Lanes at all. Its purely self Checkout.

gzt

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#2960491 28-Aug-2022 16:21

Speedy885: Id just like to point out that for a long while Countdown seem to have drastically reduced their Staff count.

It's not every store. I used to live near a countdown notorious for understaffing in busy periods. It depends on the store management.

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Speedy885

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#2960534 28-Aug-2022 18:49

gzt:
Speedy885: Id just like to point out that for a long while Countdown seem to have drastically reduced their Staff count.

It's not every store. I used to live near a countdown notorious for understaffing in busy periods. It depends on the store management.

I noticed it at different times of the day and also in different cities. Im sure some Store Managers like to make themselves look good by reducing the daily outgoings.

Tinkerisk

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#2960630 29-Aug-2022 05:23

kobiak:

Costco is here (let's hope they are successful), warehouse started selling groceries, …?

Costco? Be careful with that wish. Have a look to the idiocratic future ;-)

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#2960651 29-Aug-2022 07:56

The understaffing at supermarkets may not be a choice. Lots of employers are having trouble attracting people at the moment.

The thing I'm noticing more and more is stuff being out of stock. Possibly this is just because of when I'm able to shop (late night and weekends).

Mike

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#2960652 29-Aug-2022 08:04

Right now at this point in time the biggest impact on understaffing is just plain old absenteeism. In normal times most business would plan for 7-9% absenteeism, Currently many businesses are facing up to 30% of their staff away from work.

wellygary

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#2968672 15-Sep-2022 15:48

Despite this, I expect "Kirkland" products to proliferate pretty quickly through dairies and mini-marts across West Auckland.

https://www.stuff.co.nz/business/129870055/supermarket-duopoly-cries-foul-at-costcos-fiveyear-holiday-from-governments-supermarket-competition-regime

Kyanar

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#2968714 15-Sep-2022 16:26

wellygary:

Despite this, I expect "Kirkland" products to proliferate pretty quickly through dairies and mini-marts across West Auckland.

https://www.stuff.co.nz/business/129870055/supermarket-duopoly-cries-foul-at-costcos-fiveyear-holiday-from-governments-supermarket-competition-regime

Not really. Kirkland products aren't sold in bulk multi-packs, they're sold in bulk single packs. Not really a dairies stock and trade, since parting out a single pack into on-site-packaged multipacks will run afoul of food safety regulations. The bulk quantities of other brand name products are a different story, but to be honest if they can't already get it cheaper than or similarly priced to Costco, then the assertion that NZ grocery wholesale is fundamentally broken is 100% correct.

I don't see why Costco would be subject to this regime anyway - the whole point of Costco is that the prices are already wholesale, and their margins really come from massive volume and memberships. Telling them they have to sell wholesale would almost undoubtedly result in the store manager pointing at the large "Costco Wholesale" sign on the building before they shrug and walk off. The whinging from FSNI, FSSI and WWNZ just sounds like whinging for the sake of it (Woolworths especially should know better, given in Australia they have Costco around and unsurprisingly Costco is not considered competition to Woolworths).

Unrelated, was anyone else confused by reading the sentence "Noone said the business membership would go a long way to helping small-business owners keep their costs low" before realising Noone was the surname of the Costco representative?

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