tdgeek: I believe @sbiddle has expertise/background with supermarkets 

He was a trolley boy. Now he's just a troll 🤣

At least one of the two players perceive themselves as much a real estate company as a grocery one. It's hard to force a new competitor to come to market, you need to make it financially attractive to them - which has been one of the reasons we've not seen new competitors. CostCo is coming, but plays in a slightly different way, though could still have some impact if they price compete the way they do in other markets, but probably not huge. One of the challenges of being a relatively small market, harder to attract the volume-oriented players who normally play with catchment areas of 250k+ population per store.

Any new entrant is not going help regional Aotearoa as they will in no doubt focus only on Auckland, Wellington and Christchurch. The current players will simply discount in the big centres which will be subsidised by the regions.

MikeB4:

 

Any new entrant is not going help regional Aotearoa as they will in no doubt focus only on Auckland, Wellington and Christchurch. The current players will simply discount in the big centres which will be subsidised by the regions.

 

That is a huge risk and one I am certain will occur. I'd like them to also pass a law that pegs regional prices to city prices plus demonstrable and reasonable transport costs. It'd be way more complex than I am making it out to be, but I am sure you could find the right kind of expert to develop a fair and simple formula.

CruciasNZ:

 

MikeB4:

 

Any new entrant is not going help regional Aotearoa as they will in no doubt focus only on Auckland, Wellington and Christchurch. The current players will simply discount in the big centres which will be subsidised by the regions.

 

 

That is a huge risk and one I am certain will occur. I'd like them to also pass a law that pegs regional prices to city prices plus demonstrable and reasonable transport costs. It'd be way more complex than I am making it out to be, but I am sure you could find the right kind of expert to develop a fair and simple formula.

 

 

 

Isnt this what happens with petrol right now? Subsidise the regions

tdgeek:

 

Isnt this what happens with petrol right now? Subsidise the regions

 

Unsure. I'm actually not against the cities subsiding the regions. The regions supply our food and power, plus we go there to play, but they don't have the rate payers for the infrastructure needed to support my three points. Therefore a little bit of subsidization is actually in my benefit :)

Also as someone who has lived down in Central, holy crap the cost of a capsicum even during the right season. 

CruciasNZ:

 

tdgeek:

 

Isnt this what happens with petrol right now? Subsidise the regions

 

 

Unsure. I'm actually not against the cities subsiding the regions. The regions supply our food and power, plus we go there to play, but they don't have the rate payers for the infrastructure needed to support my three points. Therefore a little bit of subsidization is actually in my benefit :)

 

Also as someone who has lived down in Central, holy crap the cost of a capsicum even during the right season. 

 

My mistake

Subsidised BY the regions. A lot of competition in the cities, so get non cities to pay more, city customers get a better price

tdgeek:

 

My mistake

 

 

 

Subsidised BY the regions. A lot of competition in the cities, so get non cities to pay more, city customers get a better price

 

That sounds far more realistic unfortunately. It should be the other way around, but then it shouldn't be too wide apart bar additional transportation costs (which when spread out across all the produce a truck carries shouldn't be that much)

CruciasNZ:

 

Also as someone who has lived down in Central, holy crap the cost of a capsicum even during the right season. 

 

Speaking of capsicums, I've seen comments online and heard them on the radio in recent days being used as an example of why we need competition in the NZ market because the prices are high.

Such comments really show how little people understand about our entire marketplace - NZ can't grow (many) capsicums in winter due to heating costs and limited daylight hours. The cost of heating glasshouses is $$$$$$$$$$ and many NZ growers don't even bother growing them.

Every winter we rely on imports from Holland and Australia and prices are high every winter but people have short memories.

Both last year and this year imports from Holland are a major issue due to airfreight costs. Imports from Australia face bio-security issues at some point pretty much every season - while they can be irradiated now not all suppliers or distributors are capable of irradiating the product in Australia so we have limited supply options and issues from fruit fly on a number of occasions causing imports to be suspended. There have also been issues on numerous issues in recent years with mould and fungus that love growing on capsicums.

That's a very good point. High prices have reasons, Winter is one of them

Does the CC report carry weight with you @sbiddle?

tdgeek:

 

That's a very good point. High prices have reasons, Winter is one of them

 

Does the CC report carry weight with you @sbiddle?

 

I skimmed through the summary and watched the press conference but won't really have a full view until I've had a few hours to read the full report.

There is no disputing there are some issues at a wholesale level with suppliers feeling bullied - this is very different from the (supposed) issue that we're being ripped off at a retail level.

A lot of focus was on the ComCom's claims that ROACE is way too high but it's worth noting this figure is purely an estimate. There wasn't a lot of focus on the NPAT and the fact you're looking at a bottom line profit of roughly 3-4% which at the end of the day demonstrates this is a high volume, low margin business. Try comparing that to most other businesses!

Whilst slightly off topic, not sure it deserves it's own topic, but recently I saw someone try to explain why we pay so much for cheese and meat in NZ is that overseas they are prepared to pay higher prices, but the whole point is that it's cheaper to buy our stuff overseas than here and there are no international shipping costs. Aus don't put GST on some food, which would see 15%, but we are talking much lower than 15% prices overseas.  What am I missing?

Just a small comment here, in Auckland there are heaps of other options for supermarkets? For most fresh fruit/vegetables I shop at a couple of Asian supermarkets which tend to be considerably cheaper. They also sell wholefoods like rice, flour etc. for decent prices. Meat is from a butcher about 15 minutes drive away.

Maybe if you buy lots of processed foods you are forced to the supermarkets...

Zeon:

 

Just a small comment here, in Auckland there are heaps of other options for supermarkets? For most fresh fruit/vegetables I shop at a couple of Asian supermarkets which tend to be considerably cheaper. They also sell wholefoods like rice, flour etc. for decent prices. Meat is from a butcher about 15 minutes drive away.

 

Maybe if you buy lots of processed foods you are forced to the supermarkets...

 

We pretty much do the same for our regular grocery shopping too.  We hardly shop at the big supermarket chains anymore...