mattwnz: It is not OT. A lot of things are going up in price and likely food could go up a lot. Then we are going to hear compliants about supermarket prices again. We surely didn't think we could print a hundred billion plus dollars and pump up house and asset values without potentially massive inflation occurring?

I think it is referred to as Stagflation

I don't know how businesses are going to handle all the increased costs and where the money is going to come from.

It's not so much just the stimulus - it's also minimum wage increases that have had a massive effect and caused significant wage increases. When you put up minimum wage workers you also then need to put up wages for staff that were just above the minimum wage.

I'm sure there will be people who will not point to studies that show no link between the two - and there are plenty of US studies that show that the price of goods does shows no correlation to wage increases.. But there as aspects of many of those that don't directly compare to the NZ retail sector, and more importantly they're not studies that were done in the middle of a global pandemic.

Many small hospitality businesses are hurting really badly at present, and a mandated wage increase simply has to mean price increases to directly recover those costs.

K8Toledo:

 

A friend of mine is head of two grocery sections at Woolworth's (for the entire country). If you like I can ask him.

 

Thanks so much, that'd be really interesting to see what he thinks too. It was very interesting to read what Senecio wrote also :)

KrazyKid:

Supermarkets work on high turn over and low margin. They only have a 10-15% margin on most lines. Then they have lots leaders and some higher margin lines as well.
But the flip side is often slow selling lines get kicked out of the store. In a large supermarket you might find it a product sells only 6 units a week it's gone from the shelves.

You can't really look at margins in the context of a single product. You need to look in the context of the the final bottom line gross margin, and we know that's a single digit figure that compares pretty closely to other markets such as the UK which have a lot more competition.

The simple reality is it's hard for any player to launch and compete in the NZ market when you're entering a high volume, low margin sector where economies of scale simply don't stack up.

Bung: Most conspiracy theories fall flat when you investigate.

I can't speak for Countdown Kilbirnie but what I have said is definitely true for Countdown Hastings. The veggie hotdogs disappeared from the shelves, did not come back, are unobtainable there, and have suddenly appeared at New World, which never used to stock them. The on-line stock does not always reflect what is actually in the store and I looked for them many times without success before discovering them at New World. If that is not a conspiracy, I don't know what is!

Rikkitic:

 

Bung: Most conspiracy theories fall flat when you investigate.

 

I can't speak for Countdown Kilbirnie but what I have said is definitely true for Countdown Hastings. The veggie hotdogs disappeared from the shelves, did not come back, are unobtainable there, and have suddenly appeared at New World, which never used to stock them. The on-line stock does not always reflect what is actually in the store and I looked for them many times without success before discovering them at New World. If that is not a conspiracy, I don't know what is!

 

 

 

Stores have range lists which normally depends on the size of the store but can also vary depending on demographics - so not every store is going to carry every product.

KrazyKid: ... absorbedorbed.

...

OT, not sure if this is a typo or some wordplay, but this is now one of my new favourite words.😄

Remember "3 Guys" supermarket that tried to enter the NZ market?   That failed, the assets IIRC bought by Progressive, then absorbed/rebranded.  

Aldi registered aldi.co.nz many years ago, for a while the site stated that they had plans to open in NZ with a "coming soon" type statement, but for the past decade the site redirects to aldi.com.au.

The Warehouse / TWG is still hanging in there in a half-hearted way after pulling back from grand plans.  Can't say I've ever bought a "supermarket" item there myself, YMMV.

OTOH there are plenty of small operators that seem to be surviving with specialty food shops, where prices are good, quality is good, but the convenience of doing all the grocery shopping under one roof is gone. 

Fred99:

 

Remember "3 Guys" supermarket that tried to enter the NZ market?   That failed, the assets IIRC bought by Progressive, then absorbed/rebranded.  

 

3 Guys was founded by Albert Gubay.  Details here: Founder of New Zealand Retail Grocery Deep Discounting Dies - MSC NewsWire.

My abiding memory was the Northcote store - a shambles - very narrow product range but large quantities of what they did have, all in same cartons that they came in through inwards goods but with cut-out panels.  The only staff were the check-out operators, who also did everything else, so often there was just one or two checkouts operating.  This was in stark contrast to Progressive (then Foodtown owned by Tom Ah Chee) and Foodstuffs (then New World and 4 Square) which had two staff per checkout.  Foodstuffs launched PaknSav as a direct competitor, although now this brand has a much wider product range and more attention to merchandising presentation than 3 Guys ever had.

Gubay did not advertise much - but regularly pulled publicity stunts to make him newsworthy.  These days this would be described as part of the 3 Guys business model.

Gubay sold out to Progressive and they retained the brand for a few years. 

The Government has launched an enquiry into our supermarket duopoly. Like most of the other enquiries over the last few years not much will come of it. This is certainly an impressive industry to be in especially during covid. I would imagine record profits are being recorded.

Mahon:

 

The Government has launched an enquiry into our supermarket duopoly. Like most of the other enquiries over the last few years not much will come of it. This is certainly an impressive industry to be in especially during covid. I would imagine record profits are being recorded.

 

As somebody who spent 30 years in the industry and still has good links to it I see it the exact opposite way.

When the report is complete I can see people being shocked when they discover the true profit margins of the industry as a whole. The ROI isn't great compared to many other parts of the retail sector due to the intense competition, and when you're looking at a large supermarket these days costing in the vicinity of $30m - $50m it's not a game you enter unless you're very good at it.

mattwnz:

It is not OT. A lot of things are going up in price and likely food could go up a lot. Then we are going to hear compliants about supermarket prices again. We surely didn't think we could print a hundred billion plus dollars and pump up house and asset values without potentially massive inflation occurring?

I think it is referred to as Stagflation

I don't know how businesses are going to handle all the increased costs and where the money is going to come from.

With these price increases, I wonder how much of this is businesses clawing back lost income from the lockdowns/unemployment. I would if I was in business. While a consumer may spend his pent up lockdown cash, that doesnt mean every shop will get those lost sales back.

Fred99:

 

The Warehouse / TWG is still hanging in there in a half-hearted way after pulling back from grand plans.  Can't say I've ever bought a "supermarket" item there myself, YMMV.

 

The Warehouse Extra stores were modeled off the hypermarket/Walmart style stores overseas where the plan was to sell a large range of food but cater more for Pak 'n Save type buyers (bulk packs/reduced range) rather than be a full service offering. They struggled to gain any momentum in the market, and the concept was pulled.

For those with a good memory this was also around the same time Progressive and Foodstuffs were also trying to buy TWH which only ended up with lawyers being the winners.