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.

 

I think that's very pessimistic.

Plenty of small regional businesses that could supply the retail market never get a look in the door.  For the "Barkers" and "Pic's Peanut Butter" success stories, there are many for whom getting product on the shelf is impossible.  I've seen this from different sides, as a supplier to manufacturers and as a supplier to the supermarket chains. 

The barriers to getting a new product on the shelf are massive, a third chain would ease that considerably.

Foodstuff's and Progressive definitely do act as a duopoly and effective cartel.

When I was involved,  when trying to get a new product range onto the shelf, you'd have both chains rejecting your pitch, they screw you down, so you've got to drop product price to them below cost, and commit to high advertising costs and/or punitive supply conditions (ie to take back dated unsold product).  So you take a calculated punt to get in.  Sometimes it works, sometimes you accrue losses large enough to utterly destroy small start-up businesses. If you succeed, then like a miracle the other supermarket chain comes begging - they want your product.  Only then can you go back to the first chain who your dropped your pants for to try to adjust the business so that you're making a profit.  If you demand too much, then they'll drop you anyway, the other partner in the duopoly will know that happened, and you're back to being able to be held to ransom by having only one customer.

There's much focus on the effect of the duopoly on the retail customer, but there's also big issues with having a duopoly as a barrier to potential suppliers to the retailers.  And that reduces consumer choice, which reduces competition.

Maybe a quick trip into a Woolworths in Aus would convince sceptics.  Everything looks the same as a Countdown here, but there are far more brands on the shelves.