Supermarket Excess Profit Petition

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#2912326 10-May-2022 14:41

mattwnz:

I disagree. It is obviously being highlighted for political gain, built the problem has been there for many years. But NZers are too laid back and go with the flow to do anything about it. It is self inflicted, because we should never have allowed Foodtown etc to be brought, and it turning into a duopoly, and experts warned it would happen . We are losing $1 million dollars a day from our wallets due to this, and that money could have made us wealthier as a country as a result if it had been infested into infrastructure and businesses to increase productivity. I remember this argument was brought up a the reason for introducing a third entrant into NZs mobile market and also unbundling the copper network,

NZ seems too small for more than two players. Two players is a duopoly no matter what the logo is. You might get a third player is isolated locations but I cant see a third purveyor of grocery products in most suburbs

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#2912328 10-May-2022 14:41

tdgeek:

Even the issue of competition is a bit flawed with groceries. More competition = lower prices. Citizens win, the suppliers of baked beans, lemons and cheese scones get screwed down. Its just kicking the can from the people to the providers of food for those people. There needs to be some mechanism where if I was providing brocolli, I'm not locked into one part of the duopoly and excluded from the other. Im powerless, as they tell me they will pay less for my brocolli as customers getting ratty over inflation, I lose. I cant go to the other half of the duopoly as I'm not allowed. Competition could mean lower prices but not lower margins, but many supplier profits could be slashed.

Theoretically the cheaper prices come from the $1 million dollars a day that NZs have been overpaying, which is the extra margin the supermarkets are apparently making. So suppliers shouldn't lose out.

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#2912331 10-May-2022 14:47

tdgeek:

NZ seems too small for more than two players. Two players is a duopoly no matter what the logo is. You might get a third player is isolated locations but I cant see a third purveyor of grocery products in most suburbs

Except we used to have 3 big players with an even smaller population. Back then there was some okay competition, and I remember that supermarkets back then used to accept other supermarkets coupon books. In the UK they price match on food prices with other supermarkets, but not in NZ. I understand Auckland is getting Costco, so obviously they see money in NZ despite the barriers of entry, but Auckland has a highly concentrated population. The warehouse is priming up to be the third player, but are likely going to have problems scaling up, especially getting sites to build on, and distribution and getting suppliers. That is why it is almost impossible for there to be new entrants in this market in NZ without some form of government intervention. .

johno1234

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#2912332 10-May-2022 14:47

tdgeek:

johno1234:

Quick peek at PaknSave v Coles

PaknSave butter 500g is NZ$6.79 for the house brand. Quick look at Coles in AU (not even sure if that's the low cost supermarket there?) shows house brand Coles butter AU$6.00.

Then consider the exchange rate, and no GST on food in AU.

NZ$5.90 + GST here vs NZ$6.60 + no GST there

Our butter is cheaper until you add GST. Despite Australia's economy of scale. And our inflation is double Australia's.

The recent update was 1.8% for last quarter for NZ and 2.0% for the last quarter for AU

Source? There are lots of them.

Latest OECD https://data.oecd.org/chart/6HWP has Australia Food inflation 4.8% and NZ Food inflation 7.4%

mattwnz

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#2912333 10-May-2022 14:49

Surprised there are only 27,000 people who have signed it, considering it got TV coverage last night.

johno1234

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#2912336 10-May-2022 14:52

mattwnz:

Surprised there are only 27,000 people who have signed it, considering it got TV coverage last night.

I think that most people understand that petitions allow venting of frustration but otherwise have zero effect.

MikeB4

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#2912338 10-May-2022 14:52

mattwnz:

They would need to look overseas and get a balance. But has that occurred in NZs mobile market where a 3rd entrant came in? Businesses are always going to look at ways to reduce costs, and in NZ supermarkets are already moving to almost solely self service checkouts, and some pay some of the lowest rates.

There has been little real gain for consumers with new players in the market. There was more competition when it was mainly Vodafone and the then Telecom. Telcos are divesting a lot of their infrastructure eg Towers, scaling down their call centres, scaling down their retail operations, cutting back dramatically their consumer product choice. The price differential in consumer products across the RSPs is minimal and their offerings are very similar. In Aotearoa if you want to buy a new phone locally you have the choice of Apple, Samsung, Oppo with the odd Motorola and Huawei.

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Earbanean

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#2912341 10-May-2022 14:57

Geektastic:

No. I’m saying staying in huts ought not to be the only way. Carry a tent. Sleep by the track. It’s supposed to be a wilderness experience not an organised walk.

I climbed widely in the Alps in France, Switzerland, Austria and Italy in my youth. Stayed in many huts. Didn’t have to book at all. It can be done.

But staying in huts is NOT the only way. You don't have to stay in the huts and you most certainly don't have to do an organised walk. You do have to book and pay IF you want a bunk in a hut, but there's no requirement to do so. If you want the 'wilderness experience', then knock yourself out. You have a right to do that under the National Parks Act. The only requirement is you camp a certain distance from the track and huts.

Same goes for ski fields on DOC land - like Whakapapa. You can ski all over it as much as you like for free. However, if you would like a ride on one of RAL's lifts, then you have to buy a lift pass from them in order to do so.

ezbee

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#2912342 10-May-2022 15:02

There is also something that needs to be done with regards to supply contracts.
The power the Duopoly has also backed suppliers into oppressive contracts.

Its ok if you are big global player, but the NZ growers etc have indicated major issues since we dropped from 3 to 2 players.

tdgeek

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#2912345 10-May-2022 15:06

johno1234:

Source? There are lots of them.

Latest OECD https://data.oecd.org/chart/6HWP has Australia Food inflation 4.8% and NZ Food inflation 7.4%

Ill check later, Stuff article on a Scott Morrison speech a week or so ago, bagging NZ (amongst others re the inflation rate) The last quarter had been released at 1.8 for us and 2.1 for them

https://www.newshub.co.nz/home/politics/2022/05/inflation-scott-morrison-takes-crack-at-new-zealand-as-pressure-builds-ahead-of-australian-election.html

As Australia prepares to go to the polls later in May, focus has turned to the economy, with it being revealed last week that annual inflation was at 5.1 percent, with a quarterly jump of 2.1 percent. Both were above market expectations.

It's true that New Zealand's annual inflation rate recorded to the end of March did come in at 6.9 percent

However, the quarterly inflation increase - meaning how much it has risen over the last three months - for New Zealand is lower than Australia's at 1.8 percent. That suggests inflation in Australia is currently increasing at a greater rate than here in New Zealand.

mattwnz

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#2912348 10-May-2022 15:12

MikeB4:

mattwnz:

They would need to look overseas and get a balance. But has that occurred in NZs mobile market where a 3rd entrant came in? Businesses are always going to look at ways to reduce costs, and in NZ supermarkets are already moving to almost solely self service checkouts, and some pay some of the lowest rates.

There has been little real gain for consumers with new players in the market. There was more competition when it was mainly Vodafone and the then Telecom. Telcos are divesting a lot of their infrastructure eg Towers, scaling down their call centres, scaling down their retail operations, cutting back dramatically their consumer product choice. The price differential in consumer products across the RSPs is minimal and their offerings are very similar. In Aotearoa if you want to buy a new phone locally you have the choice of Apple, Samsung, Oppo with the odd Motorola and Huawei.

But wouldn't some of that have occurred anyway? I remember when VF contracted out their call centre to Egypt, and then introduced a $1 call charge for prepay customers for phone support. I recall that was before 2D came in. Since then call and data prices have dropped, and vodafone reverted back their support.

I also always look at AirNZ as an example when it comes to competition. Before Ansett came in, Air NZ in Wellington had a terrible terminal (old hanger), and Ansett created a brand new flash terminal. So Air NZ were forced to up their game and they tarted up their old terminal.

Lias

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#2912350 10-May-2022 15:22

mattwnz:

That is why they have paid all these experts and consultants, who look overseas for examples. I believe the Comcom is neutral and independent, and they are the ones who wrote the report showing the problems.

The ComCom did a very good job of trying to ignore the evidence that NZ supermarket profit margins were not materially greater than those overseas (Page 57 of the report). That smacks of not being neutral, but of trying to bend the facts to achieve a political outcome.

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PolicyGuy

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#2912362 10-May-2022 16:04

You may have heard of Countdown's "winter price freeze", wherein they promise to freeze the price of ~500 "essentials" for the winter.

The Spinoff investigates: https://thespinoff.co.nz/money/10-05-2022/a-deep-dive-into-the-countdown-price-freeze

TL;DR - it's a crock

Almost a fifth of the items are herbs and spices, and while they may be a common purchase, New Zealanders struggling with inflation are hardly able to use paprika or nutmeg as the essential ingredient in dinner.
Pasta, cooking oil and toilet paper are all things you might include on a list of essentials, yet Countdown hasn’t. They have found room, however, for a total of 37 dessert items, as well as 29 different snacks and lollies. If you’re thirsty, you can quench your thirst with one of the 19 “essential” wines that have been price frozen.
...
A deeper investigation into the price of those three veges {carrots, onions, and pumpkins} – which will likely be among the most bought of the price-frozen items – is revealing. It’s important to note here that Countdown has frozen selected prices, rather than simply promising not to increase them; they won’t go up or down in price.
Stats NZ data shows carrots, onions, and pumpkins usually go down in price in winter, before rising again in summer.
The timing of the freeze means these vegetables have been frozen at the higher May price, and so they won’t decrease like they usually do. Countdown’s freeze might therefore keep prices of carrots, onions, and pumpkins artificially high – meaning that from June to August, consumers could possibly be worse off when buying these veges at Countdown than they would be without the freeze.

mattwnz

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#2912364 10-May-2022 16:10

PolicyGuy:

You may have heard of Countdown's "winter price freeze", wherein they promise to freeze the price of ~500 "essentials" for the winter.

You can buy a lot of things cheaper at pac n save. People should use the new grocer app to compare prices. I noticed that quite a few things at CD have gone up significantly recently, such as cones (previous $2 a box, now $2.50, which is a 25% increase). That is one of the items in the price freeze. Also if people want to get cheaper cheese, Fresh Choice are doing Mainland 1kg cheese for $11. As FC is owned by CD I wonder why they are not doing the same deal. At CD it says the price is normally $17.90, and on special at $14.90, which is still a lot more than $11 https://www.countdown.co.nz/shop/productdetails?stockcode=281911&name=mainland-edam-cheese-mild-creamy compared to https://www.freshchoice.co.nz/ scroll down for speicals.

sen8or

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#2912421 10-May-2022 16:42

mattwnz:

PolicyGuy:

You may have heard of Countdown's "winter price freeze", wherein they promise to freeze the price of ~500 "essentials" for the winter.

You can buy a lot of things cheaper at pac n save. People should use the new grocer app to compare prices. I noticed that quite a few things at CD have gone up significantly recently, such as cones (previous $2 a box, now $2.50, which is a 25% increase). That is one of the items in the price freeze. Also if people want to get cheaper cheese, Fresh Choice are doing Mainland 1kg cheese for $11. As FC is owned by CD I wonder why they are not doing the same deal. At CD it says the price is normally $17.90, and on special at $14.90, which is still a lot more than $11 https://www.countdown.co.nz/shop/productdetails?stockcode=281911&name=mainland-edam-cheese-mild-creamy compared to https://www.freshchoice.co.nz/ scroll down for speicals.

I thought Pak n Save were cheaper too, but whilst not exactly 100% accurate (but close enough to be meaningful), I used online shopping to compare as best possible between supermarkets, Pak n Save and New World on a recent shop. Admittedly, both are owned by the same group, but Pak n Save is always touted as being the cheapest. Where possible I matched items exactly, where this couldn't be done, I matched the cheapest offering. On a $300 spend, they were both within a few dollars of each other, much came down to the different specials where cost per item (or kilo) varied. Pak n Save were typically cheaper on items not on special (especially things like canned goods) with 20-50c per item cheaper. Where one type of meat was on special at one (steak for example), it wasn't the case at the other.

Ultimately with online shopping and click n collect, you could theoretically shop the specials at any of your local supermarkets and get the goods at the best price. So long as the fees ($6 all up at our New World) don't outweigh the savings (or you aren't driving all over town wasting gas) this is a reasonably prudent way to get the best between the brands. It's not like you have too spend hours wandering the isles wondering if you are getting the best deal, or buying it because you simply can't be bothered going elsewhere.

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