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8 March 2022

Consumer NZ finds final grocery sector report falls a step short

The Commerce Commission’s recommendations in its final report on the supermarket industry are a good start, but should go further to ensure a fair deal for New Zealand consumers.

Consumer NZ today welcomed the Commerce Commission’s recommendations in its final report on the supermarket industry but is disappointed the recommendations don’t go further.

We have been calling for 10 fixes to the grocery sector, including a mandatory code of conduct, a supermarket commissioner, a ban on restrictive land covenants and mandatory unit pricing – all of which the Commerce Commission has recommended in its final report.

The report confirms consumers aren’t getting a fair deal and recommends changes to bring about more competition in the sector. But the report hasn’t recommended regulation of supermarket price displays, promotions and loyalty schemes and there is nothing that will require supermarkets to supply other retailers with groceries at competitive wholesale prices. Instead, the recommendations rely on supermarkets voluntarily changing their pricing and loyalty scheme practices and to only consider requests for wholesale supply from other retailers in good faith.

"We are concerned the recommendations rely on the supermarkets doing the right thing. While we’re happy to see the spotlight put on the supermarket sector, we are concerned that if the spotlight is removed, supermarkets will revert to the practices that brought about the need for this market study in the first place. Change is likely to be slow and consumers are not going to see lower prices at the checkout any time soon," said Jon Duffy, Consumer NZ chief executive.

Our recent research found three out of four shoppers (84%) remove items from their weekly shop because of cost, highlighting how widespread cost concerns are across the country. The majority of New Zealanders (89%) substitute grocery items because of price and 37% cannot afford to buy fruit and vegetables for themselves and their families.

Mr Duffy said the pandemic had exacerbated problems and many consumers are struggling to put food on the table.

“Food has become unaffordable for many consumers. In January 2021, our research showed six out of 10 consumers were worried about the price of groceries. By February 2022, this had risen to 98%. It is times like this that we need competitive markets producing good outcomes for consumers. The problems highlighted in the Commission’s report demonstrate strong regulatory intervention is required, and we will be looking to Minister Clark to address the problems in the sector as he considers the Commission’s recommendations,” Duffy said.

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