Online grocer Supie closes after ‘cash flow difficulties’
Supie, the online-only, Auckland-based grocery retailer, has closed and gone into voluntary administration.
The company opened two years ago with the specific aim of fighting the country's supermarket duopoly and delivering cheaper prices to customers.
Despite expanding into the Waikato and gaining 55,000 customers since its 2021 launch, today it closed its doors after a key investor pulled out.
“The sole director … made the decision to appoint administrators following a key investor ceasing to continue providing funding to the business,” PWC voluntary administrator Richard Nacey said in a statement.
“This resulted in the business facing cash flow difficulties. While sales have rapidly grown over the last calendar year, recent growth has been lower than expected, and insufficient to provide the scale needed to operate profitably in what is a highly competitive industry.”
Nacey estimates claims to be in the vicinity of $3 million.
Supie went offline over the weekend. Its website is down, its Facebook and Instagram profiles have disappeared, and its Google account describes it as being "permanently closed".
In a short statement, Supie's founder said she was "devastated" by Supie's failure. "I have put absolutely everything into Supie. But I'm so grateful for all Supie's supporters - employees, customers, suppliers and shareholders.
"Together, we fought so hard to introduce competition in the market so that Kiwis could get a fairer deal for their groceries."
The New Zealand Companies Register shows two directors pulled out of the company on October 27.
How Supie works for customers
Supie started in 2021 with the express aim of delivering fairer prices to customers.
It operates under a membership-based subscription model with an annual fee of $99, offering perks like free delivery and cashback on some items.
Customers could set up an account and order their groceries online. Deliveries would be packed at Supie's base in Wiri, then delivered the following day.
It was growing, with customers number increasing from 20,000 in April 2022, to 55,000 in July this year. Staff numbers had increased from 35 to 120 over this time.
While Supie didn't offer as much selection as its bigger competitors New World, Countdown and Pak’nSave, it was competitive on price.
A recent Consumer NZ supermarket survey of prices at New World, Countdown, Pak’nSave and Supie showed Supie was the cheapest to buy the ingredients for six meals: burgers, lasagne, pad thai, butter chicken, vegetarian nachos and pizza.
The Commerce Commission wants more competition
In an report released in March 2022, the Commerce Commission said New Zealand’s supermarket sector needed competition.
It announced a raft of initiatives to allow this to happen, including making more land available for grocery stores, improving access to wholesale supply, improving relationships between retailers and suppliers, and helping consumers make more informed decisions.
The Commission said the supermarket duopoly had created conditions that meant it made $1 million per day in excess profits.
In a press release issued today, New Zealand’s grocery watchdog, Pierre van Heerden, said creating a level playing field and reducing the barriers to entry by alternative players was one of his top three priorities.
Balle has positioned herself as an outspoken critic of that duopoly.
“What’s happening in the sector is awful, in terms of how suppliers are being treated,” Balle told The Spinoff in 2022.
“[Customers] have also been let down on food prices.”
Earlier this year, Balle told RNZ suppliers had pressured Supie to increase its prices. Supie refused, saying its profit margins were “reasonable”.
"We can't confirm that the duopoly are putting pressure on our suppliers, but for them [suppliers] to request us to increase our retail prices means that there is some pressure coming from somewhere,” she said.
"I think it really shows how important competitors are in this market, like us.”
New Zealand desperately needs more competition
Consumer CEO Jon Duffy called Supie’s closure “sad”.
“At Consumer we are saddened to hear that Supie has gone into voluntary administration. Supie was a brave disrupter in the supermarket sector and it challenged the entrenched duopoly.
Today’s news is a stark reminder of just how difficult it is for new entrants to get a foothold in the supermarket sector. We remain hopeful that the Grocery Commissioner will use his powers to bring about improvements, and soon.”
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