WELLINGTON — ACT has unveiled a new policy to increase supermarket competition by making it significantly easier to build supermarkets, a move economists say could result in New Zealand enjoying up to three times as many manifestations of the existing duopoly.
The proposal, dubbed the Fast-Track Grocery Freedom Pathway, would allow new supermarket developments to receive planning approval within months rather than years.
Under the scheme, applicants would deal with a single national consenting authority instead of multiple councils.
Officials confirmed the authority’s first 47 applications had all been submitted by the two companies currently dominating the market.
“This demonstrates immediate success,” said a spokesperson for the newly established National Grocery Acceleration Office. “Before the policy, there were two major supermarket chains. If all applications are approved, there will still be two major supermarket chains, but spread more efficiently over a larger geographical area.”
The office has released modelling showing competition will increase by 380% once measured using its new Grocery Presence Index, which counts every supermarket as an independent market participant regardless of ownership.
Using the system, one Woolworths directly opposite another Woolworths is classified as “vigorous retail rivalry”.
The policy was developed after officials became concerned that existing competition metrics placed too much emphasis on who owns supermarkets and not enough emphasis on how many fruit-and-vegetable aisles people can see simultaneously.
Industry experts welcomed the shift.
“For too long we’ve been trapped by narrow definitions,” said retail consultant Hayden Procurement-Smythe, author of Rethinking Monopolies As A Mindset Issue. “If a customer can stand in a carpark and observe four nearly identical stores, that customer is experiencing four choices. Ownership structures are really more of an emotional question.”
To ensure genuine market entry, ACT’s one-stop-shop will also offer assistance to overseas operators.
Initial discussions with Aldi, Lidl, Walmart and Costco reportedly ended after officials clarified that New Zealand’s most streamlined approval process still included a Heritage Signage Reflection Assessment, two tui-impact reviews and a mandatory consultation with a committee responsible for protecting historically significant speed bumps.
In response, the Government established a second one-stop shop to help companies navigate the first one-stop shop.
Within hours, concerns emerged that the second one-stop shop would itself require regulatory approval.
A third one-stop shop was announced shortly afterwards.
By Tuesday, the number of one-stop shops had exceeded the number of major supermarket chains.
Officials insisted this represented healthy competition.
The situation intensified when analysts forecast that easier supermarket construction would produce more supermarkets than shoppers by 2031. Treasury estimates suggest the average Auckland household could soon be within 14 metres of a supermarket, with some residents enjoying simultaneous membership in six loyalty programmes simply by opening their letterboxes.
To address oversupply concerns, Foodstuffs and Woolworths announced plans to begin operating supermarkets inside existing supermarkets.
The first pilot site reportedly features a New World located inside a Woolworths, which contains a Metro-format Woolworths, which contains a Four Square, which contains a convenience-format New World designed exclusively for customers who have become lost trying to leave.
Early customer feedback has been positive.
“It took me three days to buy milk,” said one shopper. “But I felt surrounded by competition the entire time.”
In a final report released yesterday, the National Grocery Acceleration Office declared the policy an unqualified success, noting that New Zealand now has more supermarkets, more supermarket brands, more supermarket loyalty cards and more supermarket-related government agencies per capita than any country on Earth.
The report acknowledged one minor issue.
Nobody had managed to make groceries cheaper, but officials said approval had already been granted for a supermarket that would look into it.