Shoppers could soon see more choice at the checkout as the government moves to clear barriers for supermarket competition. New laws, due in November, will simplify approvals for new or expanding supermarkets.
Cutting Red Tape in New Zealand’s Grocery Market
Finance Minister Nicola Willis said the reforms would remove red tape that has long stifled rivals to the country’s dominant grocers, Foodstuffs NZ and Australia’s Woolworths.
“We’re creating an express lane for new supermarkets to boost competition and deliver better deals for Kiwi shoppers,” Willis said on Wednesday.
Fast-Track Supermarket Approvals to Boost Market Entry
Tough regulations and slow approval processes have blocked new players from gaining a foothold in the grocery sector for years. Therefore, the lack of competition has allowed the two main operators to maintain a tight grip on the market.
Willis argued that the new laws will remove unnecessary delays and make it easier for companies to open or expand. “Tough regulations and a slow approval process for new applications are blocking new competitors,” she said.
Government Rejects Calls to Break Up Grocery Duopoly
Some respondents to the government’s review of the sector had called for the breakup of Foodstuffs and Woolworths. But Willis made clear that dismantling the duopoly would not be the government’s first move.
“To restructure the supermarkets is not a decision that would be taken lightly,” she said. “It would be a significant intervention that would carry costs and risks that would need to be rigorously weighted against the potential benefits to shoppers.”
The government is currently prioritising streamlined approvals and market access over heavy-handed restructuring.
Single Authority Planned to Oversee Grocery Sector Approvals
A single authority will be appointed to oversee supermarket approvals under the proposed changes, simplifying what is currently a fragmented system. The government also intends to modify foreign investment rules, creating clearer pathways for overseas companies looking to enter the market.
Willis warned that existing players could face prosecution if they misuse their market power to squeeze out competitors. “Companies could be prosecuted if they misuse their market power to exclude or stamp out competitors,” she said.
Rising Interest From Domestic and International Retailers
The government’s announcement has already attracted interest from potential entrants. U.S. retail giant Costco, which opened its first New Zealand store in Auckland in 2022, welcomed the changes. According to Willis, the company “informed the government that the initiatives to boost competition will help with the company’s future expansion plans in New Zealand.”
There are five domestic companies that have expressed interest in entering the grocery sector alongside Costco.
“We’re creating an express lane for new supermarkets to boost competition and deliver better deals for Kiwi shoppers,” Willis said.