Night ’n Day general manager Matthew Lane said he would be making a submission after the government asked potential entrants to the market what changes needed to be made to clear the way for a third player to take on the duopoly.
He believed there needed to be “a much more level playing field” in the supermarket industry.
In order to enter the supermarket industry, Night ’n Day would need to “look at purchasing one of the existing banners combined with being able to reduce prices considerably in store by way of stronger wholesale prices”, he said.
“I’ve had positive conversations already on it, which I won’t go into detail what they are at this stage, but they are certainly very positive and constructive to finding solutions to increase competition.”
His company’s plan to make submissions to the government comes after Finance Minister Nicola Willis called for potential competitors in the supermarket industry to provide feedback on how to make the industry more competitive.
Mr Lane welcomed the moves.
“I think it’s a great idea to actually gain interest and see what’s needed and what’s holding people back,” Mr Lane said.
“There are similarities to the actual initial market study around what the barriers were, but I feel like this is more a step to take action rather than a step to purely understand.”
Mr Lane said potential challengers to the supermarket duopoly of Foodstuffs and Woolworths NZ did not necessarily need to come from overseas.
“I think it’s been widely touted that people may come to New Zealand, or The Warehouse may grow in New Zealand, but I simply just don’t believe it’s enough to create a meaningful impact in the market.
“Aldi only has 9% in Australia after entering that market quite a while ago. So I don’t think any international player is going to shake it up quick enough.”
In 2022, the Commerce Commission found that New Zealand grocery prices appear high by international standards and the scale and pace of innovation is lower than would be expected from a more competitive market.
Mr Lane said it was too difficult to tell whether consumers were getting a fair deal from the duopoly, because of the lack of easily accessible market information.
“I think there’s too much smoke and mirrors to say they are.
“The market’s fundamentally broken. To fix that, that needs significant changes.”
He said a host of changes were needed for the market to become more flexible.
They included allowing competitors access to private brand label products, such as Pam’s or Homebrand, along with a loosening of the liquor licence laws.
“There’s an irony when two players control the whole grocery market and charge you more than what you can and it’s based on volume.
“Not only have they taken away all your customers for grocery products, but you then can’t qualify for liquor stores. So if you want cheese crackers and a bottle of wine, you can only go to two companies in New Zealand that have an overwhelming market power.”
Another means to increase competitiveness would be loosening the restraint of trade rules to allow members of co-operatives to leave and trade under a different banner.
Night ’n Day began in Dunedin in 1990 and now has more than 50 stores nationwide, making it the third-largest grocery retailer in New Zealand.
“We’ve been able to move with compliance I think a lot quicker than some competitors and been quite agile with that.
“We’ve also focused heavily on areas that can give us a competitive advantage.”
matthew.littlewood@odt.co.nz
