“New investment means more choices and lower prices at the checkout. If we want new investment, we need to stop doing things that repel it and start doing things that attract it,” Seymour said.
“That’s why we’ve issued new guidelines which roll out the red carpet for credible investors looking to open a new supermarket in NZ. The guidelines specify to investors which provisions of the Act apply to them, what tests their investment needs to meet, and how LINZ will apply those tests to their application. This will give investors more certainty when making their applications.”
Seymour said the Government wanted to make it “as easy as possible” for credible investors to establish or expand grocery retail operations in New Zealand.
“The more options there are for kiwis, the more competition there is within the market. This will lead to lower prices for Kiwis at the checkout.”
Speaking to reporters at Parliament, Seymour described the new “specialised” guidance as rolling out the “red carpet” for investors who can improve competition in the New Zealand duopoly supermarket sector.
Despite Aldi already signalling they were not interested in investing in New Zealand, Seymour said he was still holding out hope they could change their mind following the removal of these investment barriers.
The Government had been vocal in its intent to increase supermarket competition throughout this term, in an attempt to address high food prices. However, its progress had been slow.
In June, the Commerce Commission’s most recent report on New Zealand’s highly concentrated grocery sector showed no meaningful change to weak competition, despite a slew of regulatory changes in recent years.
The market share for the duopoly supermarkets, Woolworths and Foodstuffs (including the North Island and South Island entities), remained 82%.
“Margins and profitability have remained largely stable [for Foodstuffs and Woolworths] suggesting that competition pressure is not meaningfully increasing,” the report said.
“These patterns are not what we would expect in a market experiencing increasing competition, where sustained downward pressure on margins would be more likely.”
Foodstuffs North Island (FSNI) and Woolworths New Zealand experienced small margin decreases over the period while Foodstuffs South Island’s (FSSI) margins rose across fresh and non-fresh categories.
“Both FSNI and FSSI continue to sit at the top end of international profitability benchmarks,” the report found.
This was despite regulatory changes introduced since a 2022 market study found only muted competition in the sector, and apparently high prices and profits for the duopoly.
The changes include:
Banning lease exclusivity arrangements and land covenants previously used by the major supermarkets to block competitors from specific retail locations.A grocery supply code to govern dealings between suppliers and the major supermarkets.A mandatory regime to force the major supermarkets to open their wholesale divisions to customers other than their own retail stores (including competitors).Reforms to planning and consenting rules for new supermarket building, including under the fast-track regime.