Now it plans to invest $25m over the next five years to bring greater supermarket competition to underserved communities nationwide.
Paddock to Pantry business manager John Kennerley said changes to supermarket competition settings provided the foundation for independent operators to compete with the big chains.
“The groundwork has already been done through the changes to supermarket competition settings. Those reforms have opened the door for independent operators like us to compete, and we’ve demonstrated that the model works.
“We’re not building a handful of speciality food stores. Our ambition is to become New Zealand’s third-largest grocery retailer and provide a genuine alternative to the two dominant supermarket groups.
“We’ve demonstrated that we can compete online on price, range and service. The next stage is translating that into a physical network that brings those benefits directly into more communities.”
Paddock to Pantry business manager John Kennerley and brand manager Anna Kennerley, are preparing to take the business to the next level.
The five-year investment programme includes about $10m in new shops, a proposed 5000sq m distribution centre and an expansion of its delivery fleet to 25 vehicles.
Paddock to Pantry’s first new store will be a 500sq m outlet in Kinloch set to open in December, with larger supermarket-format sites planned for the East Coast and South Auckland in the first quarter of 2027.
The company is seeking sites ranging from 500sq m to 1800sq m, with larger stores expected to employ about 50 people each.
The programme could create up to 1000 retail jobs, alongside additional employment in warehousing, transport and distribution.
The company expects to open grocery stores at a rate of about one every three months, transforming the business from a predominantly online grocery operator into a national bricks-and-mortar supermarket chain.
E-commerce currently accounts for about 90% of sales, but is expected to fall to about 33% within five years as its physical network grows.
Kennerley said the strategy was focused on locations where limited supermarket choice had historically reduced competitive pressure on prices, including regional centres and metropolitan suburbs.
“We’ve already done much of the heavy lifting. We have the distribution infrastructure in place, direct relationships with the major grocery manufacturers and a pricing model that allows us to compete.
“Suitable retail sites are available, and we’ve identified locations where we believe there’s sufficient demand for another supermarket.”
Paddock to Pantry opened its second physical store in Kahawai Point, Auckland, late last year. Pictured is co-owner Melanie Kennerley.
Kennerley said changes to wholesale grocery access arrangements had supported the company’s growth, enabling it to establish the purchasing volumes needed to negotiate directly with major manufacturers.
But he also called for the establishment of a Government-backed “Supermarket Growth Fund” to provide low-interest loans to privately owned operators.
He argued that the fund could be a low-cost way to accelerate competition by helping existing independent operators to expand more rapidly.
“Scaling from here is largely a matter of securing the capital to fit out stores, stock shelves and employ local people. That’s why access to low-interest funding could make such an immediate difference.
“We’re not asking the Government to fund the creation of a new supermarket business. We’re talking about helping established operators replicate a model that’s already working.”
The scheme could allow New Zealand’s second tier of privately owned grocers to double or triple their expansion rates, bringing forward investment, employment and pricing benefits that might otherwise take years to achieve.
He said privately owned operators did not have access to the same financial resources, so expansion had to be funded progressively.
“Rather than waiting for another international supermarket chain to enter New Zealand and establish a national network from scratch, we could accelerate the growth of businesses already operating here.
“We believe New Zealand’s next major source of supermarket competition can come from the privately owned operators already in the market. The opportunity now is to give those locally owned businesses the means to grow much faster.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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