Bernard Hickey 's Opinion

Bernard is an economics columnist for the NZ Herald

Bernard Hickey: Rival out to unsettle monopolies

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Photo / Kellie Blizard
Photo / Kellie Blizard

Large parts of New Zealand's economy have settled into monopolies and duopolies, often foreign-owned.

Our small population and a trend over the past three decades of deregulation towards consolidation and economies of scale has put a series of industries into the hands of a few dominant players.

New Zealand now has two major newspaper groups, two major radio networks and three television operations. In supermarkets we have two major chains and in malls Westfield is the dominant player.

Some argue that this is one reason why consumers lack choice and that prices are higher than they are in more competitive markets such as Australia, Britain and the United States.

Some also argue this lack of competition and price inflation in our so-called non-tradeable sectors of finance, retailing, media, health and education has been a factor in the unbalancing of our economy away from exporting and production towards consumption and importing over the past decade.

So it's great to see a new enterprise shaking up two of these sectors and lowering entry barriers for smaller manufacturers and retailers.

Advertising man Greg Partington, managing director of Ogilvy, is launching the Shopping Channel on Sky 18 and Freeview 18 (24/7) and late at nights and mornings on Prime from October 1. He wants a display platform for retailers and manufacturers, small and large It will sell advertising slots by the minute. Shoppers can order goods over the phone or the internet for home delivery.

This challenges the entrenched players in malls and the media business.

At present it's expensive for anyone with a new line of cosmetics or household gadgets to reach an audience then get into a distribution system.

Our malls are dominated by a small number of chains with limited products, often determined by a few buyers who prefer to deal with big suppliers. Advertising campaigns on our free-to-air television networks are too expensive for most small manufacturers and retailers.

The Shopping Channel is therefore challenging the dominance of these in retailing and media. It also may help curtail a disturbing shift to shop overseas.

A PwC survey this week showed almost 6 per cent of New Zealand's retail sales are done online, with 35 per cent of that online shopping on overseas sites. Women now spend more than $1 billion overseas on apparel.

Partington's Shopping Channel will employ 50 to 80 people and aims to open up wider ranges of cosmetics, shoes, clothing and household goods to women shoppers.

Extra competition has got to be good for consumers and the local economy.

- Herald on Sunday

Bernard Hickey

Bernard is an economics columnist for the NZ Herald

Bernard Hickey is the publisher of Hive News, a Wellington-based political and economic subscription news email service. He also writes for Interest.co.nz and appears regularly on Radio New Zealand, Radio Live, TVNZ and TV3. He has been a financial journalist for 25 years, having worked for Reuters, the Financial Times Group and Fairfax Media.

Read more by Bernard Hickey

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