Lobby group targeting supermarket giants can play important role: Editorial

There are several ways in which a newly formed lobby group, leveraging the media and political ties, can help to bring more competition to the grocery market. Photo / Stock

Editorial

EDITORIAL

The emergence of a new antagonist to the supermarket giants has reverberated across the food retail industry. Last week, the Herald revealed a new consumer action group – yet to be named – is being formed to lobby for tougher constraints on the dominance of Foodstuffs and Woolworths over our $22 billion grocery market.

“There’s a social emergency here that needs more decisive action than has been shown so far,” said Suzanne Chetwin, a former newspaper editor and Consumer NZ chief executive who is fronting the group, promising an aggressive focus on lowering prices at the checkout.

Privately, some industry players welcomed the initiative but were sceptical about whether it would make an impact. Their doubts are understandable: Chetwin has a long track record in consumer advocacy, but she has yet to reveal who she is working with and the resources they will bring to bear in an area that has been stubbornly resistant to reform. Her action group will be little use – and will fade quickly into irrelevance – if it turns out to be just another angry voice shouting hopelessly into the wind.

But Chetwin is right that there are several ways in which such an organisation, leveraging the media and political ties, can help to bring more competition to the grocery market.

First, it promises to keep watch over the watchdogs.

The Commerce Commission – and its new Grocery Commissioner Pierre van Heerden – has been given increased responsibilities to monitor and regulate supermarkets, including the ability to impose fines for treating suppliers unfairly.

These enforcement powers, Chetwin says, are “limited but real”, and one of the group’s main purposes will be to make sure the commissioner uses them. It will hold van Veerden’s “feet to the fire”, she says.

Second, the group will lobby the new coalition Government to extend the regulators’ powers.

The coalition partners have committed to increasing competition in the sector but disagree about how to make it happen. National was initially lukewarm about Labour’s regulatory reforms, including the creation of the Grocery Commissioner, but since the election ministers have indicated they will maintain the regulatory direction of travel.

They need to go further, Chetwin argues, and give the commission even more authority to regulate the supermarkets’ conduct and impose bigger penalties for anti-competitive practices.

Third, the new group aims to bring greater transparency to pricing practices and supermarkets’ dealings with suppliers.

According to the Competition Commission’s market study in 2022, Kiwi consumers pay high prices for groceries compared with those in other countries, which is compounded by an array of confusing pricing and promotional practices that make it hard to make informed purchasing decisions.

Suppliers such as farmers, growers and manufacturers are sometimes forced to accept lopsided trading relationships in which the supermarket giants set the terms. Even if they feel they are getting a raw deal, suppliers may be reluctant to raise complaints out of fear the supermarkets will retaliate.

Chetwin says her group will “furiously” monitor new unit pricing rules to ensure customers aren’t confused by the cost of items, expose misleading pricing practices, and publicise unfair treatment of suppliers – providing cover particularly to those smaller operators that feel they can’t afford to speak out themselves.

Other advocacy groups such as Consumer NZ have done excellent work to highlight problematic supermarket pricing. Chetwin insists her new group, with a singular focus on the sector, can do more. She has promised to say more publicly about the group later this month. Consumers will want to know that it has more to offer than laudable ambitions.