Pierre van Heerden, the newly appointed inaugural Grocery Commissioner at the Commerce Commission, has unveiled the top three priorities on his fix-it list for the country’s $25 billion supermarket sector.
They are pricing integrity, supplier behaviour, and level playing field, which – according to van Heerden – all need attention right now.
He also reiterated the importance of the new Grocery Industry Competition Act, which took effect in July, to deliver sustainable benefits for New Zealand consumers over the long-term.
Pricing integrity
Most of the complaints sent to the Commerce Commission this year were about supermarkets, with pricing issues being a common reason. The total overcharge paid by consumers could conceivably run to tens of millions of dollars every year.
“The current level of pricing errors that Kiwi consumers are raising with the commission is far too high and points to a real problem,” said van Heerden.
He called on the supermarkets’ management teams to make accurate pricing an “absolute priority”.
“Getting pricing right is the cornerstone of good business practice. It doesn’t need to be complicated, and we expect all businesses, including supermarkets, to have the processes in place to avoid mistakes.”
Supplier behaviour
There is an undesirable behaviour from some suppliers that could negatively impact new and emerging retailers, consumer choice and product prices, he said.
To be a trusted brand in the grocery sector, suppliers have to cooperate with the grocery regime and play fair in the system, van Heerden stressed.
While regulated grocery retailers are now required to sell wholesale groceries to retail competitors, some insist on supplying direct to smaller retailers at much higher prices.
“I will be keeping an eye on this behaviour and exploring possible options for action so that Kiwi consumers and the whole sector, including suppliers, can benefit from more supply options and more retail competition in the long term.”
Level playing field
While there have been encouraging moves by the major supermarket operators to lift land covenants, the commission is continuing to actively monitor this space, to ensure that all existing prohibited covenants have been removed and no new covenants are created.
Improving the conditions, such as making more land available for new grocery stores, is critical to address barriers to new entrants and in turn the level of competition in the market, van Heerden stated.
