A lack of competition in the grocery sector remains a concern, especially in rural areas where major supermarkets continue to dominate the market and customers’ options are limited, the Commerce Commission’s Annual Grocery Report shows.

While this year’s report signals some progress, many of the issues already identified continue to stifle significant improvement in competition, according to Grocery Commissioner Pierre van Heerden.

Among these issues is the increase in grocery retail prices after a period of stabilisation last year, as major supermarkets have maintained their national market share of 82 per cent.

“When we dig deeper, we can see geographical differences in the supermarkets’ dominance. Consumers in Auckland and other main cities have a range of options, but consumers in smaller towns and rural areas typically have minimal to no choice within their locality, with some stores in small towns functioning as a localised monopoly,” van Heerden explained.

The data shows that in Auckland, the major supermarkets hold 71 per cent of the market compared to 88 per cent in the rest of New Zealand. The top of the South Island, West Coast, Otago, Waikato, and Taranaki are regions where the major grocery retailers continued to have the most dominance. 

This indicates that barriers to entry for new competitors remain, and that the major supermarkets continue to wield their power over smaller suppliers. 

“I know there is an appetite for change, and it can’t come quick enough for Kiwis who are feeling the pinch at the checkout. Change in an industry this large and entrenched will take time and deliberate, coordinated effort,” van Heerden said. 

“These annual reports give us, and others, the information and transparency of the industry to make the decisions and changes that are necessary,” he added.