Competition in New Zealand’s grocery sector is showing signs of improvement, although the country’s two major supermarket groups continue to dominate the market. 

According to the Commerce Commission’s latest State of Grocery Competition report, Foodstuffs and Woolworths New Zealand still account for more than 80 per cent of grocery sales nationwide. However, reforms introduced in recent years are beginning to lower barriers to entry and expansion for rival retailers.

The regulator said measures such as the Grocery Supply Code, wholesale supply obligations and the removal of restrictive land covenants are helping create a more competitive market.

“While it will take time for other grocers to significantly change the industry-wide metrics, we are seeing new stores opening and several specialty grocers expanding their footprints, particularly in Auckland,” said grocery commissioner Pierre van Heerden. 

The report highlighted increased competitive activity in some local markets, particularly in Auckland, where new entrants and expanding retailers have gained market share. It also found that supermarket profitability and margins remained broadly stable over the past year.

Foodstuffs North Island welcomed the findings, saying the report reflects a sector that continues to evolve.

CEO Chris Quin said the report recognised growing competition in urban centres while highlighting the challenges of maintaining grocery services in smaller communities.

“Significant progress has been made, and we’re committed to continuing that,” said Quin. 

“Over the past few years, the grocery landscape has shifted. As the report notes, in larger urban areas in particular, customers are seeing more choice, more formats, and new ways to shop, which is a positive development.”

• Further reading: Woolworths warned by Commerce Commission for alleged code breach.