“We’re accountable and delivering at pace”: Foodstuffs North Island shares quarterly update on progress against Commission’s market study recommendations

Foodstuffs North Island (FSNI) has today released the third quarterly update on progress towards implementing the Commerce Commission’s final recommendations from the retail grocery market study.

In April, the co-op launched a reporting dashboard to track its progress on the recommendations, and committed to going further on accountability and transparency by publicly reporting via the dashboard on a quarterly basis.

The co-op's latest dashboard update details the progress made in simplifying pricing and promotions to make it easier for customers to find value in every supermarket aisle. The dashboard also outlines work underway to develop FSNI’s wholesale service for retailers who aren’t members of the cooperative.

FSNI Chief Executive Chris Quin says the cooperative's work to remove the genuine barriers to competition within its control is an ongoing priority.

“Foodstuffs North Island is accountable for the delivery of all the Commission’s recommendations to improve competition in the retail grocery sector.

“On pricing and promotions, we’ve committed to clear, consistent and simple price ticketing on shelf so our customers know what’s on special, and where they can save every day when they shop with us. The extensive work underway to introduce a new and simpler pricing and promotions structure at PAK’nSAVE and New World is well advanced.

“In July, we began implementing changes to the way we do ticketing our PAK’nSAVE stores to make it easier for customers to find value. In August, Everyday Low Price (EDLP) was introduced in all 148 New World stores nationwide. The introduction of EDLP is one way we’ve been able to provide more certainty for customers at the checkout, by ensuring low stable pricing for 100s of everyday items.

“We’ve worked quickly to implement the proposed enhancements to New World Clubcard terms and conditions and changes to our Privacy Policy that we shared with the Commission, and we’ve recently communicated these changes to customers.

“On wholesale, we have a dedicated team working on developing our wholesale service for retailers who aren’t members of our cooperative. The team are working quickly through the expressions of interest received to date and engaging with each party to get the detailed understanding needed to create a solution that could meet the needs of different sized retailers.

“To date, we’ve engaged with almost 100 retailers that have expressed interest in our wholesale offering. We’ve also written to all suppliers seeking their agreement to have their products included in a wholesale offer to retailers outside of our co-op. We’ll continue working hard to quickly get this up and running, while ensuring that we’re taking the necessary time to get it right.

“On land covenants, we made a commitment in August 2021 to end the use of restrictive covenants and exclusivity provisions in leases, and immediately started a process to identify and remove all existing ones. While that process is underway no covenant or exclusivity provision has or will be enforced. The technical process required to identify and remove all restrictive covenants continues at pace.

“We’re also delivering on our commitment to provide customers and stakeholders with as much useful data and insights as we can on cost and price changes, and the drivers behind them.”

The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) was introduced in August to measure the change in the cost of grocery goods charged by suppliers to the Foodstuffs North and South Island cooperatives. The latest Index shows the continuing pressure on supermarkets’ costs from record supplier increases, up 10%pa in October.

“Our data and insights team are also tracking and comparing our price increases against food price inflation each month, so that customers get a full picture of food cost changes and what’s driving them,” says Quin.

The latest Stats NZ Food Price Index (FPI) shows food prices increased 8.3% in September compared to a year ago. On the same products, the retail price increase to Foodstuffs customers was 6.8% - meaning the co-operatives’ members held prices in their stores at 1.5% less than inflation in September.

“We’ve held grocery price increases in our stores below inflation for five months in a row now, which shows that our meaningful work to fight inflation for our customers is paying off, and the extent to which we’re absorbing record cost increases,” says Quin.

Quin says external factors driving this year’s food price inflation are not related to structural issues within the supermarket industry in New Zealand, and shouldn’t be conflated with the Government’s policy response to the market study.

“Profitability was not the smoking gun the Commission had first thought in its draft report. That’s why, after 18 months of detailed investigation, the Commission shared a set of final recommendations it said were proportionate and would genuinely improve competition in our sector – the stated aim of the market study.

“We’re committed to keep providing updates each quarter on our work to action all of the Commission’s recommendations to ensure that our customers are getting value at the checkout. We know we’re accountable to New Zealanders on this.

“The substantial change that is happening as a result of the Commission’s recommendations to improve competition from the market study is good for the industry, good for customers, and good for New Zealand.”

The dashboard is available on the Foodstuffs North Island website here.