Government to boost NZ supermarket competition, lower grocery prices

The New Zealand Government is set to shake up the supermarket sector, currently dominated by Woolworths and Foodstuffs, as Economic Growth Minister Nicola Willis announces a Request for Information (RFI) aimed at increasing competition and lowering grocery prices.

To present recommendations by mid-2025, the initiative explores potential structural reforms, including breaking up existing chains, to improve market functioning and provide relief for Kiwi families facing high living costs.

The Government is exploring options to increase competition in the supermarket sector, currently dominated by Woolworths and Foodstuffs.

Economic Growth Minister Nicola Willis announced on Sunday that grocery prices in New Zealand are higher than international standards, highlighting the need for effective market functioning.

A formal Request for Information (RFI) has been approved to gather insights on potential regulatory changes and structural reforms, including the possibility of breaking up existing supermarket chains.

Willis aims to gather information over the next six weeks and will present recommendations to the Cabinet by mid-2025.

She says that while all options are on the table, including significant changes, the Government will not create a third grocery chain.

Labour has criticised the National government for failing to make major changes to the grocery sector, claiming it has not introduced competition or reduced prices.

Labour's commerce and consumer affairs spokesperson, Arena Williams, says the Government is delaying actions in prioritising cost reduction.

Economic Growth Minister Nicola Willis has put the supermarkets on notice. Photo/Supplied

“This long-awaited big announcement doesn’t bring competition into the supermarket sector, introduce a new player or bring down prices for New Zealanders as promised,” Williams says in a statement.

“The cost of living is squeezing New Zealanders, and National has been promising for nearly two years now – from opposition and in Government – that they’d do something about it."

But consumer advocates like the Grocery Action Group support the Government’s move, arguing that minor adjustments are insufficient and that a more substantial change is needed to improve supermarket competition.

Foodstuffs has recently expressed its willingness to participate in the Government’s request for information on obstacles to competition while emphasising the need for changes to offer real benefits to consumers.

While it is aware of the Government’s announcement, Woolworths has refrained from making any comments.

Labour's Manurewa MP Arena Williams says the National Government is failing to deliver on supermarkets. Photo/Mark Mitchell

Previous findings highlighted by Willis show that competition in the grocery market is limited, profits are high, and New Zealanders pay more for staples compared to other countries.

The Government has ruled out establishing its grocery chain and cannot force a new market entrant to disrupt the current duopoly.

Supermarket margins have increased, with Foodstuffs and Woolworths maintaining dominance in the sector.

A recent Commerce Commission study found that Foodstuffs and Woolworths collectively control 80 per cent of the domestic grocery market.

In New Zealand, the Woolworths Group owns and operates the Woolworths (formerly Countdown) supermarkets, as well as franchises SuperValue and FreshChoice stores.

Woolworths NZ operates over 191 stores nationwide. Countdown, the previous name of Woolworths NZ's flagship chain, was rebranded to Woolworths in early 2024.

Foodstuffs, a New Zealand grocery company owned by the retailers' cooperatives Foodstuffs North Island Limited and Foodstuffs South Island Limited, owns and operates the supermarket brands New World, PAK'n SAVE, and Four Square.

Foodstuffs also owns Gilmours, Liquorland, and Raeward Fresh, which operates only on the South Island.

Foodstuffs also has its private label brands, including Pams, Pam's Finest, and Pam's Value.