ANALYSIS: Another player may yet storm the New Zealand supermarket pitch – currently dominated by Foodstuffs and Countdown – but Kiwis are warned, don't get your hopes up it will be Aldi.
The Government has been looking into whether New Zealand's supermarkets are giving a fair deal to consumers and suppliers . New Zealand has only two big chain owners: Countdown with its Fresh Choice and Super Value chains, and Foodstuffs which owns the New World, Pak 'n Save and Four Square brands.
The Commerce Commission is due to publish its draft market study into the $22 billion groceries industry on Thursday, and one possibility is to pave the way for a new supermarket company.
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But the grocery market has not attracted big names to the same extent, although Costco is making headway with its Auckland superstore and confirmed it was looking to open by the middle of next year.
"The brand people would love to see is definitely Aldi," said First Retail Group managing director Chris Wilkinson, who described it as a potential disruptor.
The German low-price supermarket opened its first Australian store in 2001, and has been registered with the New Zealand companies office since 2000.
Most of its products are home brand, said Wilkinson. It also brings in " very odd types of categories" , for example toasters or beach toys, keeping shoppers loyal and interested.
"Aldi's focus is low price, but it's a pleasant environment," he said.
"They are a massive player globally, so they're able to leverage that."
But Aldi has been saying no to New Zealand for years , and Wilkinson does not see that changing.
Ours is a tiny market and any newcomer would have to spend big money on infrastructure and stores, if it could even find suitable properties in the first place. Compounding those challenges are Covid-19's uncertainty and supply chain disruption .
"It would be great, but I don't see it. There are a lot of other things going on at the moment, and it's going to take a while for some stabilisation to happen before there will be the confidence for big operators to come in like that," he said.
"Aldi is the one that everyone wants, there isn't another player to be honest."
Dr Bodo Lang, senior lecturer at University of Auckland's business school, said Kiwis were paying far too much for groceries and were keen for alternatives.
"Any brand that's in Australia that will address the issues in consumers' minds with the grocery market, I think that would be the preferred brand, and Aldi seems to be one of those brands that ticks all of the boxes."
Aldi was known to be cost-competitive, Lang said.
"I think the evidence is pretty clear that grocery prices at supermarkets in Australia decreased pretty rapidly once Aldi was in the market. I think we would see the same result here."
If not Aldi, then another large international chain that was efficient and willing to disrupt the sector, such as fellow German retailer Lidl, would do, Lang said.
However, a shock decision by Lidl's sister brand Kaufman early last year may have hurt the chances of another supermarket firm coming here.
Kaufman was on the verge of opening its first store in Australia, having spent hundreds of millions of dollars on building distribution centres and taking shop sites, before pulling the plug.
"They made a massive play, and they were tipped to be shaking up the market in a massive way, but they pulled out," Wilkinson said.
The company wanted to focus on its European operations, but there was speculation that changes to Australia's retail sector, and flagging consumer confidence partly as a result of recent bushfires, had also forced its hand.
"So that would have rocked the confidence of others," Wilkinson said.
However, Costco was almost ready here.
"Costco's difference is their focus is on selling bulk products, so instead of buying one can of baked beans you buy a catering sized can of baked beans, or you buy a box, and that's how you achieve your savings," he said.
The arrival of Costco in itself would be a major shakeup, even if it was only based in Auckland. Wilkinson said it would attract people from places such as Hamilton or the Bay of Plenty to buy in bulk.
The Warehouse had already had a crack at the fresh groceries market , and was unlikely to have another go, Wilkinson said.
The world's biggest retailer is US company Walmart, followed by Amazon, Costco, Germany's Schwarz Group (owner of Lidl and Kaufman), and Kroger, all of which offer groceries. Aside from Costco, they are off the local menu, along with France's Carrefour, or the United Kingdom's Tesco or Waitrose.
But more competition was still possible even without the world's big players. The rise of shopping from home meant a supermarket did not need to have a physical presence.
For example, Australian grocer Coles, owned by Wesfarmers along with Kmart and Bunnings, could use Kmart and Bunnings stores as pick-up points if it had a New Zealand distribution centre, Wilkinson said.
"These are the types of things that are not beyond the bounds of reason, and this is the type of disruption that we probably will see going forward."
Lang agreed that the only viable alternative at the moment would be for another brand to enter the market as an online retailer.
"We're doing that more and more anyway, and you just can’t on a national scale launch another grocery retailer and just expect all these large sites in highly competitive locations to suddenly become available, it's just not going to happen."
New Zealand had a long way to go in terms of automation compared with companies such as Amazon, which operated nearly fully automated warehouses, Lang said.
"I fill in my form on the website and then somebody goes shopping for me – that's unbelievably backwards. It just seems a really obvious task that should be automated.
"It's 2021, it's not 1921, so I'm surprised where we are at with online shopping, to be honest."
But again, don't hold out any hopes for groceries by Amazon.
"It's like Ikea. Ikea's business model works on the premise they need one million people within one car hour from the shop – you can easily achieve that in Auckland and you can't achieve that anywhere else in New Zealand," Lang said.
"I think for very much the same reason we won't see a large-scale Amazon retailer entering the grocery market, because their business model is yeah they do groceries, but they do a whole bunch of other things, and we're just too small."
A mix and match of smaller local providers could be part of the answer.
"We've seen more people blending their shopping journeys or relationships with their food suppliers," said Wilkinson.
"Sometimes they're shopping in store, sometimes they're ordering online and having it delivered, other times it's pick up in store, and we'll see more and more of that with potentially less dedication to one particular brand.
"We're already seeing that now with the likes of My Food Bag and Hello Fresh, where people will nimbly swap between those brands as well as also potentially doing that staple shop at Pak 'n Save and those convenience shops at New World and Countdown."
At the premium end there are smaller regional grocers such as Moore Wilson's and Farro, and at the bargain end players such as Reduced to Clear, which stocked products from around the world, he said.
But at the moment they were a drop in the ocean compared with the turnover at the main supermarkets.
"We're now starting to see significant changes across New Zealand in terms of the demographics and populations and so everything's up for grabs at the moment as far as we can see."
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