Foodstuffs setting up wholesale access for rivals 'with urgency'

Source: 1News

The second of New Zealand's two major supermarket brands are setting up a wholesale grocery service for rival retailers.

Man shopping in a supermarket.

Retailers who aren't members of the Foodstuffs co-operatives can now express interest to become wholesale customers.

It follows a similar move by Countdown owners Woolworths NZ earlier this month.

Foodstuffs is also asking its major suppliers if they're prepared to supply wholesale products to competitors "on comparable terms to what they offer Foodstuffs' co-op members".

Managing director Chris Quin said there were some things that needed to happen first, included understanding demand for the wholesale grocery service, access to product supply, and supplier trade terms.

"Wholesaling groceries to retailers who aren’t members of our co-op isn’t as simple as opening the doors of our distribution centres and letting trucks roll up… providing retail-ready wholesale groceries to non-members means setting up a new service for retailers who are not integrated into our co-operatives."

He said the new service was being built "with urgency" and discussions were underway with four potential customers already.

"Once we know who wants wholesale groceries from us, and what they need in terms of things like service level, range and volume, we can take that information to negotiations with suppliers," Quin said.

It comes off the back of a Commerce Commission inquiry that found competition wasn't working well for consumers.

One suggestion from the commission was to encourage supermarkets to voluntarily consider all requests for wholesale supply of goods. The Government wanted that to be made mandatory.

Speaking to 1News, Quin said it was "very early days" for the new scheme and that Foodstuffs was still in the process of establishing how the system would work.

He said protocols being considered included non-disclosure agreements so that "competing retailers can sit in the room together and work on things".

"We've got some people building technology and interfaces. It's just simple things like being able to take their orders, give them a bill, do all of those things."

Quin said Foodstuffs was prompted to set up the process after accepting "the need to change".

"We accept the need to change. The last couple of years of the market study process has made it clear change is needed... Now what we need to do is build the capability to serve these other retailers".

He said there was a "belief that it is possible" that greater wholesale access would lead to competitors to buy at better prices.

"We understand that it's important for consumers and that we let that happen and that we be part of enabling that to happen."

Consumer NZ had been calling for the opening up of wholesale access to rivals of Countdown and Foodstuffs to encourage competition.

The retailers, who hold a duopoly in New Zealand's supermarket sector, each have retail and wholesale arms.

The cost of fruit and vegetables had risen by 10% from the year to April while the cost of living continues to rise.

Foodstuffs, which includes the New World, Pak'nSave and Four Square chains, had recently frozen the prices of 110 of its items until August. It included fruit and vegetables, some butter and cheeses, as well as some nappies and soap.