Woolworths New Zealand, who own the Countdown supermarket chain, has signed its first wholesale agreement - with organic grocer Huckleberry.
It comes amid growing concerns in recent years around the lack of competition in the grocery sector due to the dominance of supermarket giants Woolworths New Zealand and Foodstuffs.
The Government last week confirmed its plans to give the supermarket duopoly one year to make voluntary wholesale agreements with smaller players. A supermarket watchdog will also be established in a bid to crack down on the duopoly.
It comes after a Commerce Commission report released in March made a raft of recommendations to increase competition.
Today, Woolworths New Zealand announced it had signed a wholesale partnership with organics grocer Huckleberry.
The agreement means Huckleberry, which has four North Island stores and an e-commerce website, will be able to supply a range of groceries.
Huckleberry managing director Darren Guo says the move means there will soon be “more organic options at better prices”.
“We’re really, really excited to be the first to get into this agreement with Woolworths and they’ve been really, really helpful throughout this whole process,” he told Breakfast.
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While Woolworths NZ director - NZ grocery wholesale and local, Steve Sexton, said the supermarket giant is unable to provide wholesale supply at a large scale at this stage, its first agreement shows its commitment to encouraging competition in the sector.
“We’re really transparent about the fact that currently, the whole WWNZ business is set up to service our Countdown, SuperValue and FreshChoice stores,” he said on Friday in a statement.
“We’ve been working hard to get this agreement in place and we are confident it will be the first of many.”
Sexton said their partnership will “need a bit of experimentation as we work through order quantities, demand, delivery and logistics, and test and learn so we can quickly scale for other wholesale customers in the future”.
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Woolworths NZ is in talks with more than 50 other retailers and organisations who have reached out, Sexton said.
Woolworths' New Zealand grocery wholesale business operates separately from Countdown, SuperValue and FreshChoice, with a different buying team having discussions with suppliers around products, supply and potential wholesale volumes.
“The Government has been really clear that it wants to see wholesale opening up so we’ve all got to play our part," Sexton said.
Guo said Woolworths NZ has “really come to the table” to help support Huckleberry, “especially around things like logistics so that we can actually buy the goods at a cheaper price and then offer it to our customers at a better price as well”.
“This is just the start and as we progress and Woolworths builds up more capability, we’re going to have more access to do more organic products, more sustainably focused products and definitely more healthier options which are what we’re looking for, so definitely a big win for us.”
Guo said Huckleberry had already been in talks with Woolworths after reaching out to the supermarket giant in early May, but the Commerce Commission’s announcement provided a sense of urgency to have a deal in place.
Huckleberry’s first trial order will be carried out next week.
“We’re going to be testing out different products to see what our customers like and we’re going to be really stress testing where we can go with the price points.
“As the deal matures, we’ll get more options and hopefully, that will make us a little bit more competitive in marketing, get our small businesses more options."
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