The New Zealand Labour Party has unveiled a plan to restructure the supermarket sector by separating the wholesale and retail operations of major chains Woolworths and Foodstuffs. The proposal aims to allow smaller grocers, including Four Square operators, to purchase stock from any wholesaler on fair terms, thereby increasing competition and reducing grocery prices.
Under the proposed legislation, Woolworths and Foodstuffs would be required to operate their wholesale supply businesses independently from their retail outlets. This change is intended to eliminate existing restraints that prevent smaller stores from accessing wholesale products at competitive prices. Labour’s commerce and consumer affairs spokesperson, Arena Williams, argued that current arrangements allow supermarket giants to favor their retail stores, forcing smaller grocers to pay higher prices or shop from supermarkets rather than wholesale, which limits competition.
Labour leader Chris Hipkins said the proposed reforms would “crack down on big companies ripping you off” and address the high cost of living by taking immediate action on grocery prices. He emphasized that the time for reviews was over and pledged to implement the new framework within the first 100 days of a Labour government. The plan also includes banning “junk fees” charged to suppliers and increasing transparency around rebate and data deals.
The proposal has sparked debate ahead of the general election, as National and other parties have presented their own plans to reform the supermarket sector. National’s finance and economic growth spokeswoman, Nicola Willis, criticized Labour’s approach as lacking detail and warned it could lead to government overreach in regulating procurement and pricing. Willis highlighted previous government-commissioned assessments that found forced wholesale-retail separation to be “fundamentally flawed,” potentially causing disruption and added costs that could be passed on to consumers.
The opposition Act Party also condemned Labour’s proposals, describing them as knee-jerk political responses that risk undermining investment and innovation in the sector. Act argued that such interventions could do more harm than recent policies like the oil and gas ban, by creating uncertainty in the business environment.
National’s alternative plan involves breaking up Foodstuffs by separating New World and Four Square into one nationwide chain and Pak’nSave into another, effectively creating an additional supermarket player to reduce the combined market share held by Foodstuffs and Woolworths, which currently stands at about 82 percent.
Labour maintains that their approach will empower small grocers to compete more effectively, ultimately putting more money in consumers’ pockets. As Williams noted, the party aims to “deliver lasting change by giving shoppers more choice and ensuring fairer prices that last,” contrasting with what they view as entrenched anti-competitive practices in the current supermarket landscape. The cost of groceries and supermarket regulation is expected to remain a significant issue during the upcoming election campaign.