1 00:00:00,160 --> 00:00:02,560 Speaker 1: Christ Church and Wellington could be next in line for 2 00:00:02,600 --> 00:00:06,480 Speaker 1: Costco stores. The US retail chain says it's working on 3 00:00:06,680 --> 00:00:10,360 Speaker 1: expansion outside of Auckland. Costco's Westgates store gained one hundred 4 00:00:10,360 --> 00:00:12,640 Speaker 1: and fifty thousand members within a year of opening and 5 00:00:12,720 --> 00:00:15,520 Speaker 1: just introduced home delivery to both members and non members 6 00:00:15,560 --> 00:00:18,960 Speaker 1: across Auckland through door dash. So is this the new 7 00:00:19,000 --> 00:00:22,040 Speaker 1: player in the grocery sector that we're looking for? Grocery 8 00:00:22,040 --> 00:00:24,759 Speaker 1: policy expert Ernie Newman joins me. Now, thanks for your time, 9 00:00:24,840 --> 00:00:26,200 Speaker 1: Ernie Gooda. 10 00:00:26,239 --> 00:00:26,439 Speaker 2: Thanks. 11 00:00:26,960 --> 00:00:29,240 Speaker 1: Do you think this expansion is likely to Wellington and 12 00:00:29,280 --> 00:00:30,760 Speaker 1: christ Church? I mean, now, it would be the time, 13 00:00:30,840 --> 00:00:33,280 Speaker 1: right the government's all in to make things happen. 14 00:00:34,360 --> 00:00:36,680 Speaker 2: I'd love to think so, but I'm not at all 15 00:00:36,720 --> 00:00:40,559 Speaker 2: convinced on this one. You know, Costco is an unusual 16 00:00:41,000 --> 00:00:44,160 Speaker 2: kind of retailer. It's very, very successful in the North 17 00:00:44,200 --> 00:00:47,960 Speaker 2: American market, mainly, I think because of the high density 18 00:00:48,000 --> 00:00:51,199 Speaker 2: housing over there and the think they can form a 19 00:00:51,240 --> 00:00:55,240 Speaker 2: supermarket down and get huge numbers of people able to 20 00:00:55,720 --> 00:00:59,320 Speaker 2: get there with a relatively short drive. New Zealand is 21 00:00:59,400 --> 00:01:02,320 Speaker 2: a much more when it's sort of place, and somehow 22 00:01:02,480 --> 00:01:05,960 Speaker 2: I struggle to see how the cost home model will 23 00:01:06,000 --> 00:01:08,920 Speaker 2: really work in New Zealand or in fact, there's a 24 00:01:08,920 --> 00:01:10,960 Speaker 2: lot of countries outside North America. 25 00:01:11,120 --> 00:01:13,360 Speaker 1: Do you think the membership holds people back? 26 00:01:14,560 --> 00:01:19,440 Speaker 2: Not necessarily. I think the big problem is the concentration. 27 00:01:19,920 --> 00:01:25,040 Speaker 2: You know, most of the supermarkets in New Zealand spread out. 28 00:01:25,080 --> 00:01:29,080 Speaker 2: They have a site in every suburb and they basically 29 00:01:29,120 --> 00:01:32,440 Speaker 2: go to where the consumers are. Costco expects the consumers 30 00:01:32,440 --> 00:01:34,600 Speaker 2: to get in their cars and travel long distances to 31 00:01:34,640 --> 00:01:37,919 Speaker 2: go to them. So I think if Nicola Willis really 32 00:01:37,959 --> 00:01:40,399 Speaker 2: wants to make a breakthrough here and if she wants 33 00:01:40,440 --> 00:01:43,000 Speaker 2: Costco to be part of it, she needs to persuade 34 00:01:43,000 --> 00:01:44,520 Speaker 2: them to change their business model. 35 00:01:45,760 --> 00:01:49,360 Speaker 1: Okay, and is Costco opening two more Is Costco opening 36 00:01:49,400 --> 00:01:54,920 Speaker 1: two more outlets going to have an impact or would 37 00:01:54,960 --> 00:01:58,080 Speaker 1: you also like to see the government still step up 38 00:01:58,120 --> 00:02:00,240 Speaker 1: and break up the current entities in place to make 39 00:02:00,240 --> 00:02:01,080 Speaker 1: an impact as well? 40 00:02:01,920 --> 00:02:05,200 Speaker 2: Absolutely, the government needs to still step up. You know 41 00:02:05,320 --> 00:02:08,519 Speaker 2: Costco and Australia for example, they've been going in Australia 42 00:02:08,680 --> 00:02:10,960 Speaker 2: ten years or so longer than they have here and 43 00:02:11,040 --> 00:02:13,560 Speaker 2: they're still struggling to get to two percent market share 44 00:02:13,639 --> 00:02:16,200 Speaker 2: over there. You know, it's a very long hard road, 45 00:02:16,240 --> 00:02:20,560 Speaker 2: and I think that's because their business model doesn't particularly 46 00:02:20,639 --> 00:02:23,520 Speaker 2: well suit the conditions in either Australia or New Zealand. 47 00:02:23,880 --> 00:02:25,919 Speaker 2: So if I was Nikola Willis, what I'd be doing 48 00:02:26,480 --> 00:02:30,880 Speaker 2: is legally requiring Woolworth Australia and food Stuff to each 49 00:02:30,960 --> 00:02:34,079 Speaker 2: sell off, say one hundred or so supermarkets, and then 50 00:02:34,120 --> 00:02:37,280 Speaker 2: I'd be working with Costco to buy them, but to 51 00:02:37,360 --> 00:02:39,760 Speaker 2: run them in the way New Zealand super I turn 52 00:02:39,919 --> 00:02:43,040 Speaker 2: markets tend to run, rather than try to impose the 53 00:02:43,040 --> 00:02:44,200 Speaker 2: North American model here. 54 00:02:44,400 --> 00:02:45,400 Speaker 1: Do you think they'd be out for that. 55 00:02:46,560 --> 00:02:49,240 Speaker 2: I don't know, that's a question for them. But you know, 56 00:02:49,280 --> 00:02:51,720 Speaker 2: there's a big there's a good opportunity here for somebody. 57 00:02:52,360 --> 00:02:55,320 Speaker 2: You know, this is a highly highly profitable market which 58 00:02:55,360 --> 00:02:58,240 Speaker 2: is broken and we really need somebody to come in 59 00:02:58,280 --> 00:03:02,480 Speaker 2: with a completely new approach and bring back competition. 60 00:03:02,960 --> 00:03:04,120 Speaker 1: I mean, I do know a lot of people in 61 00:03:04,120 --> 00:03:06,680 Speaker 1: Auckland who will drive the distance, you know, once a 62 00:03:06,680 --> 00:03:08,600 Speaker 1: month to do a big stock up of the non 63 00:03:08,639 --> 00:03:09,840 Speaker 1: perishables at Costco. 64 00:03:11,040 --> 00:03:13,440 Speaker 2: Yeah, but do you know any in Hamilton or wanger 65 00:03:13,480 --> 00:03:19,320 Speaker 2: At will do that. You know, this is a decentralized country. 66 00:03:19,720 --> 00:03:23,919 Speaker 2: North America is very different and you know, the market 67 00:03:24,000 --> 00:03:27,560 Speaker 2: figures in Australia sort of speak to themselves that Costco, 68 00:03:27,680 --> 00:03:29,960 Speaker 2: after all, is the decade or so trying to get 69 00:03:29,960 --> 00:03:32,679 Speaker 2: into that market. Are still really struggling over there. 70 00:03:33,360 --> 00:03:35,520 Speaker 1: Yeah, it's the problem, isn't it. It's the long term plan, 71 00:03:35,600 --> 00:03:37,240 Speaker 1: isn't it, Ernie, It's a. 72 00:03:37,320 --> 00:03:40,040 Speaker 2: Very long term plan. But we have a short term problem. 73 00:03:40,640 --> 00:03:42,680 Speaker 2: You know, we've got kids going hungry here. We need 74 00:03:42,760 --> 00:03:45,560 Speaker 2: something to happen in the next year or two, not 75 00:03:45,720 --> 00:03:48,880 Speaker 2: in another generation. And that's why I think Nichola Willison's 76 00:03:48,920 --> 00:03:51,880 Speaker 2: answer is to work with Costco, but as part of 77 00:03:51,880 --> 00:03:54,240 Speaker 2: a breakup of the supermarkets we already have. 78 00:03:54,640 --> 00:03:56,960 Speaker 1: Do you think an expansion would enable other players to 79 00:03:56,960 --> 00:03:59,760 Speaker 1: look at New Zealand is a good place to potentially 80 00:03:59,840 --> 00:04:00,560 Speaker 1: end the market? 81 00:04:01,360 --> 00:04:04,640 Speaker 2: I think divestment, yes, I think it's the you Nichola 82 00:04:04,680 --> 00:04:08,280 Speaker 2: Willis has made has said some very good things, like 83 00:04:08,360 --> 00:04:11,800 Speaker 2: she's indicated that she is open to an enforced breakup 84 00:04:11,840 --> 00:04:16,760 Speaker 2: of the existing structure of the market. That's really really positive. 85 00:04:17,040 --> 00:04:18,720 Speaker 2: So I think there will be a lot of other 86 00:04:18,720 --> 00:04:21,120 Speaker 2: people sniffing around the market at the moment, but what 87 00:04:21,160 --> 00:04:25,040 Speaker 2: we need now is to move from the words phase 88 00:04:25,120 --> 00:04:28,320 Speaker 2: to the action phase and show that she's serious about that. 89 00:04:28,400 --> 00:04:31,599 Speaker 2: But again, you know, it's divesting what we already have 90 00:04:31,760 --> 00:04:33,680 Speaker 2: that'll unlock the potential. 91 00:04:34,040 --> 00:04:35,800 Speaker 1: Thanks so much for your time this morning. That was 92 00:04:35,920 --> 00:04:37,920 Speaker 1: Ernie Newman. I tend to agree with Ernie. I think 93 00:04:37,960 --> 00:04:40,279 Speaker 1: this is a nice step in the right direction, but 94 00:04:40,320 --> 00:04:42,640 Speaker 1: it's a long term solution, and I don't think there 95 00:04:42,760 --> 00:04:46,520 Speaker 1: is one solution for this, this long running debate that 96 00:04:46,560 --> 00:04:49,240 Speaker 1: we have on how we break up the duropoly of 97 00:04:49,240 --> 00:04:51,880 Speaker 1: foodstuffs and will Worths. I think he's right. I think 98 00:04:51,880 --> 00:04:55,800 Speaker 1: it's going to need a variety of steps and actions 99 00:04:55,839 --> 00:04:58,320 Speaker 1: taken kind of across the board to see a difference. 100 00:04:59,279 --> 00:05:01,880 Speaker 2: For more from it the edition with Ryan Bridge. Listen 101 00:05:02,000 --> 00:05:05,040 Speaker 2: live to News Talks it be from five am weekdays, 102 00:05:05,279 --> 00:05:07,360 Speaker 2: or follow the podcast on iHeartRadio.