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Speaker 1: Right now, we're going to go across the Tasman the

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Speaker 1: equivalent there of the Commerce Commission has said to the Aussies,

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Speaker 1: you're getting a raw deal from your supermarkets. And we

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Speaker 1: often look to Australia as almost a panacea of supermarket operations.

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Speaker 1: Well not so apparently. The Australian Competition Consumer Commission, the

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Speaker 1: a Triple C, has found the big chains, along with

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Speaker 1: the discount rival Aldi, are among the most profitable supermarket

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Speaker 1: businesses in the world and the sector requires widespread reform.

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Speaker 1: Nick Hogan Dyke is a retail consultant over there, and

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Speaker 1: he's with me this afternoon.

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Speaker 2: Get a Nick, Hi, how are you?

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Speaker 1: I see Cohles has already come out and said, actually,

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Speaker 1: you guys don't know what you're talking about. That you've

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Speaker 1: you calculated our margins incorrectly.

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Speaker 2: That sounds a lot like Foodstuffs and Walworth, New Zealand

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Speaker 2: a couple of years ago with the grocery market study,

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Speaker 2: doesn't it.

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Speaker 1: So who's right? I mean, do they have a point?

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Speaker 1: Does the Commerce Commission or the A Triple C in

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Speaker 1: your actually know what they're talking about?

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Speaker 2: Oh? Look, I think they do. I think the issue

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Speaker 2: is that their powers are actually quite limited, so they

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Speaker 2: can make a lot of statements that they can't actually

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Speaker 2: enforce them and see them through. And this is a

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Speaker 2: prime example here with the atrible c in Australia, Woolworths

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Speaker 2: and Coals are operating in what is not a dyewopoli

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Speaker 2: because of the fact we have Costco and Aalde here

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Speaker 2: as well, and to a lesser degree in met Cash.

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Speaker 2: But the reality is still an oligopoly and they do

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Speaker 2: have a significant market share of you know, seventy plus

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Speaker 2: share of the share of mouth, if you like, in

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Speaker 2: terms of everyone and what they buy and they eat

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Speaker 2: when they go home and unpack their groceries. And the

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Speaker 2: reality is that they do have as a result of

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Speaker 2: the power that they have, they're able to enforce themselves

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Speaker 2: upon not only the suppliers that work with them, but

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Speaker 2: also the consumers or shoppers who buy oft them.

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Speaker 1: So what hope do we have then, Because the answer

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Speaker 1: to all of our problems, we're told is another supermarket chain.

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Speaker 1: You've got one and that's still bad.

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Speaker 2: Well, we do have another chain, but they're a discanunder

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Speaker 2: so they're not a full service supermarket in the same

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Speaker 2: sense that you have with a pack and Save or

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Speaker 2: a New World or a Willlwork sort of Coals, et cetera.

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Speaker 2: So Costco is a retailer who happens to sell grocery products.

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Speaker 2: They are not a grocery store. Aldi is a store

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Speaker 2: that has somewhere in the vicinity of a thousand to

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Speaker 2: two thousand products depending on their range at the time,

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Speaker 2: and the and the aisle down the middle with their

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Speaker 2: special buyers that typically aren't grocery products either. So versus

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Speaker 2: a supermarket like a New World or a Walworths or

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Speaker 2: of Coals that'll have twenty five to thirty thirty five

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Speaker 2: thousand SKUs or products on their shelves, they're a very

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Speaker 2: different proposition. So you know, if you look at the

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Speaker 2: New Zealand market, then yes, do you need a third

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Speaker 2: infant or do you need to break up the existing

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Speaker 2: duopoly and created into three or four retailers? Most likely

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Speaker 2: that's going to give you some some relief. But what

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Speaker 2: you've one of the most important things is actually how

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Speaker 2: you go about governing that moving forward. Because at the moment,

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Speaker 2: as you see with Wolworths and Coals, as you see

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Speaker 2: with Foodstuffs North Island in particular, and Wolworths New Zealand.

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Speaker 2: They're not really competing against one another because they don't

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Speaker 2: have to. So whilst they may not have a gentleman's

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Speaker 2: agreement between one another, they do typically you know, not

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Speaker 2: press the envelope too hard because you're talking about four

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Speaker 2: of the most profitable supermarket businesses in the world per

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Speaker 2: square met.

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Speaker 1: But is that because we're so far down the bottom

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Speaker 1: of the world, our populations are so much smaller that

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Speaker 1: these big companies that we need to come here that

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Speaker 1: are full services you put at just uninterested.

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Speaker 2: Well, I don't. Well, yes, look I spoke to someone

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Speaker 2: senior at ALDI some time ago during the course of

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Speaker 2: the market study, trying to convince them that they needed

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Speaker 2: to look at New Zealand, and one of the challenges

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Speaker 2: they pay so is well, there's eighty four million people

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Speaker 2: in the Philippines, why would I go to five million people? Now?

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Speaker 2: That's so, there may need to be some incentives there,

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Speaker 2: but if you don't look overseas, then how do you

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Speaker 2: bust them up and get people locally to take on

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Speaker 2: that responsibility? You know, the reality is that there's ten

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Speaker 2: percent of the grocery products give or take in New

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Speaker 2: Zealand aren't from Woolworth and food Stuff's in New Zealand.

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Speaker 2: So you know there is a if you look at

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Speaker 2: the size of the market, that's what a one point

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Speaker 2: three to one point six billion dollar business that you

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Speaker 2: could have. Someone offered me one of those. I take it.

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Speaker 1: Yeah, But the problem is the more I mean, because

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Speaker 1: what they are you will see talking about what the

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Speaker 1: ComCom here is talking about is more greater regulation and

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Speaker 1: that inevitably will mean higher prices. And I mean if

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Speaker 1: you start breaking them up, like running a supermarket will

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Speaker 1: never be more profitable than it is right now in

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Speaker 1: Australia and New Zealand. And even with that being the case,

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Speaker 1: we still can't attract new entrants.

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Speaker 2: You know, yes, look and I think that the barriers

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Speaker 2: to entry, but particularly in New Zealand is the land

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Speaker 2: aspect as well. You know, you're geographically you've got a

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Speaker 2: very densely populated couple of pockets of your country and

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Speaker 2: then the rest of the country is fairly sparsely populated,

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Speaker 2: so it's also navigating that through. But if you can't

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Speaker 2: get access to land, how do your sites? How do

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Speaker 2: you then open up a supermarket chain? So therefore the

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Speaker 2: bust up is probably the most logical solution in New

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Speaker 2: Zealand if you look at it on place value. The

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Speaker 2: challenge you've got it with that, of course, is that

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Speaker 2: you can't tell me that the lights of Wilworth and

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Speaker 2: Chris Quinn and co. Are going to go straight to

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Speaker 2: court to time flight that and stave that off.

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Speaker 1: Exactly, and that good point. Thank you very much for that.

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Speaker 1: Nick Hogan Dark who's a retail consultant out of It Australia,

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Speaker 1: on this hable c report into supermarkets there. For more

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