Supermarket showdown: New Zealand parties clash over grocery prices ahead of election

HouGarden New Zealand, 21 September — With the general election approaching, New Zealand's supermarket duopoly has become one of the most contested policy battlegrounds of the campaign, with the National Party, Labour, and the Greens all unveiling plans to shake up an industry dominated by two giants: the New Zealand-owned cooperative Foodstuffs and Australian-owned Woolworths NZ.

The stakes for ordinary households are immediate. Grocery prices affect every family's weekly budget, and all three parties are presenting their proposals as a path to lower costs at the checkout. But as RNZ deputy political editor Craig McCulloch makes clear, no one can yet say whether any of them will work.

National's proposal is the most structurally ambitious directed at a domestic company. The party wants to split Foodstuffs into two separate entities: Pak'nSave would operate independently on one side, while New World and Four Square would form a second company. The result, McCulloch explains, would be to move from two major supermarket groups to three, with the aim of increasing competition.

Crucially, this is a campaign pledge, not law. Under National's plan, the Commerce Commission — New Zealand's competition regulator — would be given around six months to assess whether the forced restructure would actually leave shoppers better off. McCulloch describes this as 'a pretty big get-out-of-jail-free card for National' if the proposal starts to look unworkable.

Foodstuffs has pushed back hard. The group argues it is not a single company but two cooperatives made up of more than 500 individually owned stores. Store owners — New World, Pak'nSave, and Four Square operators — have posted public objections on Facebook in what McCulloch describes as an apparently coordinated campaign.

The cooperatives' core argument is that shared operating costs under the current structure keep prices lower, not higher. 'Foodstuffs' point is, if you rip all that apart, there is a cost to that, and then actually that increased cost will drive up grocery prices, rather than bringing them down,' McCulloch says.

Business New Zealand, which typically aligns with National on economic policy, has also condemned the proposal in unusually sharp terms. McCulloch says the response has been 'vitriolic almost', with the group characterising the plan as 'banana republic stuff' and drawing comparisons to Venezuela. 'That force of feeling coming from the supermarkets and business has really been obvious,' he says.

National's proposal applies only to Foodstuffs, leaving Australian-owned Woolworths NZ untouched. ACT Party leader David Seymour has argued this inconsistency reflects a reluctance to confront an Australian-owned company, suggesting National fears a diplomatic response from Canberra. McCulloch quotes Seymour as saying National is 'too scared to intervene with Woolworths because all of a sudden Anthony Albanese would be on the phone.'

The intra-coalition tensions do not stop there. McCulloch notes that 'National has somehow managed to annoy both of its coalition partners, but from completely opposite directions — you've got ACT calling it socialism and New Zealand First calling it plagiarism.'

The Green Party has gone further still, proposing what McCulloch calls 'a radical plan by New Zealand standards': the forced acquisition of private supermarket assets — around 120 stores — to create a state-owned supermarket chain the party intended to call Kiwi Mart. The plan is at proposal stage only. The day after the announcement, a private company filed to trademark the name Kiwi Mart. A second company followed suit a few days later.

Labour's plan takes a different approach, targeting pricing behaviour rather than ownership structure. The party proposes making excessive pricing illegal, applying not just to supermarkets but also to power companies, fuel retailers, and other businesses with substantial market power. 'The test there would basically be: are they charging well above what you would expect in a competitive market? Are they doing that over time?' McCulloch explains.

Under Labour's proposal, the Commerce Commission would be empowered to investigate companies directly or to act on complaints from consumer groups. If it found a company was charging excessive prices, it could take that company to court and order it to repay the excess amount to consumers.

Labour subsequently added a second element to its policy: forced separation of the retail and wholesale divisions of both Woolworths NZ and Foodstuffs. The party argues this would introduce greater competition more quickly than National's approach, without waiting for a further Commerce Commission review.

Prime Minister Christopher Luxon dismissed Labour's excessive-pricing plan, saying it amounted to 'more bureaucrats, more clipboards' and questioning where 'the actual plan' was. McCulloch notes, however, that both National's and Labour's proposals could 'end up with protracted legal battles playing out' before any consumer benefit is seen.

For New Zealand households weighing up which party's grocery policy to back, the fundamental question is whether any of these proposals would actually bring prices down. McCulloch is candid about the limits of what anyone can say with confidence: 'The honest answer to that is that I don't know. I'm also not alone there.'

He points to a long record of market studies and reviews that have failed to produce lasting relief. 'There is just no silver bullet here,' he says, 'and it will be a matter of waiting and seeing what the parties ultimately land on, what a future government lands on, and what the Commerce Commission signs off on or not.'