The Four Square store has been with most of us for our entire lives. With its “Cheeky Charlie” Mr Four Square logo, complete with a grocer’s apron and a pencil behind his ear, excellent range and convenient location, it’s a New Zealand icon that has served us well.
Generations before mine would approach the counter at the front of the shop with a shopping list for the grocer, who would duly put together an order while the customer waited. Our generation saw “self-service” stores and an opportunity to wander the aisles and choose for ourselves.
As we grew, so too did the local grocer. Four Square stores added a new family member in the late 1960s. It was called New World, and for the seldom-travelled Kiwis of the day, it seemed just that, with new produce displays, fresh fruit and vegetables and parking outside the door. Almost two decades later, another innovation came along. It was called Pak’nSave. Pack your own groceries in exchange for lower prices.
Four Square, New World and Pak’nSave are all part of the Foodstuffs co-operative, a buying group charged with being the middleman between store owners and suppliers. Together they provide local convenience, full range and service, and discount options for shoppers.
Across town, the competitor is Woolworths. Their corporate structure means that stores are owned by the company, a company that has, over many years, changed names and ownership. You’ll remember the name Progressive Enterprises and brands including Countdown, Big Fresh, Super Value and 3 Guys. In 2023, everything changed back to Woolworths.
These two organisations had a market share in the NZ grocery industry of 82% five years ago, a number which has since shrunk to 78%. The Government, and Finance Minister Willis in particular, who continues to quote the five-year-old number, think that’s too high. She’s been trying to woo new entrants from overseas to come into our market and shake things up a bit.
Why would she do that? Well, because we love to talk about the fact that we have a cost of living crisis, and grocery costs are a part of that. Mind you, so too are electricity prices, local authority rates, insurance, petrol costs and, although not included in the CPI basket, mortgage interest rates.
But our politicians aren’t interested in having a go at that stuff. It’s the grocers they’re after.
In fact, if you’ve been listening closely to the campaign dribble over the last few weeks, you’d be forgiven for thinking that all of the nation’s problems are the fault of our grocers. In a way, the various attacks on supermarkets have become convenient – overlooking the real problems we have with health, infrastructure, productivity, government spending, our accumulating debt mountain and all the other things our politicians should be focused on.
But no, let’s give it to the grocers instead! Labour, the Greens, NZ First and surprisingly National, are all having a go at the supermarket industry’s expense.
The Greens’ desire to nationalise 120 supermarkets is ill-informed communistic nonsense that will never see the light of day.
Labour’s plan to separate the ownership of the distribution channels from the retailers is equally silly. There’s a reason it’s not done anywhere else in the world. It doesn’t work with 60,000 stock units, 530 stores and a country with 11,000km of state highways.
Then there’s the National Party plan to break up Foodstuffs, a 104-year-old New Zealand icon.
I grew up in a Foodstuffs family. My dad was a grocer. My brother is a grocer and so is my nephew. I spent eight years of school and university holidays working in the company’s warehouses, preparing orders, loading and unloading trucks and later, installing state-of-the-art IBM computer systems in the 1980s.
So I understand the business. And I understand the company well.
That said, I don’t feel that I owe Foodstuffs a defence in their current dispute with the Government. They’re not perfect. I’ve dealt with them many times and often come away bruised or frustrated.
But personal experiences aside, the current attacks by various political parties on our supermarket industry are, in my opinion, a disgrace; a word I do not use lightly.
But let’s consider the new National Party policy. In case you missed it, they intend to ask the Commerce Commission to review the Foodstuffs organisation, with a view to demanding that they split their very successful business of 104 years’ standing into two separately owned and operated companies.
Many of us, myself included, were quick to condemn former PM Jacinda Ardern when she made her “captain’s call” to disable the oil and gas industry in this country.
This is no different. There is no consultation, no public analysis and certainly no evidence to suggest that such moves will result in lower grocery prices. I don’t know where the savings are expected to come from when you establish two distribution channels, two IT systems and two executive structures instead of one. Not to mention five years of legal fees that will inevitably follow.
Their desire is to have three competing organisations rather than two, and since they’ve failed to attract another international player, they thought they’d split up a Kiwi icon instead.
The most amazing thing about this policy is how “anti-National” it is. Heraldpolitical reporter Audrey Young called it “National’s hard turn left”. The Prime Minister, who I like, is fond of talking about aspiration and helping to make New Zealanders wealthier.
The National Party itself was founded on values that include the following words: “… to maintain freedom of contract; to encourage private enterprise; to safeguard individual rights and the privilege of ownership; to oppose interference by the State in business, and State control of industry.”
And yet they launch a policy that is a direct attack on one of the most successful business stories in New Zealand history.
So what happens next? Does the Government charge Giltrap with selling too many cars and force them out of some dealerships? Perhaps Mainfreight needs to sell down half its fleet because they’re too successful. Or try telling Les Mills that there are too many Kiwis going to their gyms and force them to sell a few off. Perhaps we should even up the lopsided Bledisloe Cup by having the Government force the rugby union to give half of our players to Australia.
Sound ridiculous? It does. Because it is.
The search for a major new supermarket entrant has been well publicised. It’s not new. It’s been tried before and failed. Willis has tried and failed. There are plenty of reasons, some of which have been well documented. We’re a small nation. When it comes to major industries, we don’t often have room for more than a couple of major players. It’s also a difficult market to cover geographically. We’re long and narrow, meaning distribution is complex and expensive.
There’s another reason that new players find it difficult. New Zealand supermarkets are among the best in the world. They are among the cleanest. Fresh food presentation of meat, fruit and vegetables is regarded as the best anywhere. Survey house Roy Morgan recently reviewed New World stores as having 83% customer satisfaction in this country. It’s a better score than any other supermarket in a customer satisfaction survey anywhere.
So we hear this talk of our Government trying to entice Aldi from Europe or Walmart from the US. I’ve visited several supermarkets in both Europe and North America in the last two years. They’re awful by comparison. And besides, their pricing is higher than what we have. A Foodstuffs basket of goods comparison between Pak’nSave, Aldi and Tesco showed the Kiwi store was consistently 5 to 8% cheaper than the international stores.
So they’re no cheaper and they’re not good enough. They won’t come here because they’ll get hammered in the first 12 months.
That is, unless the Government smashes up the market leader and makes it easy for a new international player. Surely they wouldn’t do that? Don’t bet on it.
Not only is the policy anti-business, it’s also anti-Kiwi. That’s what hurts the most. Why smash up the local firm but leave the massive Australian-owned Woolworths, the most expensive in the market, untouched? The team at Woolies must be laughing. Speaking of such, the big four Australian-owned banks took $9.5 billion in profits out of New Zealand in the last financial year. They’ve taken $45b in the past five years. Where’s the action on that?
Could it be that our politicians need to stay on the right side of our cross-ditch cousins in order to secure their post-political board careers with the big Aussie banks and corporates? Nothing would surprise me anymore.
It’s fair to say that the Government have been giving the supermarket operators a hard time about pricing for a while now. But it’s equally fair to say that the supermarkets have responded.
For the 12 months to June 2026, our headline inflation was 4.1% but food price inflation was just 1.9%. Foodstuffs says that its retail prices were just 1.5% up for the year, despite suppliers charging an additional 2.9%. The difference is being absorbed by the company and its store owners.
We should keep in mind that those numbers include every product delivery with diesel-powered vehicles costing 45.8% more to fill up than they did a year ago.
So it would seem that Willis gave them a serve and they got the message. I know for a fact that the efforts to continue to drive down prices continue within Foodstuffs. It’s a never-ending quest. It always has been. They’re not getting much credit for it, though.
The most un-National Party aspect of this is the impact on the small business. Many of us will have seen the flurry of Facebook messages from the owners of those Four Square stores over the last couple of weeks. Mums and dads with young families, working six or seven days a week, trying to get ahead while providing an essential service to local communities.
Foodstuffs has 119 family-owned stores servicing communities of 5000 people or less. Those stores provide the product range and pricing that they do because they are part of a buying group that gets better deals through volumes generated by bigger stores in bigger towns. They also get logistics off the back of those bigger stores.
The Four Square store in Tekapo gets its deliveries from a truck heading to Pak’nSave in Wānaka or Queenstown. The Four Square store in Murupara gets a price for sugar or flour because the group buys so much of it. It’s called economies of scale.
I’ve heard the arguments about Foodstuffs being tough on suppliers. So is The Warehouse. So is Fletcher Building. That’s how it works. The more you buy, the better the deal.
There’s something else those mums and dads running small stores get on the back of their co-operative. Banking. Do our politicians really think that owners can get funding for their store purchase and their stock finance by virtue of the security their tiny store offers? Of course they can’t. They get funded because of the mammoth machine that sits behind them and guarantees their performance. Take that away and guess what. More small business failures. The only difference being that we can blame this one on the Government, not the operator.
Those Facebook posts also told us that these stores are not just grocery stores. Like rugby clubs and the local gym, they’re central hubs in our communities. They’re places where 35,000 people work and thousands more connect.
I know of an immigrant family that came to New Zealand with nothing eight years ago. The parents work in the local Pak’nSave. They took every overtime hour on offer and bought their first home in just seven years.
These businesses also underwrite the charitable efforts in their local neighbourhoods. The schools, rugby clubs and surf lifesaving clubs. The young motor racer with a dream and the School Board chair who needs an operation in Australia.
Audrey Young called it a left turn. It’s more like a U-turn. Readers can probably tell that this writer is disappointed. This policy is anti-Kiwi and contrary to the values of the National Party. It’s anti-small business, and it’s anti-aspirational success. Worst of all, it picks on one small segment of our society while leaving many others, including the internationals, untouched.
If you want to get stuck into the supermarkets, get into all of them, not just the New Zealand-owned guys who are easier to beat up.
And while you’re at it, get into the other industries causing cost of living pressure. Our Government has more control over energy companies and fuel prices than they do over any private Kiwi success story. Get them to cut their cloth. The Aussie banks walk away with their bags of gold untouched. Why should we let that happen?
The National Party would do well to reflect on the values under which it was founded.
After all, that’s what I thought they stood for.