No surprise, the Commerce Commission has found what the rest of us already know:
We pay too much for groceries.
We’re the 6th most expensive grocery market in the OECD at last count.
Our prices are around 10% higher than Australia’s.
No surprise, the Commerce Commission has blamed the very thing we’ve all been blaming for the longest time: there’s not enough competition.
We have only two big supermarket companies and according to the report, they’re not competing with each other on price.
So the only thing that actually matters is what comes next. What is the Commerce Commission and the Government is going to do about it?
The thing that is ultimately going to bring down those prices the Commerce Commission says a third player coming into the market to challenge Foodstuffs and Woolworths into forcing their prices down
But third players aren’t coming in because it’s too hard. The Warehouse Group tried in 2006 and gave up within two years.
So, the Government is going to have to intervene in the market to make that happen.
The easy option is to force the supermarket chains to supply a third player with wholesale groceries at reasonable prices so they can compete. The hard option is force the supermarket chains to sell off some of their stores or brands.
Either way, this will kick up a storm in the sector. The Government will buy itself a fight. Does it have the courage?
I’d like to see it go hard. I think there’s public support from frustrated shoppers. But I’m not getting my hopes up. Because the last big shake up of a market, which was petrol, has done absolutely nothing.
The responsible minister at the time, Kris Faafoi, told us petrol prices might come down by as much as 32 cents. They’ve gone up in recent months by 32 cents.
This is where the rubber now hits the road.
It was never really a question about whether we pay too much. We know we do. It was never really a question about what to do to fix that. We already know: increase competition.
It was always a question of what the Government is going to do. Ball’s in their court now.