ZB

Mike's Minute: Are the supermarkets ripping us off? Time will tell

Author
Mike Hosking,
Publish Date
Tue, 17 May 2022, 11:30am

Mike's Minute: Are the supermarkets ripping us off? Time will tell

Author
Mike Hosking,
Publish Date
Tue, 17 May 2022, 11:30am

Whether The Warehouse dip their toes back into the supermarket game properly may well be an insight into the reality of the supermarket game in this country.

And whether or not the Commerce Commission was ever really needed to provide the report they did into the sector.

There was much upset from those who believed we are getting ripped off when the Commission didn’t appear to find any of it. They suggested things weren't perfect, but then name me a business or a sector that if you studied it, you would find perfection.

The Warehouse has history. They had a crack before and it didn’t work out. But if they pull the trigger now, I don’t think they’ll make the same mistake this time.

My argument is simple, there is nothing nor has there ever been anything stopping you setting up a grocery business. A number in small form already have. Yes, there supply issues, yes the major players are aggressive and perhaps even predatory, but that’s business.

What there isn't is a scam, despite what so many want to tell you. The excessive profits they speak of is an invented term by the emotive who want to make a point.

It just might be in a country of five or so million a couple of major players and some smaller ones is about all the market can handle.

Or it might not. And if it isn't, come on in The Warehouse. They have the money, the size, and scale. They have the wherewithal should they wake up one morning and decide to go for a launch, a major play in the sector.

So why aren't they? Would all the miserable suppliers who have been clubbed into submission by the established giants not welcome some competition? What's holding them back? Wouldn't a slice of billions in groceries be tempting to have a crack at?

Is there some regulatory regime preventing them from entering the market? Do they lack experience in selling volume goods to the public?

None of those things exist. So, we are left with the simple truth, either the market is there for the picking given we are so mercilessly being ripped off. Or the market isn't actually quite big enough, we are a bit small and the way it currently operates is for a very good reason.

The market has found and formed its own size because that’s what free markets do.

The Warehouse are our canaries, so the question is, who is right?