With one exception, the word that was notably absent from your briefing was cooperative.
In contrast my letter to Labour's Arena Williams suggested she give consideration to supporting the establishment of a cooperative retail supermarket
"Farmers in New Zealand are particularly well served by the Farmlands cooperative
There would be huge support from retail consumers were they able to buy groceries from a cooperative supermarket.
"Full cooperatives redefine market functioning and accord consumers benefits that are unavailable in an investor-driven market. By ensuring returns go to materially benefit consumers rather than investors a cooperative supermarket would materially and positively redress the social contract and wealth inequality.
"Retail cooperatives have a well-established track record including those in South Australia (see Barossa), Spain’s Mondragon region and the Emilia Romagna region of Northern Italy, which has one of the highest concentrations of cooperative businesses in the developed world.
"The value of cooperatives will be the subject of one of the workshops at the Post Capitalist Aotearoa conference (23-24 April, Wellington)"
for capitalists I would say that Wellington's Post Capitalist Aotearoa conference is worryingly relevant - have you forgotten Ron how the GFC raised the fear of the collapse of capitalism.
It's not a matter of if - it's just a matter of when we transition to a socio-economic system that embraces and honours humanity's promise
One of the speakers at the conference Dr Michael Towsey 'will dwell on the impossibility of a mixed welfare-capitalist economy improving the well-being of humanity and planet Earth. He will offer a new approach drawing on proposals of PROUT and heterodox economists."
PROUT is a holistic socio-economic theory that contrasts with capitalism's self-centred and materialistic philosophy. www.prout.info provides a useful introduction
Forgive my scepticism, but as said, unless such ideas account for the unstoppable force of competitive human nature they are always going to fail. E.g. Kibbutz in Israel were a wonderful socialist ideal, the ultimate co-operatives, but have largely failed once most of the immediate, pressing challenges and goals that unite people have been achieved, after which the collective reverts to a natural state of internal competition.
You are right to be sceptical. When you work closely with someone else have you been conscious of the whole experience being greater than the sum of the parts? Yes we are competitive, but there is also much - often intangible - that unites us.
Moreover, in my experience, there's a yearning to know ourselves beyond our physical and mental selves. Call it the intuitive or our higher selves, it's something that defines us as human beings. PROUT is engaged in the never ending quest to bring that quality to our socio-economic system.
Am I naïve? How is it inferred that the introduction of a third player is going to reduce prices? I’d seriously like to know.
This is surely based 100% on the assumption that the new player decides to provide a lower cost option. What are the odds that they will do so? What if the new player enters in gleeful anticipation of the much higher prices they can charge Kiwi consumers, because everyone else is doing it, and so the market simply divides into three, and doesn’t change a thing?
In 2022, the Commerce Commission reported that the two big chains were taking an excess of a million dollars a day in profit, a markup of 12%, whereas 5.5% should be anticipated. It’s a very attractive trough unless a government or watchdog with teeth is able to monitor margins and control them down. So that is totally impossible? Also, does this assume that the big two are going to relinquish sites in shopping centres to let a new player trade there, or does the new player have to bring $billions to develop new sites? It seems chaotic to me, and curiously unlikely.
Thinking out loud, perhaps one viable solution might be to somehow introduce a partially state owned enterprise as a competitor where margins are indeed controlled.
It is great talking big, but this needs to be thought through strategically.
While suppliers will welcome a third player, as others note, property and the logistics of two islands will be challenging for the new entrant. If an established player is given sufficient encouragement to get past these two issues, then we might get a third player, but, as others also note, any conventional player will simply become part of the club (just like KiwiBank wants to be).
We need a true discounter like an Aldi. Hopefully Willis will see past the silliness of "three must be better than two" and understand we need a low-cost operator. There is no point importing another trance of highly paid executives from an established player to enjoy the benefits of an oligopoly - we need to disrupt the oligopoly with a new style of competitor.
I hope the RFI will surface such issues, but changing structural arrangements by going from 2 to 3 competitors is not the same as having multiple hungry supermarkets.
Aldi in Australia has executives steeped in their low-cost model, and the result is that consumers now have another choice. But the majority still go to Coles and Woollies.
Heaven forbid the government getting involved as a competitor directly. That makes about as much sense as the government hiring builders directly to make houses, or tellers to run an alternative bank. A huge distraction, lots of drama and no effective change.
In building supplies, banking, telecoms, energy and supermarkets the scale of the infrastructure required to create effective competition may mean that regulation (wash my mouth out) is the practical option. But then we have the issue of ‘capture by lobbyists’ and the revolving doors of industry insiders moving from operational jobs to being regulators and back again. I think this may be the fundamental issue to get to grips with though, to support competitiveness in New Zealand.
Not banking, building, telecoms, energy or supermarkets; how do we get good at ‘competition’?
I don't want to come across as an apologist for the supermarket oligopoly, but $1m in daily excess profits is roughly only $0.20 per person per day, say $5.60 per week for a family of four. That amount saved would be welcome, but would not do a lot to slacken off the thumbscrews on working class families. By my rough reckoning landlords, banks and electricity companies are probably gouging more in the way of excess profits from the average Kiwi family than the supermarkets. Still, all power to the Minister if she is going to make a start with the grocery trade.
First thoughts .. Nicola Willis for PM .. that is if she pushes ahead, but in any case somebody needs to replace Luxinda, and quick. However I do wonder about eventual effectiveness. As an example take Supercheap, which was supposed to relieve the monopolistic stranglehold on motoring products hence significantly reduce their cost. Yet in 2025 instead of maintaining Warehouse pricing Supercheap is now the most expensive outlet for most items with no increase in quality. So assuming the forces involved apply similarly to supermarkets, it will need more than just the arrival of another player to achieve sustained lower prices. Rather it will need a more complete, more innovative solution to how this tiny country can offer a compelling risk reward balance to make it sufficiently attractive to be running an efficient food distribution business that continues to offer plenty of choice and low margins to benefit consumers. The model used to drive market legislation needs to account for those kinds of dependencies over time, over the long term, rather than just looking to introduce another chair into the same musical game.
Yeah right Eric there’s loads of sites available that would enable town centre competition with existing players if only land use planning didn’t stand in the way.
The ACCC in 2008 showed with a special study that if an Aldi was within 1km of a Coles supermarket, Coles' private label product prices were 5% less than in a Coles with no Aldi within 5kms. The updated ACCC supermarket enquiry from this February showed how Aldi, now with a 9% market share after 25 years, has profits about the average of the two big guys. Aldi has slowed its growth down and is no longer disrupting.
Aldi was an experienced deep-pocketed new entrant in 2001, targeting cities and towns and achieving the price results shown in that study, for shoppers especially price sensitive - which is a large market. But its impact has been a 9% market share in 25 years, and price competition that's locally relevant for its 1800 product range.
Dismantling the existing supermarket businesses, as some call, for carries huge risks of higher prices and lower quality shopping. Denying the impact of scale, which is the main reason we have only two supermarket chains, flies in the face of all evidence it is major. Our food prices are relatively high for several measurable reasons larger than supermarket profits. One that is hurting now is our (sensible) pastoral industry export of high quality protein (dairy and meat) to high income countries - for high prices. We have drifted down towards 20th in the OECD income pecking order: we pay these global prices with our below-average incomes. There are many other practical reasons we have high food prices that outweigh radical supermarket solutions. Lowering our insane shelter costs would work better to help with food costs than tinkering with the retail sellers of it, who are only 70% of the food business here anyway.
It's a simple fact that if there is not a state owned competitor operating to some degree, able to ramp up in quick time if needed, the corporate Imperial narcist cats will always play nasty, as nothing else can truly keep them honest.
How about planners actively supporting small to medium local/regional businesses - like using their zoning and traffic management tools to encourage the public to shop around?
And government preventing closed contracts or by any methods bullying of suppliers? Farmers might like the latter and their lobbyists are pretty seriously connected….
Hang on, this is the COC of free Enterprise ?? That protects private property rights etc......Our real problem is that we have only 5 million people and the supply chain is really rather stretched so transport costs are huge relative to our domestic market. You would allow $5.00 per km to run truck and trailers there , so taking freight from the North Island to the South including the Ferry trip is well over $6k + per load, and around 70% of our freight moves North to South....
With one exception, the word that was notably absent from your briefing was cooperative.
In contrast my letter to Labour's Arena Williams suggested she give consideration to supporting the establishment of a cooperative retail supermarket
"Farmers in New Zealand are particularly well served by the Farmlands cooperative
There would be huge support from retail consumers were they able to buy groceries from a cooperative supermarket.
"Full cooperatives redefine market functioning and accord consumers benefits that are unavailable in an investor-driven market. By ensuring returns go to materially benefit consumers rather than investors a cooperative supermarket would materially and positively redress the social contract and wealth inequality.
"Retail cooperatives have a well-established track record including those in South Australia (see Barossa), Spain’s Mondragon region and the Emilia Romagna region of Northern Italy, which has one of the highest concentrations of cooperative businesses in the developed world.
"The value of cooperatives will be the subject of one of the workshops at the Post Capitalist Aotearoa conference (23-24 April, Wellington)"
A cooperative where margins are limited to effectively run as 'not for much profit'.
Have to say though that "Post Capitalist Aotearoa" sounds worryingly woke.
for capitalists I would say that Wellington's Post Capitalist Aotearoa conference is worryingly relevant - have you forgotten Ron how the GFC raised the fear of the collapse of capitalism.
It's not a matter of if - it's just a matter of when we transition to a socio-economic system that embraces and honours humanity's promise
What is a "socio-economic system that embraces and honours humanity's promise"?
So many ideas that start out with the best of intents crash up against the reality of human nature.
Thanks for asking Ron.
One of the speakers at the conference Dr Michael Towsey 'will dwell on the impossibility of a mixed welfare-capitalist economy improving the well-being of humanity and planet Earth. He will offer a new approach drawing on proposals of PROUT and heterodox economists."
PROUT is a holistic socio-economic theory that contrasts with capitalism's self-centred and materialistic philosophy. www.prout.info provides a useful introduction
Forgive my scepticism, but as said, unless such ideas account for the unstoppable force of competitive human nature they are always going to fail. E.g. Kibbutz in Israel were a wonderful socialist ideal, the ultimate co-operatives, but have largely failed once most of the immediate, pressing challenges and goals that unite people have been achieved, after which the collective reverts to a natural state of internal competition.
You are right to be sceptical. When you work closely with someone else have you been conscious of the whole experience being greater than the sum of the parts? Yes we are competitive, but there is also much - often intangible - that unites us.
Moreover, in my experience, there's a yearning to know ourselves beyond our physical and mental selves. Call it the intuitive or our higher selves, it's something that defines us as human beings. PROUT is engaged in the never ending quest to bring that quality to our socio-economic system.
Am I naïve? How is it inferred that the introduction of a third player is going to reduce prices? I’d seriously like to know.
This is surely based 100% on the assumption that the new player decides to provide a lower cost option. What are the odds that they will do so? What if the new player enters in gleeful anticipation of the much higher prices they can charge Kiwi consumers, because everyone else is doing it, and so the market simply divides into three, and doesn’t change a thing?
In 2022, the Commerce Commission reported that the two big chains were taking an excess of a million dollars a day in profit, a markup of 12%, whereas 5.5% should be anticipated. It’s a very attractive trough unless a government or watchdog with teeth is able to monitor margins and control them down. So that is totally impossible? Also, does this assume that the big two are going to relinquish sites in shopping centres to let a new player trade there, or does the new player have to bring $billions to develop new sites? It seems chaotic to me, and curiously unlikely.
Thinking out loud, perhaps one viable solution might be to somehow introduce a partially state owned enterprise as a competitor where margins are indeed controlled.
It is great talking big, but this needs to be thought through strategically.
While suppliers will welcome a third player, as others note, property and the logistics of two islands will be challenging for the new entrant. If an established player is given sufficient encouragement to get past these two issues, then we might get a third player, but, as others also note, any conventional player will simply become part of the club (just like KiwiBank wants to be).
We need a true discounter like an Aldi. Hopefully Willis will see past the silliness of "three must be better than two" and understand we need a low-cost operator. There is no point importing another trance of highly paid executives from an established player to enjoy the benefits of an oligopoly - we need to disrupt the oligopoly with a new style of competitor.
I hope the RFI will surface such issues, but changing structural arrangements by going from 2 to 3 competitors is not the same as having multiple hungry supermarkets.
Aldi in Australia has executives steeped in their low-cost model, and the result is that consumers now have another choice. But the majority still go to Coles and Woollies.
Heaven forbid the government getting involved as a competitor directly. That makes about as much sense as the government hiring builders directly to make houses, or tellers to run an alternative bank. A huge distraction, lots of drama and no effective change.
In building supplies, banking, telecoms, energy and supermarkets the scale of the infrastructure required to create effective competition may mean that regulation (wash my mouth out) is the practical option. But then we have the issue of ‘capture by lobbyists’ and the revolving doors of industry insiders moving from operational jobs to being regulators and back again. I think this may be the fundamental issue to get to grips with though, to support competitiveness in New Zealand.
Not banking, building, telecoms, energy or supermarkets; how do we get good at ‘competition’?
I don't want to come across as an apologist for the supermarket oligopoly, but $1m in daily excess profits is roughly only $0.20 per person per day, say $5.60 per week for a family of four. That amount saved would be welcome, but would not do a lot to slacken off the thumbscrews on working class families. By my rough reckoning landlords, banks and electricity companies are probably gouging more in the way of excess profits from the average Kiwi family than the supermarkets. Still, all power to the Minister if she is going to make a start with the grocery trade.
First thoughts .. Nicola Willis for PM .. that is if she pushes ahead, but in any case somebody needs to replace Luxinda, and quick. However I do wonder about eventual effectiveness. As an example take Supercheap, which was supposed to relieve the monopolistic stranglehold on motoring products hence significantly reduce their cost. Yet in 2025 instead of maintaining Warehouse pricing Supercheap is now the most expensive outlet for most items with no increase in quality. So assuming the forces involved apply similarly to supermarkets, it will need more than just the arrival of another player to achieve sustained lower prices. Rather it will need a more complete, more innovative solution to how this tiny country can offer a compelling risk reward balance to make it sufficiently attractive to be running an efficient food distribution business that continues to offer plenty of choice and low margins to benefit consumers. The model used to drive market legislation needs to account for those kinds of dependencies over time, over the long term, rather than just looking to introduce another chair into the same musical game.
For my actual views on supermarkets and competition, I encourage folks here to read any of my numerous columns or submissions.
I do not support structural separation or forced divestitutre.
But I do support liberalising land use planning so it is no longer de facto prohibited for anyone to enter at scale.
Zoning that prohibits actual competition needs to be addressed.
Yeah right Eric there’s loads of sites available that would enable town centre competition with existing players if only land use planning didn’t stand in the way.
The ACCC in 2008 showed with a special study that if an Aldi was within 1km of a Coles supermarket, Coles' private label product prices were 5% less than in a Coles with no Aldi within 5kms. The updated ACCC supermarket enquiry from this February showed how Aldi, now with a 9% market share after 25 years, has profits about the average of the two big guys. Aldi has slowed its growth down and is no longer disrupting.
Aldi was an experienced deep-pocketed new entrant in 2001, targeting cities and towns and achieving the price results shown in that study, for shoppers especially price sensitive - which is a large market. But its impact has been a 9% market share in 25 years, and price competition that's locally relevant for its 1800 product range.
Dismantling the existing supermarket businesses, as some call, for carries huge risks of higher prices and lower quality shopping. Denying the impact of scale, which is the main reason we have only two supermarket chains, flies in the face of all evidence it is major. Our food prices are relatively high for several measurable reasons larger than supermarket profits. One that is hurting now is our (sensible) pastoral industry export of high quality protein (dairy and meat) to high income countries - for high prices. We have drifted down towards 20th in the OECD income pecking order: we pay these global prices with our below-average incomes. There are many other practical reasons we have high food prices that outweigh radical supermarket solutions. Lowering our insane shelter costs would work better to help with food costs than tinkering with the retail sellers of it, who are only 70% of the food business here anyway.
It's a simple fact that if there is not a state owned competitor operating to some degree, able to ramp up in quick time if needed, the corporate Imperial narcist cats will always play nasty, as nothing else can truly keep them honest.
How about planners actively supporting small to medium local/regional businesses - like using their zoning and traffic management tools to encourage the public to shop around?
And government preventing closed contracts or by any methods bullying of suppliers? Farmers might like the latter and their lobbyists are pretty seriously connected….
Sorry Bryce, like many who r are prominent in this discussion you have just repeated the sound bites you like without doing enough research.
Hang on, this is the COC of free Enterprise ?? That protects private property rights etc......Our real problem is that we have only 5 million people and the supply chain is really rather stretched so transport costs are huge relative to our domestic market. You would allow $5.00 per km to run truck and trailers there , so taking freight from the North Island to the South including the Ferry trip is well over $6k + per load, and around 70% of our freight moves North to South....