9 Aug 2021

Could 'Kiwishop' end the supermarket duopoly stronghold?

From Afternoons, 1:22 pm on 9 August 2021

Could 'Kiwishop' - a grocery store version of Kiwibank - be the solution to fairer food prices in New Zealand?

Auckland marketing professor Dr Mike Lee believes it's time the government created its own supermarket venture, and he's written an essay about how it might work.

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Photo: RNZ / Richard Tindiller

Dr Mike Lee

Dr Mike Lee Photo: Supplied

Last week, the Commerce Commission released a draft review of the retail grocery sector and suggested the government intervene in our supermarket duopoly.

When the private sector isn't fulfilling the needs of the population, it's time for the government to step in and create something "that actually works for the populace, rather than profiting from the populace", Lee says.

The government would have a captive market for its new supermarket as they could partially pay out benefits in the form of 'Kiwishop credits'.

"So if you're giving a family $400 in cash, why not make it $450 worth of Kiwishop credits, which enables the families to buy healthy staples, essentials of living, from the Kiwishop at a better rate?”

In a sense, the government is already in competition with private interests, he says.

“The government's kind of competing against private schools with public education, they're competing against private healthcare and they're competing with private car ownership when they put out a public transport system.”

Government-run supermarkets could also provide good training opportunities, Lee says.

“Why not create a retail environment that we can actually use as a vocational training ground for upskilling the population?”

Lee imagines Kiwishop supermarkets would be more akin to food warehouses than the supermarkets we currently have.

“The cost of entry into these retail sectors is quite high, particularly because of the space that they take up. And the staffing costs.

“So what the government could do is open up storage and warehouse distribution centres outside the main city centres.

“The real estate is cheaper [and] close to the point where the local produce has grown anyway.”

The government could offer tax credits to encourage producers to sell locally, he says.

Kiwishops could steer away from offering unhealthy options, Lee suggests.

“I'm thinking this would be purely the basics and essentials of living. So staples, fresh produce, baked goods, things that New Zealand is really good at making anyway.”

Bringing competition into the New Zealand market is always going to be difficult given our country’s isolation and small population, he says.

“So in that very specific context that applies to Aotearoa, I'm thinking that the government could step in because the normal rules of free-market competition aren't working for New Zealand.”

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