Rt Hon Prime Minister Luxon,
Retailer-owned Co-operatives ( such as Foodstuffs ) with the ‘owner-operator members’ stores trading in ‘Groups’ under brand/banner names owned by the Co-operative (in Foodstuffs case New World , Pak’NSave and Four Square) are COMMON THROUGHOUT THE WORLD. In Foodstuffs case they also have ‘non-advertising’ members who trade independently outside of the Group banner system.
Similarly there are ‘investor-owned‘ Wholesalers throughout the world, who operate ‘franchised banner Groups/Chains’ trading under brands/banners owned by them as the franchising Wholesaler franchisor. An example I had dealings with was/is SuperValu Inc in Minneapolis/St Paul, Minnesota, USA who operated the ‘Cub Foods’ Super-Warehouse-Store Chain of Supermarkets.
The third common integrated structure is the ‘investor-owned Chain’ (eg Woolworths) with its own central-buying, warehousing and distribution facilities. These are the 3 major different/separate competing integrated procurement, warehousing, distribution and retailing systems COMMON THROUGHOUT THE WORLD .
There are also independent (sometimes associated) wholesalers and Cash and Carry Wholesalers who service/ cater predominantly to the ‘dairy’/convenience store and food catering hospitality and Commercial and Industrial ‘canteen‘ industries eg Gilmours.
In short , Foodstuffs retailer-owned Co-operative integrated wholesale/retail structure is one of 3 VERY COMMON integrated wholesale-retail distribution structures in widespread use throughout the World.
From your time with Unilever, Prime Minister, you must surely be totally familiar with the marketing philosophies associated with brand-segmentation of markets and brand-differentiation according to the way in which different product-related ‘attributes’ & ‘attribute-mixes’ appeal differently to different (major) Groups of consumers. This underpins the multi-brand strategies of Unilever, Procter & Gamble, a number of major motor car manufacturers, and many others with multi-brand strategies in such markets as, for example, toilet soaps ; household washing powders; dishwashing liquids; toothpaste and shampoos and many others.
In the same way Foodstuffs operate a 2-brand Supermarket strategy with New World and Pak’NSave, with each ‘banner’ catering to quite different major groups of consumers in quite different ways, with each Consumer Target Group differentiated by the quite separate/different attribute emphasis and attribute-mixes they require from their Supermarket and which in each case determines which Supermarket they will choose to patronise and shop at.
These ‘target Groups’ of consumers are quite different in their attribute/attribute-mix requirements and are in fact distributed quite differently throughout the community, meaning that New World and Pak’NSave have quite different trading-catchment structures and siting/location requirements.
Pak’NSave requires a catchment radius some 5 times larger than New World, to operate effectively, and a much larger/more populous catchment to reach its prospective customers and operate effectively, efficiently and profitably. This means that in numerous situations there are significantly/majorly ‘overlapping‘ trading- catchments between New World and Pak’NSave and that accordingly strong/intense competition between the 2 players exists in numerous locations. But it also means that, for obvious reasons to do with different catchment construction requirements and siting needs, ‘head to head’ locations/siting for New World and Pak’NSave are not a realistic expectation/prospect because the siting requirements of the 2 formats are totally different and incompatible.
This gives total lie to National’s and other Political Party’s allegations that Foodstuffs deliberately does not site New World and Pak’NSave in ‘head to head’ situations for reasons of ‘not competing’ with each other.
Catchment overlaps in major population areas ensure there is strong effective competition between the 2 formats in a considerable number of intersecting/overlapping catchment locations. It also highlights:-
1) separating the 2 formats under 2 separate Foodstuffs Companies WILL NOT result in ‘head to head’ competition because that IS NOT the motive behind the different siting of the formats; it is related to totally different catchment characteristics and siting requirements. The inference to be drawn/inevitable conclusion is that there is ABSOLUTELY NO POINT in splitting up the two formats into separate Foodstuffs Companies, because the alleged ‘REFUSAL TO COMPETE WITH EACH OTHER’ IS NOT THE MOTIVE FOR NOT SITING ‘HEAD TO HEAD’ and such allegations are totally unwarranted. Such moves as proposed under the various political Policies, can ONLY LEAD TO a major duplication in operating costs for New World and Pak’NSave and to a major duplication of operating facilities at a massive Capital cost – and inevitably, to increased consumer prices for New World and Pak’NSave to the major disadvantage of consumers, but to the major advantage of Australian-owned GIANT Woolworths, presently THE MOST EXPENSIVE of the 3 players . WHY ?
2) The allegations regarding ‘a refusal to site head to head’ is brought about by ignorance – a lack of knowledge and understanding of the Supermarket industry and how it works, and is a totally unwarranted attack on the Foodstuffs Company’s motives and integrity, to a point of being seriously legally damaging to their reputation.
3) ignores the FACT that New World and Pak’NSave are THE 2 formats / players DRIVING THE COMPETITION in the New Zealand Supermarket industry AND that the Australian-owned GIANT Woolworths is THE MOST EXPENSIVE PLAYER OF THESE 3 , IN THE MARKET. WHY are Woolworths being protected/sheltered/advantaged by these seriously flawed Policies – by a NEW ZEALAND GOVERNMENT !!
Clearly National / Government or any other Party, should TOTALLY AND IMMEDIATELY ABANDON/WITHDRAW from their Policies/plans to split up New World and Pak’NSave and Foodstuffs, because it is totally unwarranted, totally unjustified and based on a total lack of understanding of the Supermarket Industry, and on spurious information and clearly, ON POLITICAL VOTE GARNERING MOTIVES.
Why should Foodstuffs not be allowed a 2-brand/2-format Supermarket strategy, when Unilever, Procter & Gamble and a number of major car manufacturers, for example, have been pursuing multi-brand strategies for decades!! It is political hypocrisy and victimisation at its worst – of one of our greatest New Zealand-owned Companies .
The major cause of inflating prices is our steadily shrinking currency value, which affects manufacturers input-prices; the cost of imports in NZDs; the cost of steadily increasing prices for our export commodities overseas in NZD terms, reflecting into increased prices on the domestic market increasing employee wage and salary levels etc, etc.
AND that weakening currency value IS A GOVERNMENT RESPONSIBILITY — NOT Foodstuffs, New World or Pak’NSave .
Sincerely ,
Hugh Perrett
Hugh Perrett, a member of the New Zealand Business Hall of Fame, is the former managing director of Foodstuffs and founder of the Pak n' Save discount grocery chain.
The third common integrated structure is the ‘investor-owned Chain’ (eg Woolworths) with its own central-buying, warehousing and distribution facilities. These are the 3 major different/separate competing integrated procurement, warehousing, distribution and retailing systems COMMON THROUGHOUT THE WORLD .
There are also independent (sometimes associated) wholesalers and Cash and Carry Wholesalers who service/ cater predominantly to the ‘dairy’/convenience store and food catering hospitality and Commercial and Industrial ‘canteen‘ industries eg Gilmours.
In short , Foodstuffs retailer-owned Co-operative integrated wholesale/retail structure is one of 3 VERY COMMON integrated wholesale-retail distribution structures in widespread use throughout the World.
From your time with Unilever, Prime Minister, you must surely be totally familiar with the marketing philosophies associated with brand-segmentation of markets and brand-differentiation according to the way in which different product-related ‘attributes’ & ‘attribute-mixes’ appeal differently to different (major) Groups of consumers. This underpins the multi-brand strategies of Unilever, Procter & Gamble, a number of major motor car manufacturers, and many others with multi-brand strategies in such markets as, for example, toilet soaps ; household washing powders; dishwashing liquids; toothpaste and shampoos and many others.
In the same way Foodstuffs operate a 2-brand Supermarket strategy with New World and Pak’NSave, with each ‘banner’ catering to quite different major groups of consumers in quite different ways, with each Consumer Target Group differentiated by the quite separate/different attribute emphasis and attribute-mixes they require from their Supermarket and which in each case determines which Supermarket they will choose to patronise and shop at.
These ‘target Groups’ of consumers are quite different in their attribute/attribute-mix requirements and are in fact distributed quite differently throughout the community, meaning that New World and Pak’NSave have quite different trading-catchment structures and siting/location requirements.
Pak’NSave requires a catchment radius some 5 times larger than New World, to operate effectively, and a much larger/more populous catchment to reach its prospective customers and operate effectively, efficiently and profitably. This means that in numerous situations there are significantly/majorly ‘overlapping‘ trading- catchments between New World and Pak’NSave and that accordingly strong/intense competition between the 2 players exists in numerous locations. But it also means that, for obvious reasons to do with different catchment construction requirements and siting needs, ‘head to head’ locations/siting for New World and Pak’NSave are not a realistic expectation/prospect because the siting requirements of the 2 formats are totally different and incompatible.
This gives total lie to National’s and other Political Party’s allegations that Foodstuffs deliberately does not site New World and Pak’NSave in ‘head to head’ situations for reasons of ‘not competing’ with each other.
Catchment overlaps in major population areas ensure there is strong effective competition between the 2 formats in a considerable number of intersecting/overlapping catchment locations. It also highlights:-
1) separating the 2 formats under 2 separate Foodstuffs Companies WILL NOT result in ‘head to head’ competition because that IS NOT the motive behind the different siting of the formats; it is related to totally different catchment characteristics and siting requirements. The inference to be drawn/inevitable conclusion is that there is ABSOLUTELY NO POINT in splitting up the two formats into separate Foodstuffs Companies, because the alleged ‘REFUSAL TO COMPETE WITH EACH OTHER’ IS NOT THE MOTIVE FOR NOT SITING ‘HEAD TO HEAD’ and such allegations are totally unwarranted. Such moves as proposed under the various political Policies, can ONLY LEAD TO a major duplication in operating costs for New World and Pak’NSave and to a major duplication of operating facilities at a massive Capital cost – and inevitably, to increased consumer prices for New World and Pak’NSave to the major disadvantage of consumers, but to the major advantage of Australian-owned GIANT Woolworths, presently THE MOST EXPENSIVE of the 3 players . WHY ?
2) The allegations regarding ‘a refusal to site head to head’ is brought about by ignorance – a lack of knowledge and understanding of the Supermarket industry and how it works, and is a totally unwarranted attack on the Foodstuffs Company’s motives and integrity, to a point of being seriously legally damaging to their reputation.
3) ignores the FACT that New World and Pak’NSave are THE 2 formats / players DRIVING THE COMPETITION in the New Zealand Supermarket industry AND that the Australian-owned GIANT Woolworths is THE MOST EXPENSIVE PLAYER OF THESE 3 , IN THE MARKET. WHY are Woolworths being protected/sheltered/advantaged by these seriously flawed Policies – by a NEW ZEALAND GOVERNMENT !!
Clearly National / Government or any other Party, should TOTALLY AND IMMEDIATELY ABANDON/WITHDRAW from their Policies/plans to split up New World and Pak’NSave and Foodstuffs, because it is totally unwarranted, totally unjustified and based on a total lack of understanding of the Supermarket Industry, and on spurious information and clearly, ON POLITICAL VOTE GARNERING MOTIVES.
Why should Foodstuffs not be allowed a 2-brand/2-format Supermarket strategy, when Unilever, Procter & Gamble and a number of major car manufacturers, for example, have been pursuing multi-brand strategies for decades!! It is political hypocrisy and victimisation at its worst – of one of our greatest New Zealand-owned Companies .
The major cause of inflating prices is our steadily shrinking currency value, which affects manufacturers input-prices; the cost of imports in NZDs; the cost of steadily increasing prices for our export commodities overseas in NZD terms, reflecting into increased prices on the domestic market increasing employee wage and salary levels etc, etc.
AND that weakening currency value IS A GOVERNMENT RESPONSIBILITY — NOT Foodstuffs, New World or Pak’NSave .
Sincerely ,
Hugh Perrett
Hugh Perrett, a member of the New Zealand Business Hall of Fame, is the former managing director of Foodstuffs and founder of the Pak n' Save discount grocery chain.
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