Pee Kay: KiwiMart

Chloe and Marama have placed our supermarket businesses firmly in the spotlight recently.

This video below is about US supermarket but the message is still relevant for NZ.

The compulsory purchasing of 120 NZ supermarkets has to be one of the Greens most nonsensical policy ever!

Click to view

One of my mailing group, a pioneer in the supermarket business, a member of the business hall of fame and most definitely a defender of New Zealand’s supermarket industry wrote this letter to Chloe and Marama.

I post this with his permission.

Hon Chloe Swarbrick; Hon Marama Davidson ,

I am writing to strongly express an ‘informed view’ that the ‘Supermarket Industry restructuring policies’ announced by you on behalf of the Green Party are totally irrational , totally irresponsible and totally unworkable and would result in a very serious and dangerous undermining and dislocation of the Supermarket Industry , resulting inevitably in VERY SIGNIFICANT increases in consumer prices across the Supermarket industry —- the exact opposite of the announced objective.

The Policies announced by you on behalf of the Green Party demonstrates a TOTAL lack of understanding of and serious ignorance of the complexity of the Supermarket industry and the multiple dynamics involved in it such as :-

1) the marked format differentiation between the principal brands / formats in the market and the FACT that because these brand formats are markedly differentiated as between each other , they are NOT readily interchangeable / adaptable and able to be integrated — if in practice they are sufficiently adaptable to be able to be integrated at all.

2) the dynamics involved in the relationship between Supermarkets and their suppliers and the implications involved in those dynamics — which differ as between individual ‘Supermarket brand’ formats and their largely ‘in-common‘ suppliers.

3) major format-related trading pattern / ‘trading radius’ differences as between the different Supermarket formats, making integration of majorly-differentiated unrelated formats AN IMPOSSIBILITY.

4) there is seemingly no understanding , and certainly no recognition or acknowledgement, that Supermarket price increases are a DIRECT RESPONSE to price changes / increases from Suppliers involving increases in the Supplier’s raw material / ingredient input costs; NZ’s steadily weakening currency value , adversely affecting imported product costs in NZ dollars; and also the increasing prices ( in NZ dollar terms ) received from overseas for our internationally traded agricultural commodities, which reflect back directly into increasing local-market prices charged by Suppliers of those agricultural commodities to the Supermarket Industry in New Zealand .

The Supermarket Industry is a multi-dimensional very complex Industry. The Greens approach to it in your Policy announcements is clearly indicative of a very limited, very shallow, totally ill-informed / uninformed understanding of the Industry, to the point of any proposed intervention being TOTALLY IRRESPONSIBLE and having VERY DANGEROUS implications / consequences both for Industry stability and for Supermarket pricing to consumers.

Further, it is important to understand that the ‘highest-price’ Supermarket Chain operating in New Zealand is the AUSTRALIAN OWNED Woolworths Chain. Why target the New Zealand owned / operated Foodstuffs Organisation operations when THEY are clearly ‘ not at fault’ and are unquestionably responsible for generating by far and away, the major competitive pressure in the market — and with the Foodstuffs associated Pak ‘N Save format in particular being widely acknowledged internationally as being a ‘world-leading’ low-price format.

 

Something is seriously wrong here . Shouldn’t we be supporting our New Zealand domiciled Supermarket operations that are generating the major competitive-pressure and competition in the marketplace . Competition is what has brought the market down to 2 principal players, with many significant players dropping out over the years .

That competition is still very intense.

Your Policies are extremely ill-founded and ill-thought through. They should be urgently abandoned .

Sincerely,

Hugh Perrett

Pee Kay writes he is from a generation where common sense, standards, integrity and honesty are fundamental attributes. This article was first published HERE