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Supermarket Inquiry Confirms Consumers Paying Too Much

Consumer NZ is welcoming the recommendations in the Commerce Commission’s draft report on the supermarket industry.

Consumer NZ chief executive Jon Duffy said the report confirms consumers aren’t getting a fair deal and stores are making excess profits.

“We campaigned for an inquiry into the industry because our research showed there were major problems in this market that meant shoppers were paying too much,” Duffy said.

The high degree of market concentration in the grocery trade demanded stronger protections for both consumers and suppliers.

“With the supermarket trade carved up between them, the two big chains are in a cosy position and there are significant barriers to potential rivals establishing a presence. That won’t change without regulatory intervention,” Duffy said.

The commission’s report showed profit margins in the industry have been consistently high and above those in other countries.

Interventions to make it easier for new players to enter the market and increase competition were warranted.

Consumer NZ strongly supported the commission’s proposal for a mandatory industry code of conduct.

“A mandatory code governing dealings between suppliers and supermarkets would help redress the imbalance in power between suppliers and the big chains,” Duffy said.

The commission’s report also includes long overdue proposals to introduce mandatory unit pricing, and for supermarkets to simplify their pricing and promotional practices.

Consumer NZ’s research found seven out of 10 consumers felt supermarket “specials” had become so common they questioned whether the savings were genuine.

Supermarkets’ loyalty programmes have also come under scrutiny from the commission.

“We have major concerns about these programmes and price discrimination that’s resulting from them,” Duffy said.

Consumer NZ will be making a submission on the commission’s report.

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