Chris Quin: Foodstuffs North Island CEO on the Commerce Commission's merger decision, grocery prices
November 18, 2024 • 34 mins
Foodstuffs North Island chief executive Chris Quin has confirmed that the company will appeal the decision by the Commerce Commission to block its proposed merger.
Speaking on Newstalk ZB this morning, Quin said the company’s advisers had been working their way through ComCom’s reason for the decision for the last few weeks.
“The biggest concern in the document seems to be about whether suppliers would be worse off as a result of the co-op merging between the North Island and South Island,” Quin said.
“Our internal teams have the view that we passed that legal test and that the proposition we put up should have been cleared.”
Foodstuffs will appeal the decision in the High Court and expects to have officially filed its appeal by November 21.
Quin reiterated Foodstuffs' position that the two regional co-operatives in the North and South Islands don’t compete with each other in any way.
He said that if the co-operatives were merged it would make them “incredibly more efficient”.
On the suggested impacts on suppliers that ComCom posited, Quin said he briefed hundreds of suppliers after the decision last month.
“We get a lot of conversation with them almost every day on meeting with one or other and the advantages for suppliers would be dealing with one not two,” Quin said.
“The possibility would be you could do a deal to be nationally ranged, so we see a number of advantages for suppliers.”
He believed a merger would allow Foodstuffs to make prices much more competitive, ultimately benefiting consumers.
Mary Devine, chief executive of Foodstuffs South Island, also said the merger woujld bring long-term benefits to customers and communities, citing increased efficiency and faster innovation.
“Combining our operations allows us to streamline operations, reduce overheads and better invest in new technology and services that our customers want,” Devine said.
“This isn’t just a merger - it’s an evolution to ensure we remain competitive and sustainable for the future.”
The original decision
Now that Foodstuffs has confirmed its appeal, the process will likely be a lengthy one.
Foodstuffs North Island and Foodstuffs South Island operate some of New Zealand’s best-known supermarket banners – New World, Pak’nSave and Four Square – and while each retails only in its respective island, the companies already collaborate across various business areas, including marketing and home-brand purchasing. Their combined revenue was nearly $13 billion in the last fiscal year.
In their application to the commission for clearance to merge, the parties essentially argued that they do not compete at either the retail or wholesale level and they would be more efficient and better equipped to drive down grocery prices as a single streamlined entity.
However, the commission was not convinced the benefits of such an arrangement would flow to customers and moreover, its main concern was that a merger would reduce the number of buyers in the “upstream market” for grocery supply from three to two – this market is currently dominated by the two Foodstuffs entities and Woolworths NZ.
In its decision, the commission noted that this reduction would be a structural change and would likely lessen competition in multiple acquisition and retail markets. It also emphasised that competition in the country’s highly concentrated grocery market was already weak.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
You're listening to the Kerry Wooden Mornings podcast from News
Talk SEDB.
Speaker 2 (00:11):
And here we are our love and with Mark Mitchell
is over for the are talking crime. Mark Mitchell had
made a commitment that he would resign if things didn't
get better in New Zealand, and he says he'll continue
on because things are moving in the right direction, although
there is still a lot of work to do. And
you agreed, You said, he's good. You've seen a difference
(00:34):
in your neighborhoods, your communities. What you've also seen, though,
is ongoing theft from supermarkets, people just loading up their
trolleys and walking out. And I said, well, funnily enough,
we have the CEO of Foodstuff's North Island, Chris Quinn,
coming in, who's taking calls on any issues you may
have around supermarkets, grocery prices, suppliers and the like. And
(00:59):
he joins me, Now, a very good morning to you, Chris.
Speaker 3 (01:01):
You're a good morning yilder.
Speaker 2 (01:03):
Now you're a co op of three hundred and thirty
plus locally and operated grocery stores. There are one hundred
and seventy two four squares, including the most excellent one
in open one local one hundred and eight New Worlds
and forty five Pack and Saves, and I would venture
to suggest out of every single one of them, you've
had people take stuff that does not belong to them.
How are they still getting away with it?
Speaker 3 (01:24):
Look, retail crime has been an incredible issue, you know,
probably for the last four or five years, and particularly
post COVID seems to have really stepped up sadly in
the last quarter that we measured, so up to September
we saw five thousand incidences reported across just our store network.
You know, so this is a daily occurrence for our
teams in store. And you know, the one thing none
(01:45):
of these people signed up to go to work to
be faced with aggressive and assertive issues going on. You know,
there is some talk that it's partly about cost of living,
but when we look at the data, the things that
are causing retail crime are firstly, you know, I'm stealing
for gang or for affiliations that I have for fundraising,
so for profit. There is some feeding a habit, and
(02:06):
there used to be quite a driver around social media
filming yourself doing stuff that one probably has died away,
but the total occurrence is still uphock raffles, so it's
basically been black market sold.
Speaker 2 (02:22):
So they do trick raffles to have raffles, but they
sell sausage packs out of the boot of the car
to raise money.
Speaker 3 (02:29):
You get offered something in a pub that a cousin't
feel right, that might be how it came about.
Speaker 2 (02:34):
So we know it's happening. But on talkback I also
hear from people and have done for the past few
years about what people are doing overseas to stop it,
like the trolleys won't go beyond the store, or the
doors don't open unless you wave the tag. By allowing
people to get away with it, they will keep doing it.
And we don't want staff to go and put their
bodies on the line. They shouldn't, as you say, have
(02:56):
to come to work and be assaulted. But surely the
technology is there, why haven't you been fast adapting it
in store?
Speaker 3 (03:02):
So we've been from a technology point of view. The
biggest move that we made into facial recognition technology and
ability when we've had someone that has already done something
unacceptable and has been trespassed from the store, our ability
to recognize that they're coming back in and intervene early
We've been trialing that in twenty five stores for the
last six months and we've had a good, solid success
(03:23):
with being able to lower the crime rate in those stores,
So that's something we're pretty interested in. We're trying to
balance having a pleasant shopping experience for the ninety nine
percent of New Zealanders who come in and just want
to enjoy their experience in the store and try and
not have it feel like you're entering and exiting a prison.
But at the same time.
Speaker 2 (03:42):
How is waving a bar tab, you know, like a
bar code on your.
Speaker 3 (03:45):
I think received, you know, talking to our customers, a
number of them would find that a bit of a
pain to have to do that every time to exit
a building. So we're looking at all of these technologies
globally trying to work out which ones get the balance
right between a good experience and security and managing the
rate of theft, but also of any violence or assertion
that's going on in our store.
Speaker 2 (04:06):
Because it's not a good experience when you are juggling
what you're going to put in your trolley to feed
your family, when you have been working bloody hard all
week and you've got commitments and bills that you have
to pay. There's precious little discretionary income. And when you
are making those decisions and you watch someone sailing out untouched,
(04:28):
that really rips your ninety.
Speaker 3 (04:30):
Look, it's completely not acceptable, and I think.
Speaker 2 (04:32):
Our unacceptable for a very long time.
Speaker 3 (04:34):
Chris, Yeah, our owner operator model on this. You know,
there is a lot more intervention that occurs in the stores.
There is a more active approach to trying to prevent this,
but you've also got to be careful. You don't want
staff hurt or assaulted or injured. So it is a
balance all of the time on this. What we do
want is for the total rate of this to go
down exactly.
Speaker 2 (04:54):
But surely if they can't get away with it, if
they know it's not easy pickings, then they won't do it.
They go somewhere else. You know, they don't want to
work particularly hard. So if you putting those measures in place,
and so what if people don't like scanning their barcode
Let's face it, there's not much competition, which brings us
to another one very shortly. You know, they've only got
(05:15):
food stuffs or Woolworths to shop at.
Speaker 3 (05:17):
So well, it's actually a very wide range of retail food.
But we can talk about that, but it is the
balance between enjoyable experience and something that customers rate as
a place they enjoy going and get the right experience
and preventing crime. And we're trying to get that balance
right and make sure that the cost of all of
this doesn't end up in the cost of food.
Speaker 2 (05:38):
Well, surely the theft of food. Who pays for.
Speaker 3 (05:42):
That, Well, essentially it has to end up somewhere in
the food price. It's in the system, right.
Speaker 2 (05:46):
So we're going to pay for it anyway, whether it's
security measures or thefts.
Speaker 3 (05:49):
Yeah, there is an enormous you know, the balance of
investment is important, but what really matters is customer experience
and making By far the bulk of our customers aren't
thieves and aren't trying to do these things, and we
want to focus on them the most we can.
Speaker 2 (06:03):
I think they'd be quite happy, speaking for me and
for the talkback callers, if it was made just a
little bit more difficult for them to stare. We hate
seeing people.
Speaker 3 (06:13):
And there is a lot of thought that goes into
store design around where cameras are, where people are, the
shark's teeth on entry that a number of stores have
the way self checkout is monitored by staff. There is
a number of actions that probably aren't as visible as
some of those physical things that are all part of
stopping this. Genuinely, we try to intervene safely every time
(06:33):
we see something go on.
Speaker 2 (06:36):
But yes, you don't want anyone hurt. A Texas says,
Can you ask Chris what's the point of paying and
having security guards if they can do nothing so they
can come off the price and the groceries if they
were to remove them.
Speaker 3 (06:48):
Yeah, this is one issue that we are working with
government on and Mark Mitchell, who has been discussed ead
this morning, has at least been personally quite engaged in this.
He's come and seen us a couple of times about
retail crime. There is a retail crime working group that
Paul Goldsmith set up under his responsibilities, and one of
my team is on that group, so we have a
(07:08):
voice in there. The legislation around bag search and around
security guards and what they are able to do and
not able to do is something that's well being discussed
right now, and we're giving a clear view about some
of the things we think would help without making the
experience feel too draconian.
Speaker 2 (07:25):
Yeah, I mean a lot of people say, and I
know I've been told this two or three times and
it just won't stick. Why is its security guards can
tackle streakers and pitch invaders at eden Park, but they
can't tackle people who are leaving your store with thousands
of dollars worth groceries.
Speaker 3 (07:42):
And that is the current legislation and rules that we're
dealing with. We would you know, we're talking to Guman
about what's the next level? Where could you move to
in order to provide a further deterrent to retail crime
and theft that is just adding to the cost of groceries.
Speaker 2 (07:58):
So what is the difference between eden Park and New World.
Speaker 3 (08:02):
I'm not expert on the rules that Eden Park operate to,
but I know from a point of view of you know,
there is a point at which our security personnel need
to stop. There's also a safety issue. You just don't
know what you're dealing with. And we've seen stabbings, we've
seen assaults, we've seen physical and that's just not acceptable
and not right.
Speaker 2 (08:20):
No, it's not so the loveliest people. They can make
your day and for a lot of a lot of
maybe older people too, going to the supermarket is a
lovely social interaction. They know the people behind the tills.
The people behind the tills take the time to know them.
It is a really pleasant experience for a lot of people.
Speaker 3 (08:40):
It's one of the great learnings we've had from our
security teams on the front. If they're they're greeting on arrival,
saying hello, welcoming people to a store, it's amazing the
difference that makes to what happens next. It's just a
funny thing about you know. If it's a sort of
affront of sort of searching looking out for your approach,
that gets a different reaction. A welcoming reaction makes a difference.
Speaker 2 (09:00):
Yeah, all right, now, Chris kinn is here for a now,
and I have plenty of questions, absolutely loads questions for him.
But I would very much like to hear from you.
You know that you've got a lot to say whenever
it comes to supermarkets, so I'd very much like to
hear from you either as customers. Suppliers also have a
lot of questions. It was interesting I saw a woolworthsrap
(09:22):
after the ComCom report saying, oh, the price of things
is very much, you know, the supplies dictate that suppliers
would tell us otherwise. You know, they say they are
completely screwed down when it comes to price. So there's
lots around that, lots about competition. So love to take
your calls. Eight hundred and eighty ten eighty is the
numbered call, and we have Chris Quinn, the CEO of
(09:45):
food Stuffs North Island instare taking your calls. Kate, you're
the first cab off the rank, and a very very
good morning to.
Speaker 4 (09:52):
You, very good morning to you as well. My question
is is.
Speaker 5 (10:01):
There anything for legislation in place where as a person
that you walk into the store, you're actually saying, yes,
five things that I've taken something, then you are perfectly
within your right to be able to search my bag
order to pat me down, so that I.
Speaker 4 (10:22):
Understand that most into a store because it's the consequence
of what could possibly have happen to me as the
seems that I've taken something. Just I mean, you know
that you was probably only search because you've got cameras
all around that you could definitely pick up to identify
if I have taken something. So that's something like that
in place already or not.
Speaker 3 (10:44):
Thanks Kate, it's Chris speaking. Look, a large number of
our stores do have a warning or a note that's
saying bags either can't be bought in or would could
be searched. However, from a pure legal point of view,
we can't conduct an unauthorized search of bags. It is
something that we are talking to govern about to say,
(11:07):
can we get the legislation to be clearer, to be
more black and white, so that where we are confident
that something has occurred, so as you said, it's been
seen on camera or seen by one of the team members,
that we are able to do that to protect everybody
in the store and to do the right thing. But
currently it is a pretty gray area in terms of
we cannot demand an unauthorized search, right, Okay.
Speaker 4 (11:31):
Well, I was just thinking as especially it's a bit
well known if you're walking to stare there.
Speaker 3 (11:37):
Yeah, and I think, as I say, ninety nine percent
of New Zealanders would go fair enough. I've been told
I can make the choice about whether I bring a
bagin or not. It's the one percent that we're talking
about that where our tensions rise. And you know, there's
a fine balance here between people's rights and privacy, but
(11:57):
also the right of a local family that own a
business to prevent theft coming out of their store.
Speaker 2 (12:03):
Thank you kat. A text says, why do all costs
have to be passed on to the customers? Why should
we pay for your operating costs? You can claim tax
rebates on your security expenses. You're making huge profits. This
is what's happened over the last generation. Back in the day,
and nice profit while running a business was sufficient. Now
we have shareholders in corporate greed. How has this scenario
(12:25):
helped anyone address e quality?
Speaker 3 (12:28):
So you know a number of issues in that question. Firstly,
not all costs are passed on by any means, you know,
just what we were talking about is in general all
costs in the end, some of it flows through to price.
We've tried to sort of make it reasonably transparent about
what the profitability of our supermarkets is and basically and
this has been weighed and measured multiple times by everybody,
(12:51):
from the Comments Commission to us to everyone. So it's
a pretty transparent set of information. And for every dollar
of retail in our stores, three point six cents ends
up as profit after tax. That is the bottom line
on average across the board. Compare that to grosses all
over the world, and we sit in the last year
slightly below the global averages in terms of return on
(13:12):
the capital that's invested. So you're quite right. You know,
many of these costs get soaked up in the business
and just become part of what every business in New
Zealand has been seeing, which is almost every input cost
has been under pressure and it's needed to work hard
on efficiency to get there.
Speaker 2 (13:29):
All right, take a break, we'll come back with Nicky.
Questions for Chris Quincy of food Stuff's North Island also
Managing director of food Stuffs in New Zealand, if you
have a question around supermarkets, their price in competition security,
Nasia time. NICKI a very good morning to you.
Speaker 6 (13:47):
Good morning, Carey. How are you good?
Speaker 3 (13:48):
Thanks?
Speaker 7 (13:50):
Cool?
Speaker 6 (13:50):
Hey, I just wanted to ask a question regarding the
food Stuff's merger between the North Island and South Island
and where that added at the moment I thought.
Speaker 2 (13:59):
That was that had been denied, hadn't It is because
of unfair competition? Is that right?
Speaker 3 (14:04):
Yeah? So look, thanks Dicky, and a great question and
a massive part of an incredible bunch of hardworking people
at food Stuffs For the last year so on the
first of October we got the final decision from the
Commerce Commission, which was to decline our merger clearance application.
About three or four weeks later we got a document
(14:24):
setting out their reasons for that, and our advisors and
us have been going through that document or the fine
toof come to understand it and consider it and make
our minds up about what we do from here.
Speaker 2 (14:35):
Was it the lack of competition they were most concerned about.
Speaker 3 (14:37):
So the biggest concern in the document seems to be
about whether suppliers would be worse off as a result
of a cooperative merging between the North Onldon and South
Onland where we have no competition between each other. You know,
obviously we very carefully considered this right at beginning. There
is a legal test that is applied about the substantial
(14:58):
lessening of competition. All of our advisors, plus you know,
our internal teams, have the view that we passed that
legal test and that the proper position we put up
should have been cleared. Today we're announcing it's started in
the last hour or so, that we are going to
appeal this decision. So that basically means we now notify
that we're going to appeal. We have to file by
(15:19):
about the twenty first of this month, so it's only
a couple of days away, and we'll wait for the
High Court to give us a hearing date and work
through that process.
Speaker 2 (15:28):
And how will you appeal? How do you believe that
you will get them to change their mind?
Speaker 3 (15:32):
So essentially appeal takes the year's worth of work that's
been done between Foodstuffs and the Commission and puts it
in front of the court, and the court go back
through the process and determine whether the decision was appropriate
or not. The basic you know, if you stand back,
these are two regional cooperatives, one in the North Island,
one in the South Island. It's New Zealand's unique with
it split and cockstrait. We don't compete with each other
(15:55):
in any way in a retail market, and we don't
compete to buy groceries off suppliers. We buy them for
the North Island, the South Island buy them for the
South Island. We would be able to to be an
incredibly more efficient, lower cost New Zealand organization by being one.
There is really no other New Zealand business that's forced
to stay regional.
Speaker 2 (16:14):
Like this, But what would that do to supplies? Then
you could screw them down.
Speaker 3 (16:18):
It would give supplies two or three things. And I
talked a lot of a couple of days after the decline,
I had six hundred of them on a call that
we brief them on. Last week I was in Wellington
presenting live to two hundred or so supplies. So we
get a lot of conversation with them. Almost every day
I'm meeting with one or other, and the advantages for
supplies would be dealing with one. Not too the fact
(16:39):
that because Foodstuffs is a cooperative of locally owned stores,
they could still win ranging in a single store in
one of our banners, say four Square only or New
World only, in a region, an island or now, the
possibility would be you could do a deal to be
nationally ranged. So we see a number of advantages for supplies. Yes,
we're always going to try and buy the best we
can because customers hold us accountable for that. They expect
(17:02):
us to be buying well. And one, just to give
a profile the supply market in New Zealand, about eighty
percent of our products come from twenty of the world's
largest supplies. Wow So's it's not quite maybe the scene
people think. And we're incredibly proud of over the years
the hundreds of local New Zealand supplies we've worked with
to make them bigger and better.
Speaker 2 (17:23):
Yeah, because that's the thing I don't mind. I guess
if I have to choose paying fifty cents more for
a local grower or supplier who's working their portunities off
in New Zealand conditions to make a living, you know,
and they they only really make their killing when they
sell the farm or the orchard or the business the
(17:45):
manufacturing plant. So they their jolly hard work is employing
New Zealanders. So I'm happy to pay a little bit
over the odds, you know, even when things are tight.
I just don't want it to go to you.
Speaker 3 (17:58):
Yeah, you know what I mean.
Speaker 2 (18:00):
I'm already paying you. I'm coming to see you every week.
You have my business. I just want their so you know,
the supplies to be paid fairly.
Speaker 3 (18:08):
Yeah, and so do we in terms of our firstly
jolly hard working New Zealanders. That's our stores as well,
each one owned by a family across the North Island,
employing twenty four thousand New Zealanders. And we're proud of that,
and we think that's a really important.
Speaker 2 (18:21):
And I love the way you build up people within
the business. You can start off as a trolley boy
and end up as a supermarket store owner.
Speaker 3 (18:28):
Yeah, I really love that. I never worked out in
time that ownership was a great career. But I my
first sort of proper job was my uncle and Art's
new Ward and Walkworth. I was the truck driver and
then the shelf stacker for drinks. You know, so funny
how life turns out. But you know, New Zealand Supplies
we have this amazing emerge program where we tour around
(18:49):
all the regions and say this is how you engage
with us, this is how to get inside what you
perceive as a big organization and do well. We've just
done our awards where Sarah noticed Frazzelle and their Lucky Taco.
You know, we are going to be ranging all of
their commission, their retail products and all of our new
worlds because they were standout no startup player that we
picked an amazing oats maker, you know, sort of morning
(19:12):
oats guy who lives on Wahiggy Dan who's you know,
We're we're listing his product full of oats. Those stories
are the ones that I think you need to balance
out a little bit of the view that's been expressed.
There is a lot of that going on.
Speaker 2 (19:25):
Jim, A very good morning to you. You have a
question for Chris.
Speaker 8 (19:29):
Good morning carrying, Chris. Thank you for having me on
your show. I've got a couple of questions for Chris.
Speaker 3 (19:35):
Are you there, Chris, Yes, Jim, I can hear you.
Speaker 6 (19:37):
Fine, Thank you very much.
Speaker 8 (19:40):
I've been involved in the grocery industry for over forty
years and I can go back to well, obviously roughly
halfway through that period, over twenty years ago when the
Commerce Commission allowed supermarkets to pursus each other, and the
(20:00):
going back twenty five years ago, roughly twenty there was
five supermarket in New Zealand and that provided a reasonable
level of competition. And now we've got two. So I
sat back and I watched them. When the Commerce Commission
approved to go down to a guopoly of two, I
(20:22):
just scratched my head and I thought, what the hell
is going on here? I said, this is just insanity
and it's proven to be so. And there we are
in twenty twenty four, and you guys want to merge
Norton South Island, which will be effectively free certain market
chains down to two. And I agree with their decision,
(20:45):
and there should even be more competition. But that's not
what I wanted to talk to you about specifically. I
think I know the real reason why Norton South Island
wants to merge, and that is to gain more control
over the suppliers from a price point of view, because
(21:07):
trating to the South Island is absolutely insane, and I
can tell you in the last fifteen years it's got
worse and worse and worse, and food stuff North and
South Island will not allow, not allow suppliers will certainly
not me not allow other suppliers. I believe being able
(21:31):
to charge more to send that the South Island with
the cost is way more. Our profitability has dropped fifteen
percent fifteen to twenty percent in the last the last
ten years or so since everybody was allowed to merge together.
So that's the question, not but to you, what is
the real reason behind it. I know you don't compete
(21:54):
head the head Northern South Island, but I believe it's
a ploy to gain more control of the suppliers. What
do you say, to.
Speaker 3 (22:02):
That, Thanks John, And look a few points in that question.
The first thing is I think the COMMISCE Commission would
say they didn't approve the merger that I think created
Wolworfs as we know it today. That was actually contested
through an appeal process and eventually approved by the courts.
(22:23):
But you know, if you come back to what is
the real reason that we want to merge, it's because
we have to do everything we can to lower the
cost of doing business for our cooperatives. And I think
that's the first key point. We're not a corporate like Wolves.
We are cooperatives. So we are three different retail banners
and across the across New Zealand five hundred and thirty
(22:45):
individually owned stores, so quite a different model to corporate.
So when people talk about two, you know we one
is a collection of small and medium businesses. One is
a corporate and they are different for that reason, and
the controls and the operation and everything is quite different
on that front. The real reason is because we have
duplication being north and south, than management and in processes
(23:08):
and technology and a whole lot of things that currently
customers don't value us having two of them. If we
could merge, we would be able to lower our costs,
which would mean we could make a difference to what's
happening to food prices. We have also been quite clear
for the whole way along that we think being able
to work as one organization to engage with rather than
(23:28):
two will save money not only for us, but for
our supplies and partners, and that should be able to
reflect in a lower cost of food for New Zealanders.
In terms of cost to serve between the two islands, yes,
North Island products getting to the South does cost more
to do and I'm pretty confident that we are we
are paying more for those goods in the South Island.
(23:49):
But I'm not aware of the commercial data. It's not
our company, so I can't look inside it. But you know,
I do know that when we've looked at some things
well before the merger approvals, that you know, we were
seeing different costs because of that issue. And it happens
the other so when we source products out of the
South Island, freight is part of what it costs us
to get them. So very happy to follow up directly
(24:13):
Jim withthre's something you feel isn't being listened to or
isn't being considered, but I know for sure cost to
server is different between the two. I think the key
thing that we've focused on is we're quite transparent about
our profitability. That we've talked about that, and we've been
quite transparent for thirty months now about what's happening to
our price increases versus the cost of goods from supplies
(24:35):
versus New Zealand Department. It's satistics food price inflation measure.
We're pretty proud that for twenty six of the thirty
months we've held our retail price increases below food price inflation.
Speaker 2 (24:46):
Whichever you still get it. Does it just happen that
every supplier has a friction with the retailer because I
haven't heard much of it from other retail But then
we don't have the same level of discussion. But A
Texas says, as a grocery rep for major corporates looking
after all the big Auckland pack and saves, they were
bullies and threatened to throw my products out of store
(25:07):
on multiple occasions if I didn't give them the pricing
they want. They swore at me a couple of times
and treated me like total crap. It's completely accepted as
part of the industry. And it's old and it's an
old boys club, if ever I've seen one. Why do
you allow such appalling behavior? When a personal grievance would
be raised in any other industry, no one speaks up
because their company product would be under fire. Think big
(25:30):
like Heineken, Huggies, et cetera. We're not just small players.
And you could dismiss this as one text bluff heard
that on a number of occasions from suppliers they get
stood over basically.
Speaker 3 (25:41):
So thirsty as described, that's not acceptable, right, and it's
not in our code of conducts, not in our values.
And you know I spend time in stores one to
two days a month, you know, last week opening a
four gram p tarou next week's why power?
Speaker 4 (25:57):
You know?
Speaker 3 (25:57):
I would also contend there are many many people who
have never displayed those behaviors. Where those behaviors have been displayed,
and it's accurate. That's absolutely not acceptable and needs to
be addressed and changed. I would say, I think those
behaviors have changed in the last five to eight years.
I think it's quite a change path ten twenty years ago.
(26:18):
Can't comment too much, but as described, not acceptable Having
said all of that too, you know, at the end
of the day, there is a bit of a you know,
I think, yes, there is always a tension between suppliers
and retailers in every category, not just food. You know,
retailers are trying to get the best value on shelf
for customers. They are trying to negotiate to buy products
at the best they can. Sometimes the commercial offer from
(26:42):
the supplier won't work. It just won't sell at the
price that we'd be able to put it on shelf,
and we have to say we can't do that. So
there's a little bit. You know, sometimes I see suppliers go,
but you have to have my stuff on because it's
my stuff and I think it's fantastic. Sometimes we go,
We're just not seeing that from our customers, nor at
that price will it work. That will lead to tension.
(27:02):
We have a set of values that we require our
people to work by. Not everyone is perfect, and when
we find it isn't really happy to call it out
and get it dealt with.
Speaker 2 (27:11):
News Talk, said be Chris Quinn, CEO of food Stuff's
North Island with us Allen, just on the supplies issue,
you have a question.
Speaker 7 (27:18):
Too, Yes, back in the time when COVID was on
the farmer I worked for, we used to supply our
heafer meat heads to New Will for Meat and we
got four dollars fifty of kilo for our heifers back
in that time. And I went into the butcher's new world.
(27:39):
And around the same time you were paying twenty two
dollars a kilo for your mints and forty forty five
dollars for your stakes. Where is the justification between the
farm gate and the butcher's you know, the new world?
Speaker 3 (27:56):
Thanks Ellen, And look, you know, as you will be
probably more aware than me. You know, there is a
lot that happens between a beast leaving the farm and
turning up on shelf as a product. You know, it
goes through processing. It generally comes to us through a wholesaler.
There is transport, storage and then processing in the store.
So a lot of stages in between those things. What
(28:18):
I do know, you know, can I can sort of
point to the margins in the butchery at the end
of that process, somewhere in the mid twenty percents so,
and that's before we account for the cost of the butchers,
before we account for waste or product that has to
be withdrawn from sale because of age and all of
those sort of things. So whilst that gap at face
(28:41):
value appears quite large, the stages in between there is
cost and margin added at multiple stages on the way through.
You know, we love the fact that we're engaged with
so many New Zealand farmers indirectly, usually through wholesalers and processes,
and we try our very best to make sure that
we've always got New Zealand product available. The last two
(29:02):
or three months has been a bit tough on that front.
Is we've got supply issues because of export, but in
general that's you know, when you break it down, there
are multiple stages between those two things that caused that
to be the outcome. What I try and work back
from is, so are the margins, thus the prices from
what comes into the store versus what's on shelf reasonable
for the investment that needs to go into the business.
(29:24):
And also all the time we've got to look at
our competition and make sure that we're in the right
place get competition.
Speaker 2 (29:30):
Because I do want to ask you about that, But
just one more on the supply, because we have had
a lot of talk about that.
Speaker 3 (29:36):
In the past.
Speaker 2 (29:37):
Is it John or Andrew or John Andrew, John John?
I'm sorry there's another name there as well, doubling on you,
Oh John.
Speaker 7 (29:46):
Hi.
Speaker 6 (29:46):
Yeah, So I'm a supplier to food stuff and I
just wanted to give Chris a big up.
Speaker 3 (29:52):
There we go.
Speaker 6 (29:53):
Things things have changed in the industry, and it was
a little bit of a well we said ten plus
years ago, but I've definitely noticed the changes as a
supplier dealing with head off us individual stores. They're a
big business and I must say they've got a hell
of a job to do. I guess us customers just
(30:15):
look at it as picking up a product off the shelf,
but look, Chris has just alluded to in the butchery
department to get it from the farmer and Bloodies of
South Island too. On the shelf, there's a lot of process,
there's a lot of hands touched in the product. So
I just wanted to say I think they're doing a
good job, and from a supply point of view, I
can see the change is happening and I appreciate them.
Speaker 2 (30:37):
There you go. You were just saying in the ad break,
oh and now we do get you know, lovely supplies.
They spend a lot of time talking.
Speaker 3 (30:44):
Yeah, thanks John, And look, you know we're never done right,
We've got to keep working on it. You know, fundamentally,
you know, the thing to remember about the supermarket industry,
we are an aggregator of thousands of products from supplies.
We need fantastic, strong, sustained, innovative supplies who bring us
great products that customers are keen to buy. If we
(31:05):
don't have those on our shelves, we don't have a business.
So you know, that's at the core of it. We
need a functioning relationship with supplies where you know, our
goal is to be the most valuable retailer for our suppliers.
So we're trying to deliver that. We are also trying
to deliver the value that New Zealanders are demanding in
these times.
Speaker 2 (31:24):
We'll ask about competition. God, we could have you one
for another hour. Really, we'll be back in just a moment.
I'll ask you about competition and land banking. We're holding
as you prefer to. Okay, so competition, you said, there's
lots of competition where.
Speaker 3 (31:39):
Look, so you know competition in New Zealand where five
million people in a country this physical size of Japan. Yeah,
so competition in every industry won't look like it looks
in other markets. So in New Zealand right now, you've
got Woolworth's Australia and their New Zealand operation. You've got
our cooperatives and the multiple retail banners. And one thing
people never think about is how much they compete between themselves.
Speaker 2 (32:00):
I'm just going to ask you that if I go
into New World Birkenhead and see two egg plant for
five bucks, could I go into New World Milford and
see three eggplants for five bucks?
Speaker 3 (32:10):
You might depending on what that owners decide to invest
in this week. Yesterday I was in Taranaki meeting a
bunch of our owners and the New World in the
Pack and Save can see each other across the street,
and trust me, that conversation is always full of energy
and they're trying to win customers by doing their thing
the way they do. And then you know, in New
Zealand we've got a costco, now we have the warehouse.
(32:30):
You know, I think twenty five or more percent of
Itage revenue is grocery now so fast as growing business
as a business, times are tough, but that category seems
to be going well. And you know, we're seeing a
lot of ethnic stores, particularly Auckland's, you know Asian supermarkets
all over East and North. You know, solid offers that
I'm visiting and seeing very busy and a lot of
(32:51):
people choosing to get their core products there. So competitions
simply won't just look like another pack and save. It's
going to look like something different because they're trying to
win a different way.
Speaker 2 (33:00):
If there was money to be made, would as to.
Speaker 3 (33:03):
Be here absolutely, you know, there is nothing preventing ld
or Asda or anyone else coming to the New Zealand market.
You just have to do what our owner families have done,
which is put your money on the line and take
the risk.
Speaker 2 (33:15):
And buy up land around you like monopoly, so nobody
else can.
Speaker 3 (33:19):
Yeah, the land story, so we picked up that that
was expressed as a concern in the annual grocery report.
We haven't heard anything since about that concern. What I
do know today is all of the land that we
own as foodstuffs that is not yet built on is
either one of two things. It's right next door to
a current store, so it's for expansion. A car park.
One day customers say the car park's too busy. We
(33:40):
need you to make it bigger. You've got to have
the land to do that. Or secondly, it is sites.
We have got a plan to build on in the
next five to ten years.
Speaker 2 (33:48):
Every piece shouldn't there be a use it or lose
it after ten years?
Speaker 3 (33:52):
Look, you know, use it or lose it after a
decent period of time is fine. You've got to accommodate
for when communities grow.
Speaker 2 (33:59):
Okay, news talk said b it is three minutes to God. Thanks,
right out of time. I thought we had another break
and I could talk to you. I think we're gonna
have to get you back in Chris.
Speaker 3 (34:11):
There are a lot of questions, would you Yeah, absolutely.
Speaker 2 (34:15):
I'm glad your choice was Bruce Springsteen. So Helen's chosen
walking working on a dream. It's kind of what you're
doing and that will take us through to the news.
I look forward to an update on the security the
next time we speak.
Speaker 3 (34:28):
Sure, thank you very much.
Speaker 2 (34:29):
And I don't think they'd mind waving their barcodes. They're
all a little proportion of talk back callers are.
Speaker 3 (34:36):
Saying, we're going go and challenge the team on that one.
Speaker 2 (34:38):
Yeah, good, Okay, thanks for your time, Thank you and
it was Chris Quinn, CEO of Foodstuffs and North Island.
Possibly SEEO of Foodstuffs in North and South Island if
they get their way in the Court of Appel. You
heard it here first.
Speaker 1 (34:53):
For more from Kerry Wooden Mornings, listen live to news
talks it'd be from nine am weekdays, or follow the
podcast on iHeartRadio.
You're listening to the Kerry Wooden Mornings podcast from News
Talk SEDB.
Speaker 2 (00:11):
And here we are our love and with Mark Mitchell
is over for the are talking crime. Mark Mitchell had
made a commitment that he would resign if things didn't
get better in New Zealand, and he says he'll continue
on because things are moving in the right direction, although
there is still a lot of work to do. And
you agreed, You said, he's good. You've seen a difference
(00:34):
in your neighborhoods, your communities. What you've also seen, though,
is ongoing theft from supermarkets, people just loading up their
trolleys and walking out. And I said, well, funnily enough,
we have the CEO of Foodstuff's North Island, Chris Quinn,
coming in, who's taking calls on any issues you may
have around supermarkets, grocery prices, suppliers and the like. And
(00:59):
he joins me, Now, a very good morning to you, Chris.
Speaker 3 (01:01):
You're a good morning yilder.
Speaker 2 (01:03):
Now you're a co op of three hundred and thirty
plus locally and operated grocery stores. There are one hundred
and seventy two four squares, including the most excellent one
in open one local one hundred and eight New Worlds
and forty five Pack and Saves, and I would venture
to suggest out of every single one of them, you've
had people take stuff that does not belong to them.
How are they still getting away with it?
Speaker 3 (01:24):
Look, retail crime has been an incredible issue, you know,
probably for the last four or five years, and particularly
post COVID seems to have really stepped up sadly in
the last quarter that we measured, so up to September
we saw five thousand incidences reported across just our store network.
You know, so this is a daily occurrence for our
teams in store. And you know, the one thing none
(01:45):
of these people signed up to go to work to
be faced with aggressive and assertive issues going on. You know,
there is some talk that it's partly about cost of living,
but when we look at the data, the things that
are causing retail crime are firstly, you know, I'm stealing
for gang or for affiliations that I have for fundraising,
so for profit. There is some feeding a habit, and
(02:06):
there used to be quite a driver around social media
filming yourself doing stuff that one probably has died away,
but the total occurrence is still uphock raffles, so it's
basically been black market sold.
Speaker 2 (02:22):
So they do trick raffles to have raffles, but they
sell sausage packs out of the boot of the car
to raise money.
Speaker 3 (02:29):
You get offered something in a pub that a cousin't
feel right, that might be how it came about.
Speaker 2 (02:34):
So we know it's happening. But on talkback I also
hear from people and have done for the past few
years about what people are doing overseas to stop it,
like the trolleys won't go beyond the store, or the
doors don't open unless you wave the tag. By allowing
people to get away with it, they will keep doing it.
And we don't want staff to go and put their
bodies on the line. They shouldn't, as you say, have
(02:56):
to come to work and be assaulted. But surely the
technology is there, why haven't you been fast adapting it
in store?
Speaker 3 (03:02):
So we've been from a technology point of view. The
biggest move that we made into facial recognition technology and
ability when we've had someone that has already done something
unacceptable and has been trespassed from the store, our ability
to recognize that they're coming back in and intervene early
We've been trialing that in twenty five stores for the
last six months and we've had a good, solid success
(03:23):
with being able to lower the crime rate in those stores,
So that's something we're pretty interested in. We're trying to
balance having a pleasant shopping experience for the ninety nine
percent of New Zealanders who come in and just want
to enjoy their experience in the store and try and
not have it feel like you're entering and exiting a prison.
But at the same time.
Speaker 2 (03:42):
How is waving a bar tab, you know, like a
bar code on your.
Speaker 3 (03:45):
I think received, you know, talking to our customers, a
number of them would find that a bit of a
pain to have to do that every time to exit
a building. So we're looking at all of these technologies
globally trying to work out which ones get the balance
right between a good experience and security and managing the
rate of theft, but also of any violence or assertion
that's going on in our store.
Speaker 2 (04:06):
Because it's not a good experience when you are juggling
what you're going to put in your trolley to feed
your family, when you have been working bloody hard all
week and you've got commitments and bills that you have
to pay. There's precious little discretionary income. And when you
are making those decisions and you watch someone sailing out untouched,
(04:28):
that really rips your ninety.
Speaker 3 (04:30):
Look, it's completely not acceptable, and I think.
Speaker 2 (04:32):
Our unacceptable for a very long time.
Speaker 3 (04:34):
Chris, Yeah, our owner operator model on this. You know,
there is a lot more intervention that occurs in the stores.
There is a more active approach to trying to prevent this,
but you've also got to be careful. You don't want
staff hurt or assaulted or injured. So it is a
balance all of the time on this. What we do
want is for the total rate of this to go
down exactly.
Speaker 2 (04:54):
But surely if they can't get away with it, if
they know it's not easy pickings, then they won't do it.
They go somewhere else. You know, they don't want to
work particularly hard. So if you putting those measures in place,
and so what if people don't like scanning their barcode
Let's face it, there's not much competition, which brings us
to another one very shortly. You know, they've only got
(05:15):
food stuffs or Woolworths to shop at.
Speaker 3 (05:17):
So well, it's actually a very wide range of retail food.
But we can talk about that, but it is the
balance between enjoyable experience and something that customers rate as
a place they enjoy going and get the right experience
and preventing crime. And we're trying to get that balance
right and make sure that the cost of all of
this doesn't end up in the cost of food.
Speaker 2 (05:38):
Well, surely the theft of food. Who pays for.
Speaker 3 (05:42):
That, Well, essentially it has to end up somewhere in
the food price. It's in the system, right.
Speaker 2 (05:46):
So we're going to pay for it anyway, whether it's
security measures or thefts.
Speaker 3 (05:49):
Yeah, there is an enormous you know, the balance of
investment is important, but what really matters is customer experience
and making By far the bulk of our customers aren't
thieves and aren't trying to do these things, and we
want to focus on them the most we can.
Speaker 2 (06:03):
I think they'd be quite happy, speaking for me and
for the talkback callers, if it was made just a
little bit more difficult for them to stare. We hate
seeing people.
Speaker 3 (06:13):
And there is a lot of thought that goes into
store design around where cameras are, where people are, the
shark's teeth on entry that a number of stores have
the way self checkout is monitored by staff. There is
a number of actions that probably aren't as visible as
some of those physical things that are all part of
stopping this. Genuinely, we try to intervene safely every time
(06:33):
we see something go on.
Speaker 2 (06:36):
But yes, you don't want anyone hurt. A Texas says,
Can you ask Chris what's the point of paying and
having security guards if they can do nothing so they
can come off the price and the groceries if they
were to remove them.
Speaker 3 (06:48):
Yeah, this is one issue that we are working with
government on and Mark Mitchell, who has been discussed ead
this morning, has at least been personally quite engaged in this.
He's come and seen us a couple of times about
retail crime. There is a retail crime working group that
Paul Goldsmith set up under his responsibilities, and one of
my team is on that group, so we have a
(07:08):
voice in there. The legislation around bag search and around
security guards and what they are able to do and
not able to do is something that's well being discussed
right now, and we're giving a clear view about some
of the things we think would help without making the
experience feel too draconian.
Speaker 2 (07:25):
Yeah, I mean a lot of people say, and I
know I've been told this two or three times and
it just won't stick. Why is its security guards can
tackle streakers and pitch invaders at eden Park, but they
can't tackle people who are leaving your store with thousands
of dollars worth groceries.
Speaker 3 (07:42):
And that is the current legislation and rules that we're
dealing with. We would you know, we're talking to Guman
about what's the next level? Where could you move to
in order to provide a further deterrent to retail crime
and theft that is just adding to the cost of groceries.
Speaker 2 (07:58):
So what is the difference between eden Park and New World.
Speaker 3 (08:02):
I'm not expert on the rules that Eden Park operate to,
but I know from a point of view of you know,
there is a point at which our security personnel need
to stop. There's also a safety issue. You just don't
know what you're dealing with. And we've seen stabbings, we've
seen assaults, we've seen physical and that's just not acceptable
and not right.
Speaker 2 (08:20):
No, it's not so the loveliest people. They can make
your day and for a lot of a lot of
maybe older people too, going to the supermarket is a
lovely social interaction. They know the people behind the tills.
The people behind the tills take the time to know them.
It is a really pleasant experience for a lot of people.
Speaker 3 (08:40):
It's one of the great learnings we've had from our
security teams on the front. If they're they're greeting on arrival,
saying hello, welcoming people to a store, it's amazing the
difference that makes to what happens next. It's just a
funny thing about you know. If it's a sort of
affront of sort of searching looking out for your approach,
that gets a different reaction. A welcoming reaction makes a difference.
Speaker 2 (09:00):
Yeah, all right, now, Chris kinn is here for a now,
and I have plenty of questions, absolutely loads questions for him.
But I would very much like to hear from you.
You know that you've got a lot to say whenever
it comes to supermarkets, so I'd very much like to
hear from you either as customers. Suppliers also have a
lot of questions. It was interesting I saw a woolworthsrap
(09:22):
after the ComCom report saying, oh, the price of things
is very much, you know, the supplies dictate that suppliers
would tell us otherwise. You know, they say they are
completely screwed down when it comes to price. So there's
lots around that, lots about competition. So love to take
your calls. Eight hundred and eighty ten eighty is the
numbered call, and we have Chris Quinn, the CEO of
(09:45):
food Stuffs North Island instare taking your calls. Kate, you're
the first cab off the rank, and a very very
good morning to.
Speaker 4 (09:52):
You, very good morning to you as well. My question
is is.
Speaker 5 (10:01):
There anything for legislation in place where as a person
that you walk into the store, you're actually saying, yes,
five things that I've taken something, then you are perfectly
within your right to be able to search my bag
order to pat me down, so that I.
Speaker 4 (10:22):
Understand that most into a store because it's the consequence
of what could possibly have happen to me as the
seems that I've taken something. Just I mean, you know
that you was probably only search because you've got cameras
all around that you could definitely pick up to identify
if I have taken something. So that's something like that
in place already or not.
Speaker 3 (10:44):
Thanks Kate, it's Chris speaking. Look, a large number of
our stores do have a warning or a note that's
saying bags either can't be bought in or would could
be searched. However, from a pure legal point of view,
we can't conduct an unauthorized search of bags. It is
something that we are talking to govern about to say,
(11:07):
can we get the legislation to be clearer, to be
more black and white, so that where we are confident
that something has occurred, so as you said, it's been
seen on camera or seen by one of the team members,
that we are able to do that to protect everybody
in the store and to do the right thing. But
currently it is a pretty gray area in terms of
we cannot demand an unauthorized search, right, Okay.
Speaker 4 (11:31):
Well, I was just thinking as especially it's a bit
well known if you're walking to stare there.
Speaker 3 (11:37):
Yeah, and I think, as I say, ninety nine percent
of New Zealanders would go fair enough. I've been told
I can make the choice about whether I bring a
bagin or not. It's the one percent that we're talking
about that where our tensions rise. And you know, there's
a fine balance here between people's rights and privacy, but
(11:57):
also the right of a local family that own a
business to prevent theft coming out of their store.
Speaker 2 (12:03):
Thank you kat. A text says, why do all costs
have to be passed on to the customers? Why should
we pay for your operating costs? You can claim tax
rebates on your security expenses. You're making huge profits. This
is what's happened over the last generation. Back in the day,
and nice profit while running a business was sufficient. Now
we have shareholders in corporate greed. How has this scenario
(12:25):
helped anyone address e quality?
Speaker 3 (12:28):
So you know a number of issues in that question. Firstly,
not all costs are passed on by any means, you know,
just what we were talking about is in general all
costs in the end, some of it flows through to price.
We've tried to sort of make it reasonably transparent about
what the profitability of our supermarkets is and basically and
this has been weighed and measured multiple times by everybody,
(12:51):
from the Comments Commission to us to everyone. So it's
a pretty transparent set of information. And for every dollar
of retail in our stores, three point six cents ends
up as profit after tax. That is the bottom line
on average across the board. Compare that to grosses all
over the world, and we sit in the last year
slightly below the global averages in terms of return on
(13:12):
the capital that's invested. So you're quite right. You know,
many of these costs get soaked up in the business
and just become part of what every business in New
Zealand has been seeing, which is almost every input cost
has been under pressure and it's needed to work hard
on efficiency to get there.
Speaker 2 (13:29):
All right, take a break, we'll come back with Nicky.
Questions for Chris Quincy of food Stuff's North Island also
Managing director of food Stuffs in New Zealand, if you
have a question around supermarkets, their price in competition security,
Nasia time. NICKI a very good morning to you.
Speaker 6 (13:47):
Good morning, Carey. How are you good?
Speaker 3 (13:48):
Thanks?
Speaker 7 (13:50):
Cool?
Speaker 6 (13:50):
Hey, I just wanted to ask a question regarding the
food Stuff's merger between the North Island and South Island
and where that added at the moment I thought.
Speaker 2 (13:59):
That was that had been denied, hadn't It is because
of unfair competition? Is that right?
Speaker 3 (14:04):
Yeah? So look, thanks Dicky, and a great question and
a massive part of an incredible bunch of hardworking people
at food Stuffs For the last year so on the
first of October we got the final decision from the
Commerce Commission, which was to decline our merger clearance application.
About three or four weeks later we got a document
(14:24):
setting out their reasons for that, and our advisors and
us have been going through that document or the fine
toof come to understand it and consider it and make
our minds up about what we do from here.
Speaker 2 (14:35):
Was it the lack of competition they were most concerned about.
Speaker 3 (14:37):
So the biggest concern in the document seems to be
about whether suppliers would be worse off as a result
of a cooperative merging between the North Onldon and South
Onland where we have no competition between each other. You know,
obviously we very carefully considered this right at beginning. There
is a legal test that is applied about the substantial
(14:58):
lessening of competition. All of our advisors, plus you know,
our internal teams, have the view that we passed that
legal test and that the proper position we put up
should have been cleared. Today we're announcing it's started in
the last hour or so, that we are going to
appeal this decision. So that basically means we now notify
that we're going to appeal. We have to file by
(15:19):
about the twenty first of this month, so it's only
a couple of days away, and we'll wait for the
High Court to give us a hearing date and work
through that process.
Speaker 2 (15:28):
And how will you appeal? How do you believe that
you will get them to change their mind?
Speaker 3 (15:32):
So essentially appeal takes the year's worth of work that's
been done between Foodstuffs and the Commission and puts it
in front of the court, and the court go back
through the process and determine whether the decision was appropriate
or not. The basic you know, if you stand back,
these are two regional cooperatives, one in the North Island,
one in the South Island. It's New Zealand's unique with
it split and cockstrait. We don't compete with each other
(15:55):
in any way in a retail market, and we don't
compete to buy groceries off suppliers. We buy them for
the North Island, the South Island buy them for the
South Island. We would be able to to be an
incredibly more efficient, lower cost New Zealand organization by being one.
There is really no other New Zealand business that's forced
to stay regional.
Speaker 2 (16:14):
Like this, But what would that do to supplies? Then
you could screw them down.
Speaker 3 (16:18):
It would give supplies two or three things. And I
talked a lot of a couple of days after the decline,
I had six hundred of them on a call that
we brief them on. Last week I was in Wellington
presenting live to two hundred or so supplies. So we
get a lot of conversation with them. Almost every day
I'm meeting with one or other, and the advantages for
supplies would be dealing with one. Not too the fact
(16:39):
that because Foodstuffs is a cooperative of locally owned stores,
they could still win ranging in a single store in
one of our banners, say four Square only or New
World only, in a region, an island or now, the
possibility would be you could do a deal to be
nationally ranged. So we see a number of advantages for supplies. Yes,
we're always going to try and buy the best we
can because customers hold us accountable for that. They expect
(17:02):
us to be buying well. And one, just to give
a profile the supply market in New Zealand, about eighty
percent of our products come from twenty of the world's
largest supplies. Wow So's it's not quite maybe the scene
people think. And we're incredibly proud of over the years
the hundreds of local New Zealand supplies we've worked with
to make them bigger and better.
Speaker 2 (17:23):
Yeah, because that's the thing I don't mind. I guess
if I have to choose paying fifty cents more for
a local grower or supplier who's working their portunities off
in New Zealand conditions to make a living, you know,
and they they only really make their killing when they
sell the farm or the orchard or the business the
(17:45):
manufacturing plant. So they their jolly hard work is employing
New Zealanders. So I'm happy to pay a little bit
over the odds, you know, even when things are tight.
I just don't want it to go to you.
Speaker 3 (17:58):
Yeah, you know what I mean.
Speaker 2 (18:00):
I'm already paying you. I'm coming to see you every week.
You have my business. I just want their so you know,
the supplies to be paid fairly.
Speaker 3 (18:08):
Yeah, and so do we in terms of our firstly
jolly hard working New Zealanders. That's our stores as well,
each one owned by a family across the North Island,
employing twenty four thousand New Zealanders. And we're proud of that,
and we think that's a really important.
Speaker 2 (18:21):
And I love the way you build up people within
the business. You can start off as a trolley boy
and end up as a supermarket store owner.
Speaker 3 (18:28):
Yeah, I really love that. I never worked out in
time that ownership was a great career. But I my
first sort of proper job was my uncle and Art's
new Ward and Walkworth. I was the truck driver and
then the shelf stacker for drinks. You know, so funny
how life turns out. But you know, New Zealand Supplies
we have this amazing emerge program where we tour around
(18:49):
all the regions and say this is how you engage
with us, this is how to get inside what you
perceive as a big organization and do well. We've just
done our awards where Sarah noticed Frazzelle and their Lucky Taco.
You know, we are going to be ranging all of
their commission, their retail products and all of our new
worlds because they were standout no startup player that we
picked an amazing oats maker, you know, sort of morning
(19:12):
oats guy who lives on Wahiggy Dan who's you know,
We're we're listing his product full of oats. Those stories
are the ones that I think you need to balance
out a little bit of the view that's been expressed.
There is a lot of that going on.
Speaker 2 (19:25):
Jim, A very good morning to you. You have a
question for Chris.
Speaker 8 (19:29):
Good morning carrying, Chris. Thank you for having me on
your show. I've got a couple of questions for Chris.
Speaker 3 (19:35):
Are you there, Chris, Yes, Jim, I can hear you.
Speaker 6 (19:37):
Fine, Thank you very much.
Speaker 8 (19:40):
I've been involved in the grocery industry for over forty
years and I can go back to well, obviously roughly
halfway through that period, over twenty years ago when the
Commerce Commission allowed supermarkets to pursus each other, and the
(20:00):
going back twenty five years ago, roughly twenty there was
five supermarket in New Zealand and that provided a reasonable
level of competition. And now we've got two. So I
sat back and I watched them. When the Commerce Commission
approved to go down to a guopoly of two, I
(20:22):
just scratched my head and I thought, what the hell
is going on here? I said, this is just insanity
and it's proven to be so. And there we are
in twenty twenty four, and you guys want to merge
Norton South Island, which will be effectively free certain market
chains down to two. And I agree with their decision,
(20:45):
and there should even be more competition. But that's not
what I wanted to talk to you about specifically. I
think I know the real reason why Norton South Island
wants to merge, and that is to gain more control
over the suppliers from a price point of view, because
(21:07):
trating to the South Island is absolutely insane, and I
can tell you in the last fifteen years it's got
worse and worse and worse, and food stuff North and
South Island will not allow, not allow suppliers will certainly
not me not allow other suppliers. I believe being able
(21:31):
to charge more to send that the South Island with
the cost is way more. Our profitability has dropped fifteen
percent fifteen to twenty percent in the last the last
ten years or so since everybody was allowed to merge together.
So that's the question, not but to you, what is
the real reason behind it. I know you don't compete
(21:54):
head the head Northern South Island, but I believe it's
a ploy to gain more control of the suppliers. What
do you say, to.
Speaker 3 (22:02):
That, Thanks John, And look a few points in that question.
The first thing is I think the COMMISCE Commission would
say they didn't approve the merger that I think created
Wolworfs as we know it today. That was actually contested
through an appeal process and eventually approved by the courts.
(22:23):
But you know, if you come back to what is
the real reason that we want to merge, it's because
we have to do everything we can to lower the
cost of doing business for our cooperatives. And I think
that's the first key point. We're not a corporate like Wolves.
We are cooperatives. So we are three different retail banners
and across the across New Zealand five hundred and thirty
(22:45):
individually owned stores, so quite a different model to corporate.
So when people talk about two, you know we one
is a collection of small and medium businesses. One is
a corporate and they are different for that reason, and
the controls and the operation and everything is quite different
on that front. The real reason is because we have
duplication being north and south, than management and in processes
(23:08):
and technology and a whole lot of things that currently
customers don't value us having two of them. If we
could merge, we would be able to lower our costs,
which would mean we could make a difference to what's
happening to food prices. We have also been quite clear
for the whole way along that we think being able
to work as one organization to engage with rather than
(23:28):
two will save money not only for us, but for
our supplies and partners, and that should be able to
reflect in a lower cost of food for New Zealanders.
In terms of cost to serve between the two islands, yes,
North Island products getting to the South does cost more
to do and I'm pretty confident that we are we
are paying more for those goods in the South Island.
(23:49):
But I'm not aware of the commercial data. It's not
our company, so I can't look inside it. But you know,
I do know that when we've looked at some things
well before the merger approvals, that you know, we were
seeing different costs because of that issue. And it happens
the other so when we source products out of the
South Island, freight is part of what it costs us
to get them. So very happy to follow up directly
(24:13):
Jim withthre's something you feel isn't being listened to or
isn't being considered, but I know for sure cost to
server is different between the two. I think the key
thing that we've focused on is we're quite transparent about
our profitability. That we've talked about that, and we've been
quite transparent for thirty months now about what's happening to
our price increases versus the cost of goods from supplies
(24:35):
versus New Zealand Department. It's satistics food price inflation measure.
We're pretty proud that for twenty six of the thirty
months we've held our retail price increases below food price inflation.
Speaker 2 (24:46):
Whichever you still get it. Does it just happen that
every supplier has a friction with the retailer because I
haven't heard much of it from other retail But then
we don't have the same level of discussion. But A
Texas says, as a grocery rep for major corporates looking
after all the big Auckland pack and saves, they were
bullies and threatened to throw my products out of store
(25:07):
on multiple occasions if I didn't give them the pricing
they want. They swore at me a couple of times
and treated me like total crap. It's completely accepted as
part of the industry. And it's old and it's an
old boys club, if ever I've seen one. Why do
you allow such appalling behavior? When a personal grievance would
be raised in any other industry, no one speaks up
because their company product would be under fire. Think big
(25:30):
like Heineken, Huggies, et cetera. We're not just small players.
And you could dismiss this as one text bluff heard
that on a number of occasions from suppliers they get
stood over basically.
Speaker 3 (25:41):
So thirsty as described, that's not acceptable, right, and it's
not in our code of conducts, not in our values.
And you know I spend time in stores one to
two days a month, you know, last week opening a
four gram p tarou next week's why power?
Speaker 4 (25:57):
You know?
Speaker 3 (25:57):
I would also contend there are many many people who
have never displayed those behaviors. Where those behaviors have been displayed,
and it's accurate. That's absolutely not acceptable and needs to
be addressed and changed. I would say, I think those
behaviors have changed in the last five to eight years.
I think it's quite a change path ten twenty years ago.
(26:18):
Can't comment too much, but as described, not acceptable Having
said all of that too, you know, at the end
of the day, there is a bit of a you know,
I think, yes, there is always a tension between suppliers
and retailers in every category, not just food. You know,
retailers are trying to get the best value on shelf
for customers. They are trying to negotiate to buy products
at the best they can. Sometimes the commercial offer from
(26:42):
the supplier won't work. It just won't sell at the
price that we'd be able to put it on shelf,
and we have to say we can't do that. So
there's a little bit. You know, sometimes I see suppliers go,
but you have to have my stuff on because it's
my stuff and I think it's fantastic. Sometimes we go,
We're just not seeing that from our customers, nor at
that price will it work. That will lead to tension.
(27:02):
We have a set of values that we require our
people to work by. Not everyone is perfect, and when
we find it isn't really happy to call it out
and get it dealt with.
Speaker 2 (27:11):
News Talk, said be Chris Quinn, CEO of food Stuff's
North Island with us Allen, just on the supplies issue,
you have a question.
Speaker 7 (27:18):
Too, Yes, back in the time when COVID was on
the farmer I worked for, we used to supply our
heafer meat heads to New Will for Meat and we
got four dollars fifty of kilo for our heifers back
in that time. And I went into the butcher's new world.
(27:39):
And around the same time you were paying twenty two
dollars a kilo for your mints and forty forty five
dollars for your stakes. Where is the justification between the
farm gate and the butcher's you know, the new world?
Speaker 3 (27:56):
Thanks Ellen, And look, you know, as you will be
probably more aware than me. You know, there is a
lot that happens between a beast leaving the farm and
turning up on shelf as a product. You know, it
goes through processing. It generally comes to us through a wholesaler.
There is transport, storage and then processing in the store.
So a lot of stages in between those things. What
(28:18):
I do know, you know, can I can sort of
point to the margins in the butchery at the end
of that process, somewhere in the mid twenty percents so,
and that's before we account for the cost of the butchers,
before we account for waste or product that has to
be withdrawn from sale because of age and all of
those sort of things. So whilst that gap at face
(28:41):
value appears quite large, the stages in between there is
cost and margin added at multiple stages on the way through.
You know, we love the fact that we're engaged with
so many New Zealand farmers indirectly, usually through wholesalers and processes,
and we try our very best to make sure that
we've always got New Zealand product available. The last two
(29:02):
or three months has been a bit tough on that front.
Is we've got supply issues because of export, but in
general that's you know, when you break it down, there
are multiple stages between those two things that caused that
to be the outcome. What I try and work back
from is, so are the margins, thus the prices from
what comes into the store versus what's on shelf reasonable
for the investment that needs to go into the business.
(29:24):
And also all the time we've got to look at
our competition and make sure that we're in the right
place get competition.
Speaker 2 (29:30):
Because I do want to ask you about that, But
just one more on the supply, because we have had
a lot of talk about that.
Speaker 3 (29:36):
In the past.
Speaker 2 (29:37):
Is it John or Andrew or John Andrew, John John?
I'm sorry there's another name there as well, doubling on you,
Oh John.
Speaker 7 (29:46):
Hi.
Speaker 6 (29:46):
Yeah, So I'm a supplier to food stuff and I
just wanted to give Chris a big up.
Speaker 3 (29:52):
There we go.
Speaker 6 (29:53):
Things things have changed in the industry, and it was
a little bit of a well we said ten plus
years ago, but I've definitely noticed the changes as a
supplier dealing with head off us individual stores. They're a
big business and I must say they've got a hell
of a job to do. I guess us customers just
(30:15):
look at it as picking up a product off the shelf,
but look, Chris has just alluded to in the butchery
department to get it from the farmer and Bloodies of
South Island too. On the shelf, there's a lot of process,
there's a lot of hands touched in the product. So
I just wanted to say I think they're doing a
good job, and from a supply point of view, I
can see the change is happening and I appreciate them.
Speaker 2 (30:37):
There you go. You were just saying in the ad break,
oh and now we do get you know, lovely supplies.
They spend a lot of time talking.
Speaker 3 (30:44):
Yeah, thanks John, And look, you know we're never done right,
We've got to keep working on it. You know, fundamentally,
you know, the thing to remember about the supermarket industry,
we are an aggregator of thousands of products from supplies.
We need fantastic, strong, sustained, innovative supplies who bring us
great products that customers are keen to buy. If we
(31:05):
don't have those on our shelves, we don't have a business.
So you know, that's at the core of it. We
need a functioning relationship with supplies where you know, our
goal is to be the most valuable retailer for our suppliers.
So we're trying to deliver that. We are also trying
to deliver the value that New Zealanders are demanding in
these times.
Speaker 2 (31:24):
We'll ask about competition. God, we could have you one
for another hour. Really, we'll be back in just a moment.
I'll ask you about competition and land banking. We're holding
as you prefer to. Okay, so competition, you said, there's
lots of competition where.
Speaker 3 (31:39):
Look, so you know competition in New Zealand where five
million people in a country this physical size of Japan. Yeah,
so competition in every industry won't look like it looks
in other markets. So in New Zealand right now, you've
got Woolworth's Australia and their New Zealand operation. You've got
our cooperatives and the multiple retail banners. And one thing
people never think about is how much they compete between themselves.
Speaker 2 (32:00):
I'm just going to ask you that if I go
into New World Birkenhead and see two egg plant for
five bucks, could I go into New World Milford and
see three eggplants for five bucks?
Speaker 3 (32:10):
You might depending on what that owners decide to invest
in this week. Yesterday I was in Taranaki meeting a
bunch of our owners and the New World in the
Pack and Save can see each other across the street,
and trust me, that conversation is always full of energy
and they're trying to win customers by doing their thing
the way they do. And then you know, in New
Zealand we've got a costco, now we have the warehouse.
(32:30):
You know, I think twenty five or more percent of
Itage revenue is grocery now so fast as growing business
as a business, times are tough, but that category seems
to be going well. And you know, we're seeing a
lot of ethnic stores, particularly Auckland's, you know Asian supermarkets
all over East and North. You know, solid offers that
I'm visiting and seeing very busy and a lot of
(32:51):
people choosing to get their core products there. So competitions
simply won't just look like another pack and save. It's
going to look like something different because they're trying to
win a different way.
Speaker 2 (33:00):
If there was money to be made, would as to.
Speaker 3 (33:03):
Be here absolutely, you know, there is nothing preventing ld
or Asda or anyone else coming to the New Zealand market.
You just have to do what our owner families have done,
which is put your money on the line and take
the risk.
Speaker 2 (33:15):
And buy up land around you like monopoly, so nobody
else can.
Speaker 3 (33:19):
Yeah, the land story, so we picked up that that
was expressed as a concern in the annual grocery report.
We haven't heard anything since about that concern. What I
do know today is all of the land that we
own as foodstuffs that is not yet built on is
either one of two things. It's right next door to
a current store, so it's for expansion. A car park.
One day customers say the car park's too busy. We
(33:40):
need you to make it bigger. You've got to have
the land to do that. Or secondly, it is sites.
We have got a plan to build on in the
next five to ten years.
Speaker 2 (33:48):
Every piece shouldn't there be a use it or lose
it after ten years?
Speaker 3 (33:52):
Look, you know, use it or lose it after a
decent period of time is fine. You've got to accommodate
for when communities grow.
Speaker 2 (33:59):
Okay, news talk said b it is three minutes to God. Thanks,
right out of time. I thought we had another break
and I could talk to you. I think we're gonna
have to get you back in Chris.
Speaker 3 (34:11):
There are a lot of questions, would you Yeah, absolutely.
Speaker 2 (34:15):
I'm glad your choice was Bruce Springsteen. So Helen's chosen
walking working on a dream. It's kind of what you're
doing and that will take us through to the news.
I look forward to an update on the security the
next time we speak.
Speaker 3 (34:28):
Sure, thank you very much.
Speaker 2 (34:29):
And I don't think they'd mind waving their barcodes. They're
all a little proportion of talk back callers are.
Speaker 3 (34:36):
Saying, we're going go and challenge the team on that one.
Speaker 2 (34:38):
Yeah, good, Okay, thanks for your time, Thank you and
it was Chris Quinn, CEO of Foodstuffs and North Island.
Possibly SEEO of Foodstuffs in North and South Island if
they get their way in the Court of Appel. You
heard it here first.
Speaker 1 (34:53):
For more from Kerry Wooden Mornings, listen live to news
talks it'd be from nine am weekdays, or follow the
podcast on iHeartRadio.
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