Pak’nSave shoppers seem to be getting the best deal.
A recent study by Foodstuffs North Island has found that New Zealand stores offer the lowest grocery prices when compared to leading retailers in Australia and the UK.
The study compared 20 everyday necessities, and after adjusting for sales tax and exchange rates, Pak’nSave came out on top – cheaper than Woolworths NZ, Woolworths Australia, Tesco UK, and Aldi Australia.
Foodstuff North Island CEO Chris Quin told Kerre Woodham that when they look at that data, there’s a really competitive, innovative story being told.
He says they don't have price match guarantees because there's just too many products to cover.
Quin says supermarkets may hold up to 18 thousand different products so it would be too tricky to match them all.
He told Woodham they have more holistic aims.
Quin says for Pak N Save stores it's about getting the cheapest basket possible, and with New World it's about providing a good shopping experience.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the Carry Wood and Mornings podcast from
News Talks.
Speaker 2 (00:10):
He'd b Chris Quinn see your food Stuffs, North Island,
Managing director of Foodstuff's in New Zealand, with you for
the next hour. Oh eight hundred eighty ten eighty is
the numbered call. You can text me and a number
of you already have nine two ninety two on the
text and if you want to email me, I probably
won't be as quick on the emails because I'm not
(00:31):
in my own studio, but I would I would suggest
that texting or phoning is the best way of getting
your question through to Chris Quinn. He'll take your calls
on any issues you may have regarding grocery prices, supermarkets competition.
Food Stuff's is a co op of three hundred and
thirty plus locally owned and operated grocery stores, including one
(00:53):
hundred and seventy two four Squares, one hundred and eight
New Worlds, forty five Pack and Saves, and Chris Quinn
joins me. Now, good morning to you, Good morning, carry
What is it like? The political parties seldom agree on much.
What they do agree on is that you guys have
had it too sweet for too long and they intend
to do something about it.
Speaker 3 (01:14):
Look, I don't know that they all agree that, but
there's no doubt there's a lot of conversation about about
food price and I guess what we saw last Sunday
was unprecedented in terms of the announcement. Yeah, and I
think where we agree with all of the political parties is,
you know, food is a really important issue for New
Zealand households and the cost of food has been globally
(01:36):
quite a challenging issue. The last five years has seen
food prices all over the world lift twenty seven percent.
So there's no doubt households are feeling this and the politicians,
acting on behalf of consumers want to see if they
can make it better. So we would all agree with that.
What we would say is, let's focus on the things
that will actually make a difference to that so that
we can make progress on the issue that matters to households.
Speaker 2 (01:59):
Yeah, but I mean they might have gone up twenty
seven percent around the world, but it depends on where
you start from. I mean, any of us who have
traveled know that food is cheaper overseas well.
Speaker 3 (02:10):
It's a really good example to talk about because a
lot of people think that's what they see and it's
a challenge that we're often given. So one of the
things we've done in the last little while, for about
six or seven months now is do a proper comparison
of New Zealand food prices to a very similar country,
so to Australia. And what we stood back and did
was we said, let's take twenty items that are in
the top fifty bought items list and go and compare
(02:33):
them properly to a number of places in a number
of countries and see what the actual price difference is.
To do that, you've got to get your exchange rate
matched because that's real. You've got to match on GST
because that's quite a difference between countries in terms of
GST on food when we did that, so we took
this back to twenty items. These are items that are
bought millions of times a week. They are the popular
(02:54):
items like what, oh like your toilet papers, your cheeses, butters, milks,
dairy foods.
Speaker 2 (03:00):
Is this pre tariffs?
Speaker 3 (03:03):
It was done over the last four weeks, so it's
sort of somewhere in between all of that. We didn't
include the US, so that's not a factor in looking
at this, but that basket when you did all of
that Walworst and Australia one hundred and fifteen dollars, Tesco
one hundred and eight Walworst, New Zealand one hundred and
three ALD in Australia, which is once often talked about
one hundred dollars Pack and Save in the North Island
(03:25):
ninety three dollars for the same basket. So when we
look at right now with the data that is current,
we think there is a story to be looked at
that says is actually a really competitive, innovative story. Being
in the country for a long time.
Speaker 2 (03:38):
What competing amongst yourselves providing different products to different consumers.
Speaker 3 (03:42):
Yeah, so the competition question is a really interesting one
as well, because some people would define if you're a
store that is within the food Stuff's franchise and you're
a member of the cooperative that that sort of somehow
doesn't make you individual. We have three hundred and fifty
three stores in the North Island. When you talk to
them about competition, they mention each other almost before they
(04:03):
mention anyone else. They are individually owned businesses that are
competing for customers with the offer that they have and
they work incredibly hard to do that. So at one level,
we have three hundred and fifty three competing stores. Now
they're not all in the same catchment. They on the
same town and many of our stores are on their
own in a town because there is no other store there,
and we think that town is reasonably happy to have
(04:24):
a store there. In the scale of the co op
enables that for them. But they do compete with each other.
The competition between pack and say the New World is
as fierce as it is anywhere.
Speaker 2 (04:32):
Else, but you're offering different shopping experiences. Like if you
go to a New World, you know you're going to
pay a premium because you get a nicer shopping experience.
Speaker 3 (04:41):
In my opinion, yeah, I think that's exactly it. Competition
is about all offer something different to you to see
if I can win the customer.
Speaker 2 (04:47):
But how can you compete against one another if the suppliers,
you know, if the buyers are buying in bulk, which
is where you get the savings, how do you compete.
Speaker 3 (04:58):
Well, that's how you give a New Zealand cooperative a
chance of competing against an Australasian business or an American
business or a global busines is the very reason they
co op formed in nineteen twenty two was so that
a number of grosses could get together and say, in
order to be able to stay as a New Zealand
owned and local and very strong family owned business, we
need to work together on things we can so that's
(05:20):
buying and that we compete with each other on our
stores offering something to customers. So yes, a certain amount
of the buying is done centrally and brought through our
supply chain that gives them some scale. There is also
a lot of activity locally between our stores and supplies,
and a lot of different range between all.
Speaker 2 (05:35):
The stores, so individuals stores can stock something that the
Pack and Save down the road might not.
Speaker 3 (05:41):
Absolutely so, if you look at a pack and Save
in East Auckland versus one in South Auckland versus Northland,
you will see a range that is all about that community.
Speaker 2 (05:50):
The thing that makes me a little uneasy is that
when we first started talking about this, just as a
you know, I think it was the Commerce Commission was
interested in doing something back under, labor and supplies rang
in and they rang in in their droves, you know,
and a lot of them were unhappy with the deals
that were being done. Since that time, we haven't heard
from a single solitary one other than by text saying
(06:13):
we can't talk. The last time we talked, We've got
all sorts of pressure put on us. The last time
this was discussed, other supplies had pressure put on them
not to speak that. I don't like that at all. Like,
if your contract means that you can't criticize your buyer,
that's not cool.
Speaker 3 (06:34):
Yeah, there is nothing in a contract that says you
can't criticize a buyer.
Speaker 2 (06:38):
But there might well be, you know, pressure put on
by individuals to say, stage storm, it's not in your
best interest to criticize the hand that's feeding you.
Speaker 3 (06:47):
Look, I can't comment on that because I've had no
example or evidence of that or to me. I want
to be very clear. We have a code of conduct
that the Commics Commissions put in place. We train everyone
constantly on that and hold people to it. We have
a set of values that we hold ourselves to. And
every one of these occasions where you know we've been
able to speak in public or speak directly with our supplies,
which we do a lot of, I've always said if
(07:09):
you have an issue like that, call me and I
will sort that on your behalf. I have not had
one come direct.
Speaker 2 (07:14):
Okay, well there you go. There's a challenge to those
supplies that have contacted me in the past. Can we
get one question in before we take a break. Sure,
we'll go to cliff. Good morning to you.
Speaker 4 (07:26):
Yeah, good morning there, good morning. I'm just ring and
regarding the supermarket, I've worked for both sides of the industry,
count down side and progressive side and the food stuff
I had a food stuff shop for Square back in
the nineties. We question if another brand came into the
(07:48):
country and opened and wanted to open a retail business,
they don't have a wholesale you know, they don't have
any wholesale markets. They don't have any place to buy
in for that then to be distributed. Now, if a
new a new brand comes in, they're only to go
into the likes of Auckland and christ Church pick Out
(08:09):
where they want to be. So at the end of
the day, it's not going to really make any difference
to New Zealand. Now I live down in the South Island,
there's there's not going to be a new chain of
supermarkets coming down this way in the future, if they
got some sort of foothold, they might. But look that
big market that's opened up in Sylvia Park that does
(08:33):
the bulk stuff, Well, they've only open one shop, so
at the end of the day, I don't really see.
I would just like to see a little bit more competition.
You know, if there's a Pack and Save and tonsonbye
and there's a Countdown across the road, they'll fight each other.
If there's only one Pack and Save there and the
next competing shop is two or three miles away, he's
(08:57):
not feeling like he's competing with anybody.
Speaker 2 (08:59):
So I think that's just as that this sort of
thing you're talking about, where there was that sort of
hoarding of land so that you prevented other competitors from
buying it up. Is that the kind of thing you mean, Cliff.
Speaker 4 (09:12):
Well, well, the Countdown is very strong, well, the Progressive
wallwhere in the Auckland, because they took over the three Guys,
the food towns, the Countdown supermarkets and the Walworth so
they've got a lot more shops and food stuffs have
There's not many Pack and Saves in Auckland compared to
the Countdown markets, so pack and say has got to
(09:36):
compete against more. But at the end of the day,
you can't get into a certain area, there's not going
to be much competition.
Speaker 3 (09:44):
In that area, all right, Thanks Cliff. And look, I
think you asked two questions there. One was access to
product through wholesale, ye and you know, so a couple
of things. One, there is wholesale regulation in the market.
Today we are supplying seving to eighty customers or other
retailers with products through our supply chain at cost effectively,
(10:04):
so what it costs us the warehouse have not taken
up our offer. We don't know whose they have. That's
their business. And I suspect they're probably buying direct off
suppliers because that will be for you know, quite often
the cheapest and best service way to do it. And
I think that's the key point. When any other retailer,
and over fifteen percent of the market in New Zealand
(10:25):
is already not Wilworth's or either of the food Stuff's
co ops or any of its brands, they are buying
direct off suppliers, or they're importing direct, or they're accessing
whatever supply chain suits their offer for their purpose. For
their customers. There is regulated wholesale in place, so there
is something there that anyone could come a knock on
the door, or we're basically communicating with them as often
(10:46):
as we can to say do you want the offer?
Speaker 2 (10:48):
Didn't that have? Didn't that come about as a result
of the Commerce Commission inquiry that came.
Speaker 3 (10:52):
Off the last five years of studies? You said, did yep?
And but prior to that we had our Gilmore's business
selling B to B to many retailers, so there was
always a service there that could be used. You then
get into conversations around with the best price or the
best service, and that's entirely up to each retailer to
go and find out. With regard to land, look, you
know the history is back in twenty eleven twelve, there
(11:16):
was some covenants left on some land from prior to
the previous food Stuff's merger. We had removed all of
those when the Commerce Commission came to look at them,
and rightly they have said they are not appropriate. It
shouldn't be part of the compare environment. They're not legal
to use anymore. So the ones from twenty eleven to
twelve are gone. That has been dealt with and there
are no more in place, so land covenance is not
(11:38):
a thing of the industry anymore. In terms of land
we hold that we've not yet built on, we have
a number of sites, the bulk of them by far
small holdings next door to a current supermarket. So you
say one day we're going to need a bigger car
park or those sort of things, so no class. Example
might be the New Order and Kindala. There are two
or three residential properties that as they've come for sale,
(11:59):
we've purchased so that we can expand the car park
for customers one day. That's three of about forty So
that's the sort of you know, we can't afford to
have sites sitting there not being used. There is a
lot of capital tied up in sites. When we buy land,
we intend to build it into a supermarket, or add
it to a car park, or do something we're not buying.
There is no return from buying a piece of land
(12:21):
hoping that no one else will use it.
Speaker 2 (12:22):
There used to be.
Speaker 3 (12:24):
I don't know if there was ever a return in
doing it. It's a practice from locking a.
Speaker 2 (12:28):
Competition is a good way of getting a return in
a way.
Speaker 3 (12:31):
Isn't it not one that we believe in. Not now, no, no,
Well I can talk about my time, right.
Speaker 2 (12:37):
I have Chris Quinn in studio for the next thirty
five minutes see your food Stuffs North Island, Managing Director
of food Stuffs New Zealand. This one comes up a lot, Chris.
This is from Jim. Could you please ask Chris about
the actual ownership structure of food Stuff's North Island. You
often say it's equally owned by local owner operators. When
you check the company's register publicly available info, it shows
(12:59):
that around ninety percent of shares held by four individuals.
The owner operators collectively hold about zero point two percent.
Speaker 3 (13:07):
Yeah, so this is a conversation that has been started
and is misconstrued.
Speaker 2 (13:12):
So is it wrong or is it just misunderstood.
Speaker 3 (13:15):
That representation isn't correct? So what is absolutely correct? We
have approximately three hundred and fifty three store owners. Most
of them are now what is referred to as a shareholders.
You have to have been in the co op a
certain amount of time to become an a shareholder. But
it's well over the three hundred that are They are
the owners of the cooperative and they have one vote
(13:36):
each equal votes regardless of the size of their stores.
And every person owns one store.
Speaker 2 (13:42):
Only, so you can't own more than one store.
Speaker 3 (13:44):
You cannot own more than one store.
Speaker 2 (13:46):
Can you have an interest in another store, like if
your son in law or daughter in law.
Speaker 3 (13:50):
No, you can't have a ownership interest. If you personally
wish to support them with funding anything, that's entirely up
to you, But you cannot have an ownership interest.
Speaker 2 (13:58):
And are you telling me that the owner the owners
of New World, Victoria Park and Auckland, which is huge
and busy, has the same voting power as my lovely man,
lovely family and open only the four square and open.
Speaker 3 (14:12):
On Yes they do. If they're both a shareholders, then
they have the same voting right. And that's one of
the pretty cool, pretty uniqu and pretty special things about
a cooperative is that the voice matters of everybody and
that everybody has their say. So for example, when we
had the merger vote where we had a ninety nine
points something percent support for the merger, that's exactly what happened.
(14:33):
Every vote holder voted and that was that their result
was to support that, and every stores vote mattered. There
is a second layer to the organization which is a
protection trust which only comes into play if there is
a suggestion that there was some attempt to take over
food stuffs by a corporate or any other player, or
(14:54):
that there was some hostile action, and that acts as
a blocking mechanism to make sure that the food stuff's
cooperative is held in perpetuity by the owners of the stores.
So I think what's happening here is people are reading
the wrong document and getting to that conclusion the co
op is owned by the owners of the stores.
Speaker 2 (15:13):
Just further to that that you can't own more than one.
I've got a text to saying, hang on a minute,
New World Livin and Packinsave liv And have the same owners,
don't they.
Speaker 3 (15:22):
So good news. It's a brother and a sister who
owned one story. So Matt and Gwen Rolinson packinsa mini
It is in Livin zigned by Gwen, and Matt owns
the New World. They are a multi generation family of Groses.
It's an amazing story and we're really proud of them.
Speaker 2 (15:37):
Brilliant Tony, Good morning to you.
Speaker 5 (15:41):
Good morning, Jerry Chris. I apologize that this covered before,
but I had a question as far as pricing goes
at pack and Save stores. Is it up to the
owner operator of the sword to set the pricing of
the product, Because I'll give you an example, like we
don't live in Green Lane, the prices are normally plott
(16:03):
often for certain products a lot dearer than they are
and Glenninis and aw Club. So is that a similar
sippleful like competing service stations where they can be like
mobile one service station could be cheap on the others.
That the basically the pricing structure that you encourage in
your business model.
Speaker 3 (16:22):
Look, thanks, and it's a really important question. So they
are independently owned businesses. So ultimately, at the end of
the day, the pricing position and the pricing outcome is
the responsibility of the owner of the business. So each store,
how it works. We basically have a set of targets
for pack and Say where we say we need to
be this much cheaper than competition. Because if you want
(16:43):
to get out there and claim to be New Zealand's
lowest food prices, and that claim is critical to us.
We focus on that every day. Then then we set
that target and measure it across a wide range of goods.
Doesn't mean every single product and it means how the
stores go about achieving it will be different because they'll
know they're different customer bases desire different things, so they'll
(17:03):
focus in different areas. Actually, there is a promise that
we measure and we constantly are managing their performance on
to make sure they're delivering the pack and say promise
of New Zealand's lowest food prices. And then the store
innovates within the store as to where they've got things
that they might have been able to get a deal on,
where they've got things that are more important to their
community than another community, and we'll run their mix day
(17:26):
and day out to keep fighting for value in that
in that store and in that brand. So there's a
level at which we hold everyone to the promise overall,
and then there is the individual trading the stores due
to try and stay as competitive as they can.
Speaker 2 (17:38):
Does that make sense, Tony, You're.
Speaker 5 (17:40):
Just one of a spall point. But you've never ever
considered price matching if your competitors have you like, if
you can show that a competiting competitor has got a
product for the same price, you won't match it, will you?
Speaker 3 (17:53):
Now don't We don't have a price match promise like
you know, there's some risk do that, don't do that,
mainly because of the massive range. You know, we're talking
about ten, fifteen, eighteen thousand products in a store, depending
on the store. And you know what we do focus
on is, you know, most people don't go into a
supermarket and buy one item. They are buying a trolley
(18:14):
or a basket, and we were focused on making sure
that trolley is the lowest food price, in packin safe
or a new orders, good value for the experience that
you're buying.
Speaker 2 (18:24):
Thank you, Tony and from John via email. Chris told
us the price comparison of certain items and OS and
n Z no mention is made up the difference in
wages paid to DS workers. Also, my costing has mentioned
we have to pay overseas market prices, no mention of
the cost of getting to the overseas market. Does this
mean the consumer in New Zealand is subsidizing the cost
(18:44):
of getting goods to market.
Speaker 3 (18:47):
No, No, I thought that might be just thinking about
a couple of issues the wrong way round possible, you know,
the New Zealand market. And this is interesting because Coriolis,
who are an organization the government working with on this
study have published and it's been recently well covered in
the last couple of weeks a bit of an analysis
of why food might cost different prices in New Zealand.
(19:11):
They said a very small amount of it, one or
two percent, was about less scale, so less retailers. There
was a lot about freight, a lot about how suppliers
price into New Zealand versus other countries. One of the
things that we just keep stating as a fact is
sixty eight cents of every retail dollar is what the
product costs us from the supplier. One hundred and fifty
(19:33):
seven supplies make up eighty percent of what goes on
our shelves. So there is a reasonably small number of
very large global supplies that supply to the New Zealand market.
And the five years of studying it hasn't yet probably
been considered. Is that part of what's going on in
food prices. And then you know, you go into things
like the regulation environment, the cost of land, all of
(19:55):
the things that might be different about New Zealand market.
And these guys at Coriella set it out very nicely
on you said it was twenty to thirty percent different
to some countries. One or two percent of that was
the number of retailers. The rest was the wider range
of issues I have.
Speaker 2 (20:09):
Chris Quinn here, CEO of Foodstuffs North Island, also Managing
director of food Stuffs New Zealand. Then it used to
be a lovely job, a cushy job, just going around
the country visiting all your owner operators, sort of like
being a president ambassador type role. And now it's just
select committees and fighting your patch.
Speaker 3 (20:28):
And you know, look, I don't know because it wasn't
around when it was the lovely job, but you know,
it is an amazing business and one you know, people
will believe me or not, but I'm incredibly proud of
this business and what it does for New Zealanders. You know,
any day that it all gets you know, a little
bit comes at you rather than sort of as balanced,
(20:48):
get out on the road and go and visit some stores.
Because what I see families doing a pretty amazing job
in a community. I see steam teams on the front
line of stores, you know, pretty happy to be there
and serving. And one thing I do see is people
get a career opportunity right through owning your business. That
you go there's not many places you can do that,
and it's such a New Zealand thing, a co op
(21:09):
owning your own business, having.
Speaker 2 (21:10):
A go well years and years ago, long before your
time and long before supermarkets became unfashionable. I am seed
the graduation ceremonies. I don't know if you still have them.
Food stuff's coming up, so yeah, where you've got And
one of the lead young men that spoke on behalf
of the new supermarket owners had started off as a
(21:33):
collecting the trolleys in Carwardo and his mother had kicked
him out of bed and said, you are not hanging
around at home. If you have left school, you go
out and get a job. And now he became a
supermarket owner from sixteen all through the which I like
that story.
Speaker 3 (21:48):
Look, and that's you know they have worked hard. They
are people who have a really focused set of skills
about doing a great job of leading in that environment
and delivering to a community. Now, there was a story
that's been used a bit this year. A couple who
both work and pack and save Taupo and saved enough
to buy their first home at a very young age
and are now looking to get onto the journey of
(22:08):
becoming an owner and you look at that and go,
that's the opportunity that is offered to maybe people that
would not have had it in any other way. And
you know the fact that they grew up through doing
the trolley boy job or the apprentice butcher or any
of those roles means they really do identify what it
takes to deliver a store day in, day out to
a community in great shape.
Speaker 2 (22:30):
Ask about the margins, because we've got a few texts
around that, But first I've got a Michael good morning
to you.
Speaker 3 (22:37):
Hey.
Speaker 6 (22:38):
Before I get to my question, she's had the follow
on from the previous call it Chris, Because when you
say New Zilla's lowest food prices, that's a fairly absolute statement.
So if you're not price matching, therefore you're not actually
New Zealand's lowest food prices on those items where people
are lower than you, for example. So how have you
been able to avoid the Commerce Commission coming down you
(23:00):
Because that's not actually a true statement.
Speaker 3 (23:02):
It is a true statement, Michael, on the basis of
a basket of item. So it goes back to that.
You know, it's not a one product statement. It's a
statement around New Zealand's lowest food prices for a shop.
Trust me, over the last five years we've been looked
at every which way, and that that statement you still
remains as our promise to New Zealanders that New Zealand's
(23:24):
lowest food prices across the basket will be there.
Speaker 2 (23:27):
Maybe the bracket across a basket close bracket is going
to have to be at it. Yeah, did you have
another question?
Speaker 6 (23:34):
Make Yeah, Look it's actually I wouldn't have called except
you say I had for the first time in you know,
I've chomped with you in a former life. I was
even supplier and I had a terrible experience at Gilmore's
Manekau where order product in at the end of January,
which was just some caramel syrup. Went to use it
(23:55):
on the weekend that was completely rancid, got told by
the store to bring it back in, so race through
peak hour traffic last night to get back to the store,
I mean today's fifteen dollars item, and literally got told
they wouldn't replace it because even though I'd only opened
it on the weekend. They're like, well, you've boughted it
in January. I said, well, the best before dates not
until September and literally wasted my time. So I've now
(24:18):
emailed Day the store owner, still no reply, and I'm
going to say I thought that that was probably some
of the worst custom service I've experienced.
Speaker 2 (24:26):
Chris.
Speaker 3 (24:28):
Yeah, look that that doesn't sound right at all. So
that's not what we would say, is how we want
to deal with these things. And we're doing a lot
of work on complaints and refunds policy, and there is
some news coming in the next weeks on that subject
about change to that.
Speaker 2 (24:42):
I've got some text on it.
Speaker 3 (24:44):
I think that's something that you know, we've had a
good hard look at ourselves and said we can do
better in terms of taking a customer focused approach to
how we manage that. I'm sure your story is exactly
as you've told it, Michael, and that needs to be fixed.
So first commitment. Second one, we do get, you know,
people trying it on sometimes, so there's a difficult balance
(25:05):
around this. Someday the end of the day, customer first,
where a customer driven organization, that's the focus. We need
to be just straight up and simple about how we
deal with those things. And also I want to know
about that from the point of view of why was
a product that was still used by September rented in
the bottle, because that's a real concern about how that
product's been manufactured and what's gone on. So I'm pretty
(25:29):
sure Dane will know almost now that this has happened,
and I'll be calling them after the show to make
sure that we fix this fast.
Speaker 2 (25:36):
Thank you, Michael. I've got a number of texts around
the margins for supplies, screwing down the supplies and the margins.
Maybe you can explain that after the break right, Chris
quinn is with us ask a guest about co op
charges to supplies for flow and shelf space, large weekly
charges all about selling real estate. Also about the demands
(25:56):
on supplies to supply merchandising staff to replenish displays and
fill shelves on a daily basis. I also have one
around the margin. Why is it that here we are
people have the impression that you screw down supplies yet
increase your margin at the retail end. Can you give
a couple of examples where suppliers prices have gone up,
(26:18):
maybe your margin has gone down or not changed.
Speaker 3 (26:22):
So look the charges. So the mention of you know,
payment or discount for shelf display or end promotional display.
That's a multi decade history of how things have traded
in the supermarket industry between suppliers and retailers. Basically, supplies
have over time developed a model of coming and saying
I'd like to be on the end display or I'd
(26:43):
like to be in the middle of the shelf at
I height, and I'll give you more discount or effectively
pay back some of the money you pay me for
the product in order to get that position.
Speaker 2 (26:53):
So its supplier led, not you demanding with menaces.
Speaker 3 (26:57):
Yeah, it's but then when we are buying on behalf
of customers to make sure that we're getting the best
price we can so we can sell at the best
price we can, we're looking at the offers from all
the suppliers and saying, well, here's the best offer. You know,
what can you do? So it all in the end
nets down to what have you effectively paid overall for
the product? You know, all these bits and pieces that
are added into the trading, it comes down to that.
(27:19):
So I do you know it's an One way to
look at it is to say it's a fee. The
other way to look at it is it's part of
the discount they're applying to the product to encourage the
retailer to prefer their product and to put it out
for customers. Are the merchandiser one. There's actually quite a
lot of change going on in the industry, So for
quite a large number of our supply partners now we're
rearranging so that we do the merchandising because it just
(27:41):
makes more sense at the moment. Merchandises are people who
travel across pretty busy cities like Auckland trying to get
to stores to stack shelves. We can and should be
doing that in the stores, So more and more we're
moving away from that model because it's a cost in
the industry that doesn't help a customer. So wherever we
can to make sure we're doing the best job before.
Speaker 2 (28:01):
Why do supplies want their own merchandises there?
Speaker 3 (28:03):
I think because again in the history, that was make
sure that my products on shelf, make sure maybe someone
else's isn't being able to send a photo back to
head office saying this is how good we looked at
this point in time on a day. They're all part
of where it's come from. We think the future is
that we want our shelves looking full and fruit and
friendly all the time ourselves. That's our retail excellence and
(28:24):
that we've got the people in the store.
Speaker 5 (28:25):
To do it.
Speaker 2 (28:27):
And what about the margins?
Speaker 3 (28:29):
Look, you come back the things I know, because I
don't know what the facts are about supply margins. That's
not something that has been studied in the five years
to date. What's been studied is of the retail dollar,
supermarkets make up nineteen cents. Our profit over the last
five years, on average has been below four about three
point six cents. In the North Island got three point
six cents, and the dollar of the retail dollar net
(28:51):
profit after tax three point six.
Speaker 2 (28:53):
Cents for the products that you sell in supermarkets or.
Speaker 3 (28:57):
The total supermarket return.
Speaker 2 (28:58):
So how much to do supplies normally get on average?
Speaker 3 (29:01):
Look, it varies so much between categories, So you know,
groceries is a very different number to fresh products is
a very different number.
Speaker 2 (29:08):
So how do you retire at forty with your eighty
foot launch on three point six cents?
Speaker 3 (29:14):
In that? I think I think they are way less
of any of those at forty than people would believe.
Well fifty then, and you know in the same way
that many businesses do it same way. Dairy farmer does
the same way. Any successful business might be able to
do that. There's also a number of them where you know,
I've spoken to one this week who's going to retire
at seventy two. So you know, I think it's a
(29:35):
different conversation around in New Zealand. Do we want businesses
to be successful? Because I believe we do, and I
think we creditally need it for our economy. But if
you come back to is the profit reasonable? So I
think that's the real question. So we talked about price
versus LD in Australia. Now you talk about profit. Our
returns are pretty much in the range of the world supermarkets,
(29:55):
so they're not outside, they're not an outlier, they're not
super profits.
Speaker 2 (30:00):
As a previous rep we were charged between one hundred
dollars to one thousand dollars to get the product on
an end for a week. We lined up to book
these ends just to wed clarity, says Tracy.
Speaker 4 (30:10):
Yep.
Speaker 2 (30:11):
Okay, you have a question for Chris.
Speaker 7 (30:14):
Hello Chris, how are you good?
Speaker 3 (30:15):
Thanks?
Speaker 7 (30:16):
Kay, nice to have a talk. Very interesting. I'm just
wondering if you buy something at account they in store
and you get charged the wrong price, you get the
money back, and you get the product, and you will
do not do that. And I'm wondering why that is.
Speaker 3 (30:36):
Look and I think that's a question similar to this
came before what I want to say at this point,
we've had a good hard look at that. We don't
think we're in the right place at the moment. We're
going to be changing that shortly and look forward to
making sure that we tell you all about it when
we're ready to announce, and it's within days and weeks.
Speaker 2 (30:52):
But it's not that hard.
Speaker 3 (30:54):
It is in systems. So you've got to change your
point of sale systems and the way every product is
recorded in our systems so that you can do not
only the refunder the product, but the refunder the price.
It is a US system built. We were ready to
go a little while ago, but then we had to
implement the local area plan change in Auckland around alcohol.
So it's a point of sale that's the system that
(31:15):
works the tills. We have to make a change in
that system. Couldn't you just ask count done how they
do this in their system. We know how they do it,
and I remember countdowns and Australasian business. They do it
the same across Someone's.
Speaker 7 (31:28):
Never any question, you just it's just happened straight away, yep.
And I'm just wondering why a new world could not
do the same. But you sound as if you're looking into.
Speaker 3 (31:37):
It more than looking into it. Okay, it's very soon
to happen.
Speaker 2 (31:40):
It sounds like it's on its way, thank you. Kay.
Why aren't you doing more around security? Why aren't we
just showing our receipts the gates open and we can
take our trolley out. I've had a guts full.
Speaker 3 (31:53):
I think all New Zealanders had enough of retail crime
and crime against small businesses just trying to make it work.
And you know, New Zealanders should not ever feel scared
or worried shopping in a supermarket. For goodness, say, that's
not the New Zealand anyone wants. We've been doing a
lot around facial recognition technology. It's really worked. We don't
want to make you know. Ninety nine points something percent
(32:14):
of our customers are good people, just trying to get
the job done in a friendly, welcoming, easy way. We
don't want to make that any harder, but we do
have to deal with the safety risk that is retail crime.
So so facial recognitions been our big play. It's been
really successful in reducing incidents of crime in stores and
we're very keen to go further with it so that
we can protect every store.
Speaker 2 (32:35):
News Talk said be Chris Quin, Gosh, we've only got
two minutes. They went quickly, didn't it short? Had great questions, Yeah,
they were great questions. Ah, do you really see the
supermarket cooperative model being broken up by the government or
a government, because clearly it doesn't matter which one's in,
they've got you in their sites.
Speaker 3 (32:55):
Look, this is I mentioned at the beginning. It's unpreceded.
No one has done this anywhere in the world, and
you know, it was a real moment when it was
announced that this was on their minds a couple of
Sundays ago. What we're going to focus on, so there's
an RFI out for another four and a half weeks,
we're going to focus on constructively contributing to that as
much as we possibly can, because the issue matters, which
(33:17):
is New Zealand and New Zealand doers getting the benefit
of competition and getting the benefit of food value the
best they can. We will respond with everything we can
see and think of and know the facts about that
will actually achieve that and make sure we're focused on
the right things. There is regulation Land Overseas Investment Act arimay,
there is understanding what actual competition is in the country today,
(33:39):
that over fifteen percent's already not in the hands of
the larger players, and that a co op is not
the same as a corporate in terms of competition. So
we'll contribute. We're keen to keep talking with government and
keep understanding what's on their minds and then how we
can be part of the one market we get to
operate in, which is New zealand how we keep making
it better.
Speaker 2 (33:58):
Do you feel hard done by?
Speaker 3 (34:00):
Look, we want to make sure that on behalf of
our team, you know, so every checkout operator and all
the people that get a lot of this conversation when
it's racked up, and on behalf of the families that
own our stores, that we start with effects and we
focus on the things that will actually make a difference.
Speaker 2 (34:15):
All right, Thank you lovely to talk Chris Quinn Foodstuffs
in North Ireland.
Speaker 1 (34:20):
For more from Kerrywood and Mornings, listen live to news
Talks A B from nine am weekdays, or follow the
podcast on iHeartRadio
You're listening to the Carry Wood and Mornings podcast from
News Talks.
Speaker 2 (00:10):
He'd b Chris Quinn see your food Stuffs, North Island,
Managing director of Foodstuff's in New Zealand, with you for
the next hour. Oh eight hundred eighty ten eighty is
the numbered call. You can text me and a number
of you already have nine two ninety two on the
text and if you want to email me, I probably
won't be as quick on the emails because I'm not
(00:31):
in my own studio, but I would I would suggest
that texting or phoning is the best way of getting
your question through to Chris Quinn. He'll take your calls
on any issues you may have regarding grocery prices, supermarkets competition.
Food Stuff's is a co op of three hundred and
thirty plus locally owned and operated grocery stores, including one
(00:53):
hundred and seventy two four Squares, one hundred and eight
New Worlds, forty five Pack and Saves, and Chris Quinn
joins me. Now, good morning to you, Good morning, carry
What is it like? The political parties seldom agree on much.
What they do agree on is that you guys have
had it too sweet for too long and they intend
to do something about it.
Speaker 3 (01:14):
Look, I don't know that they all agree that, but
there's no doubt there's a lot of conversation about about
food price and I guess what we saw last Sunday
was unprecedented in terms of the announcement. Yeah, and I
think where we agree with all of the political parties is,
you know, food is a really important issue for New
Zealand households and the cost of food has been globally
(01:36):
quite a challenging issue. The last five years has seen
food prices all over the world lift twenty seven percent.
So there's no doubt households are feeling this and the politicians,
acting on behalf of consumers want to see if they
can make it better. So we would all agree with that.
What we would say is, let's focus on the things
that will actually make a difference to that so that
we can make progress on the issue that matters to households.
Speaker 2 (01:59):
Yeah, but I mean they might have gone up twenty
seven percent around the world, but it depends on where
you start from. I mean, any of us who have
traveled know that food is cheaper overseas well.
Speaker 3 (02:10):
It's a really good example to talk about because a
lot of people think that's what they see and it's
a challenge that we're often given. So one of the
things we've done in the last little while, for about
six or seven months now is do a proper comparison
of New Zealand food prices to a very similar country,
so to Australia. And what we stood back and did
was we said, let's take twenty items that are in
the top fifty bought items list and go and compare
(02:33):
them properly to a number of places in a number
of countries and see what the actual price difference is.
To do that, you've got to get your exchange rate
matched because that's real. You've got to match on GST
because that's quite a difference between countries in terms of
GST on food when we did that, so we took
this back to twenty items. These are items that are
bought millions of times a week. They are the popular
(02:54):
items like what, oh like your toilet papers, your cheeses, butters, milks,
dairy foods.
Speaker 2 (03:00):
Is this pre tariffs?
Speaker 3 (03:03):
It was done over the last four weeks, so it's
sort of somewhere in between all of that. We didn't
include the US, so that's not a factor in looking
at this, but that basket when you did all of
that Walworst and Australia one hundred and fifteen dollars, Tesco
one hundred and eight Walworst, New Zealand one hundred and
three ALD in Australia, which is once often talked about
one hundred dollars Pack and Save in the North Island
(03:25):
ninety three dollars for the same basket. So when we
look at right now with the data that is current,
we think there is a story to be looked at
that says is actually a really competitive, innovative story. Being
in the country for a long time.
Speaker 2 (03:38):
What competing amongst yourselves providing different products to different consumers.
Speaker 3 (03:42):
Yeah, so the competition question is a really interesting one
as well, because some people would define if you're a
store that is within the food Stuff's franchise and you're
a member of the cooperative that that sort of somehow
doesn't make you individual. We have three hundred and fifty
three stores in the North Island. When you talk to
them about competition, they mention each other almost before they
(04:03):
mention anyone else. They are individually owned businesses that are
competing for customers with the offer that they have and
they work incredibly hard to do that. So at one level,
we have three hundred and fifty three competing stores. Now
they're not all in the same catchment. They on the
same town and many of our stores are on their
own in a town because there is no other store there,
and we think that town is reasonably happy to have
(04:24):
a store there. In the scale of the co op
enables that for them. But they do compete with each other.
The competition between pack and say the New World is
as fierce as it is anywhere.
Speaker 2 (04:32):
Else, but you're offering different shopping experiences. Like if you
go to a New World, you know you're going to
pay a premium because you get a nicer shopping experience.
Speaker 3 (04:41):
In my opinion, yeah, I think that's exactly it. Competition
is about all offer something different to you to see
if I can win the customer.
Speaker 2 (04:47):
But how can you compete against one another if the suppliers,
you know, if the buyers are buying in bulk, which
is where you get the savings, how do you compete.
Speaker 3 (04:58):
Well, that's how you give a New Zealand cooperative a
chance of competing against an Australasian business or an American
business or a global busines is the very reason they
co op formed in nineteen twenty two was so that
a number of grosses could get together and say, in
order to be able to stay as a New Zealand
owned and local and very strong family owned business, we
need to work together on things we can so that's
(05:20):
buying and that we compete with each other on our
stores offering something to customers. So yes, a certain amount
of the buying is done centrally and brought through our
supply chain that gives them some scale. There is also
a lot of activity locally between our stores and supplies,
and a lot of different range between all.
Speaker 2 (05:35):
The stores, so individuals stores can stock something that the
Pack and Save down the road might not.
Speaker 3 (05:41):
Absolutely so, if you look at a pack and Save
in East Auckland versus one in South Auckland versus Northland,
you will see a range that is all about that community.
Speaker 2 (05:50):
The thing that makes me a little uneasy is that
when we first started talking about this, just as a
you know, I think it was the Commerce Commission was
interested in doing something back under, labor and supplies rang
in and they rang in in their droves, you know,
and a lot of them were unhappy with the deals
that were being done. Since that time, we haven't heard
from a single solitary one other than by text saying
(06:13):
we can't talk. The last time we talked, We've got
all sorts of pressure put on us. The last time
this was discussed, other supplies had pressure put on them
not to speak that. I don't like that at all. Like,
if your contract means that you can't criticize your buyer,
that's not cool.
Speaker 3 (06:34):
Yeah, there is nothing in a contract that says you
can't criticize a buyer.
Speaker 2 (06:38):
But there might well be, you know, pressure put on
by individuals to say, stage storm, it's not in your
best interest to criticize the hand that's feeding you.
Speaker 3 (06:47):
Look, I can't comment on that because I've had no
example or evidence of that or to me. I want
to be very clear. We have a code of conduct
that the Commics Commissions put in place. We train everyone
constantly on that and hold people to it. We have
a set of values that we hold ourselves to. And
every one of these occasions where you know we've been
able to speak in public or speak directly with our supplies,
which we do a lot of, I've always said if
(07:09):
you have an issue like that, call me and I
will sort that on your behalf. I have not had
one come direct.
Speaker 2 (07:14):
Okay, well there you go. There's a challenge to those
supplies that have contacted me in the past. Can we
get one question in before we take a break. Sure,
we'll go to cliff. Good morning to you.
Speaker 4 (07:26):
Yeah, good morning there, good morning. I'm just ring and
regarding the supermarket, I've worked for both sides of the industry,
count down side and progressive side and the food stuff
I had a food stuff shop for Square back in
the nineties. We question if another brand came into the
(07:48):
country and opened and wanted to open a retail business,
they don't have a wholesale you know, they don't have
any wholesale markets. They don't have any place to buy
in for that then to be distributed. Now, if a
new a new brand comes in, they're only to go
into the likes of Auckland and christ Church pick Out
(08:09):
where they want to be. So at the end of
the day, it's not going to really make any difference
to New Zealand. Now I live down in the South Island,
there's there's not going to be a new chain of
supermarkets coming down this way in the future, if they
got some sort of foothold, they might. But look that
big market that's opened up in Sylvia Park that does
(08:33):
the bulk stuff, Well, they've only open one shop, so
at the end of the day, I don't really see.
I would just like to see a little bit more competition.
You know, if there's a Pack and Save and tonsonbye
and there's a Countdown across the road, they'll fight each other.
If there's only one Pack and Save there and the
next competing shop is two or three miles away, he's
(08:57):
not feeling like he's competing with anybody.
Speaker 2 (08:59):
So I think that's just as that this sort of
thing you're talking about, where there was that sort of
hoarding of land so that you prevented other competitors from
buying it up. Is that the kind of thing you mean, Cliff.
Speaker 4 (09:12):
Well, well, the Countdown is very strong, well, the Progressive
wallwhere in the Auckland, because they took over the three Guys,
the food towns, the Countdown supermarkets and the Walworth so
they've got a lot more shops and food stuffs have
There's not many Pack and Saves in Auckland compared to
the Countdown markets, so pack and say has got to
(09:36):
compete against more. But at the end of the day,
you can't get into a certain area, there's not going
to be much competition.
Speaker 3 (09:44):
In that area, all right, Thanks Cliff. And look, I
think you asked two questions there. One was access to
product through wholesale, ye and you know, so a couple
of things. One, there is wholesale regulation in the market.
Today we are supplying seving to eighty customers or other
retailers with products through our supply chain at cost effectively,
(10:04):
so what it costs us the warehouse have not taken
up our offer. We don't know whose they have. That's
their business. And I suspect they're probably buying direct off
suppliers because that will be for you know, quite often
the cheapest and best service way to do it. And
I think that's the key point. When any other retailer,
and over fifteen percent of the market in New Zealand
(10:25):
is already not Wilworth's or either of the food Stuff's
co ops or any of its brands, they are buying
direct off suppliers, or they're importing direct, or they're accessing
whatever supply chain suits their offer for their purpose. For
their customers. There is regulated wholesale in place, so there
is something there that anyone could come a knock on
the door, or we're basically communicating with them as often
(10:46):
as we can to say do you want the offer?
Speaker 2 (10:48):
Didn't that have? Didn't that come about as a result
of the Commerce Commission inquiry that came.
Speaker 3 (10:52):
Off the last five years of studies? You said, did yep?
And but prior to that we had our Gilmore's business
selling B to B to many retailers, so there was
always a service there that could be used. You then
get into conversations around with the best price or the
best service, and that's entirely up to each retailer to
go and find out. With regard to land, look, you
know the history is back in twenty eleven twelve, there
(11:16):
was some covenants left on some land from prior to
the previous food Stuff's merger. We had removed all of
those when the Commerce Commission came to look at them,
and rightly they have said they are not appropriate. It
shouldn't be part of the compare environment. They're not legal
to use anymore. So the ones from twenty eleven to
twelve are gone. That has been dealt with and there
are no more in place, so land covenance is not
(11:38):
a thing of the industry anymore. In terms of land
we hold that we've not yet built on, we have
a number of sites, the bulk of them by far
small holdings next door to a current supermarket. So you
say one day we're going to need a bigger car
park or those sort of things, so no class. Example
might be the New Order and Kindala. There are two
or three residential properties that as they've come for sale,
(11:59):
we've purchased so that we can expand the car park
for customers one day. That's three of about forty So
that's the sort of you know, we can't afford to
have sites sitting there not being used. There is a
lot of capital tied up in sites. When we buy land,
we intend to build it into a supermarket, or add
it to a car park, or do something we're not buying.
There is no return from buying a piece of land
(12:21):
hoping that no one else will use it.
Speaker 2 (12:22):
There used to be.
Speaker 3 (12:24):
I don't know if there was ever a return in
doing it. It's a practice from locking a.
Speaker 2 (12:28):
Competition is a good way of getting a return in
a way.
Speaker 3 (12:31):
Isn't it not one that we believe in. Not now, no, no,
Well I can talk about my time, right.
Speaker 2 (12:37):
I have Chris Quinn in studio for the next thirty
five minutes see your food Stuffs North Island, Managing Director
of food Stuffs New Zealand. This one comes up a lot, Chris.
This is from Jim. Could you please ask Chris about
the actual ownership structure of food Stuff's North Island. You
often say it's equally owned by local owner operators. When
you check the company's register publicly available info, it shows
(12:59):
that around ninety percent of shares held by four individuals.
The owner operators collectively hold about zero point two percent.
Speaker 3 (13:07):
Yeah, so this is a conversation that has been started
and is misconstrued.
Speaker 2 (13:12):
So is it wrong or is it just misunderstood.
Speaker 3 (13:15):
That representation isn't correct? So what is absolutely correct? We
have approximately three hundred and fifty three store owners. Most
of them are now what is referred to as a shareholders.
You have to have been in the co op a
certain amount of time to become an a shareholder. But
it's well over the three hundred that are They are
the owners of the cooperative and they have one vote
(13:36):
each equal votes regardless of the size of their stores.
And every person owns one store.
Speaker 2 (13:42):
Only, so you can't own more than one store.
Speaker 3 (13:44):
You cannot own more than one store.
Speaker 2 (13:46):
Can you have an interest in another store, like if
your son in law or daughter in law.
Speaker 3 (13:50):
No, you can't have a ownership interest. If you personally
wish to support them with funding anything, that's entirely up
to you, But you cannot have an ownership interest.
Speaker 2 (13:58):
And are you telling me that the owner the owners
of New World, Victoria Park and Auckland, which is huge
and busy, has the same voting power as my lovely man,
lovely family and open only the four square and open.
Speaker 3 (14:12):
On Yes they do. If they're both a shareholders, then
they have the same voting right. And that's one of
the pretty cool, pretty uniqu and pretty special things about
a cooperative is that the voice matters of everybody and
that everybody has their say. So for example, when we
had the merger vote where we had a ninety nine
points something percent support for the merger, that's exactly what happened.
(14:33):
Every vote holder voted and that was that their result
was to support that, and every stores vote mattered. There
is a second layer to the organization which is a
protection trust which only comes into play if there is
a suggestion that there was some attempt to take over
food stuffs by a corporate or any other player, or
(14:54):
that there was some hostile action, and that acts as
a blocking mechanism to make sure that the food stuff's
cooperative is held in perpetuity by the owners of the stores.
So I think what's happening here is people are reading
the wrong document and getting to that conclusion the co
op is owned by the owners of the stores.
Speaker 2 (15:13):
Just further to that that you can't own more than one.
I've got a text to saying, hang on a minute,
New World Livin and Packinsave liv And have the same owners,
don't they.
Speaker 3 (15:22):
So good news. It's a brother and a sister who
owned one story. So Matt and Gwen Rolinson packinsa mini
It is in Livin zigned by Gwen, and Matt owns
the New World. They are a multi generation family of Groses.
It's an amazing story and we're really proud of them.
Speaker 2 (15:37):
Brilliant Tony, Good morning to you.
Speaker 5 (15:41):
Good morning, Jerry Chris. I apologize that this covered before,
but I had a question as far as pricing goes
at pack and Save stores. Is it up to the
owner operator of the sword to set the pricing of
the product, Because I'll give you an example, like we
don't live in Green Lane, the prices are normally plott
(16:03):
often for certain products a lot dearer than they are
and Glenninis and aw Club. So is that a similar
sippleful like competing service stations where they can be like
mobile one service station could be cheap on the others.
That the basically the pricing structure that you encourage in
your business model.
Speaker 3 (16:22):
Look, thanks, and it's a really important question. So they
are independently owned businesses. So ultimately, at the end of
the day, the pricing position and the pricing outcome is
the responsibility of the owner of the business. So each store,
how it works. We basically have a set of targets
for pack and Say where we say we need to
be this much cheaper than competition. Because if you want
(16:43):
to get out there and claim to be New Zealand's
lowest food prices, and that claim is critical to us.
We focus on that every day. Then then we set
that target and measure it across a wide range of goods.
Doesn't mean every single product and it means how the
stores go about achieving it will be different because they'll
know they're different customer bases desire different things, so they'll
(17:03):
focus in different areas. Actually, there is a promise that
we measure and we constantly are managing their performance on
to make sure they're delivering the pack and say promise
of New Zealand's lowest food prices. And then the store
innovates within the store as to where they've got things
that they might have been able to get a deal on,
where they've got things that are more important to their
community than another community, and we'll run their mix day
(17:26):
and day out to keep fighting for value in that
in that store and in that brand. So there's a
level at which we hold everyone to the promise overall,
and then there is the individual trading the stores due
to try and stay as competitive as they can.
Speaker 2 (17:38):
Does that make sense, Tony, You're.
Speaker 5 (17:40):
Just one of a spall point. But you've never ever
considered price matching if your competitors have you like, if
you can show that a competiting competitor has got a
product for the same price, you won't match it, will you?
Speaker 3 (17:53):
Now don't We don't have a price match promise like
you know, there's some risk do that, don't do that,
mainly because of the massive range. You know, we're talking
about ten, fifteen, eighteen thousand products in a store, depending
on the store. And you know what we do focus
on is, you know, most people don't go into a
supermarket and buy one item. They are buying a trolley
(18:14):
or a basket, and we were focused on making sure
that trolley is the lowest food price, in packin safe
or a new orders, good value for the experience that
you're buying.
Speaker 2 (18:24):
Thank you, Tony and from John via email. Chris told
us the price comparison of certain items and OS and
n Z no mention is made up the difference in
wages paid to DS workers. Also, my costing has mentioned
we have to pay overseas market prices, no mention of
the cost of getting to the overseas market. Does this
mean the consumer in New Zealand is subsidizing the cost
(18:44):
of getting goods to market.
Speaker 3 (18:47):
No, No, I thought that might be just thinking about
a couple of issues the wrong way round possible, you know,
the New Zealand market. And this is interesting because Coriolis,
who are an organization the government working with on this
study have published and it's been recently well covered in
the last couple of weeks a bit of an analysis
of why food might cost different prices in New Zealand.
(19:11):
They said a very small amount of it, one or
two percent, was about less scale, so less retailers. There
was a lot about freight, a lot about how suppliers
price into New Zealand versus other countries. One of the
things that we just keep stating as a fact is
sixty eight cents of every retail dollar is what the
product costs us from the supplier. One hundred and fifty
(19:33):
seven supplies make up eighty percent of what goes on
our shelves. So there is a reasonably small number of
very large global supplies that supply to the New Zealand market.
And the five years of studying it hasn't yet probably
been considered. Is that part of what's going on in
food prices. And then you know, you go into things
like the regulation environment, the cost of land, all of
(19:55):
the things that might be different about New Zealand market.
And these guys at Coriella set it out very nicely
on you said it was twenty to thirty percent different
to some countries. One or two percent of that was
the number of retailers. The rest was the wider range
of issues I have.
Speaker 2 (20:09):
Chris Quinn here, CEO of Foodstuffs North Island, also Managing
director of food Stuffs New Zealand. Then it used to
be a lovely job, a cushy job, just going around
the country visiting all your owner operators, sort of like
being a president ambassador type role. And now it's just
select committees and fighting your patch.
Speaker 3 (20:28):
And you know, look, I don't know because it wasn't
around when it was the lovely job, but you know,
it is an amazing business and one you know, people
will believe me or not, but I'm incredibly proud of
this business and what it does for New Zealanders. You know,
any day that it all gets you know, a little
bit comes at you rather than sort of as balanced,
(20:48):
get out on the road and go and visit some stores.
Because what I see families doing a pretty amazing job
in a community. I see steam teams on the front
line of stores, you know, pretty happy to be there
and serving. And one thing I do see is people
get a career opportunity right through owning your business. That
you go there's not many places you can do that,
and it's such a New Zealand thing, a co op
(21:09):
owning your own business, having.
Speaker 2 (21:10):
A go well years and years ago, long before your
time and long before supermarkets became unfashionable. I am seed
the graduation ceremonies. I don't know if you still have them.
Food stuff's coming up, so yeah, where you've got And
one of the lead young men that spoke on behalf
of the new supermarket owners had started off as a
(21:33):
collecting the trolleys in Carwardo and his mother had kicked
him out of bed and said, you are not hanging
around at home. If you have left school, you go
out and get a job. And now he became a
supermarket owner from sixteen all through the which I like
that story.
Speaker 3 (21:48):
Look, and that's you know they have worked hard. They
are people who have a really focused set of skills
about doing a great job of leading in that environment
and delivering to a community. Now, there was a story
that's been used a bit this year. A couple who
both work and pack and save Taupo and saved enough
to buy their first home at a very young age
and are now looking to get onto the journey of
(22:08):
becoming an owner and you look at that and go,
that's the opportunity that is offered to maybe people that
would not have had it in any other way. And
you know the fact that they grew up through doing
the trolley boy job or the apprentice butcher or any
of those roles means they really do identify what it
takes to deliver a store day in, day out to
a community in great shape.
Speaker 2 (22:30):
Ask about the margins, because we've got a few texts
around that, But first I've got a Michael good morning
to you.
Speaker 3 (22:37):
Hey.
Speaker 6 (22:38):
Before I get to my question, she's had the follow
on from the previous call it Chris, Because when you
say New Zilla's lowest food prices, that's a fairly absolute statement.
So if you're not price matching, therefore you're not actually
New Zealand's lowest food prices on those items where people
are lower than you, for example. So how have you
been able to avoid the Commerce Commission coming down you
(23:00):
Because that's not actually a true statement.
Speaker 3 (23:02):
It is a true statement, Michael, on the basis of
a basket of item. So it goes back to that.
You know, it's not a one product statement. It's a
statement around New Zealand's lowest food prices for a shop.
Trust me, over the last five years we've been looked
at every which way, and that that statement you still
remains as our promise to New Zealanders that New Zealand's
(23:24):
lowest food prices across the basket will be there.
Speaker 2 (23:27):
Maybe the bracket across a basket close bracket is going
to have to be at it. Yeah, did you have
another question?
Speaker 6 (23:34):
Make Yeah, Look it's actually I wouldn't have called except
you say I had for the first time in you know,
I've chomped with you in a former life. I was
even supplier and I had a terrible experience at Gilmore's
Manekau where order product in at the end of January,
which was just some caramel syrup. Went to use it
(23:55):
on the weekend that was completely rancid, got told by
the store to bring it back in, so race through
peak hour traffic last night to get back to the store,
I mean today's fifteen dollars item, and literally got told
they wouldn't replace it because even though I'd only opened
it on the weekend. They're like, well, you've boughted it
in January. I said, well, the best before dates not
until September and literally wasted my time. So I've now
(24:18):
emailed Day the store owner, still no reply, and I'm
going to say I thought that that was probably some
of the worst custom service I've experienced.
Speaker 2 (24:26):
Chris.
Speaker 3 (24:28):
Yeah, look that that doesn't sound right at all. So
that's not what we would say, is how we want
to deal with these things. And we're doing a lot
of work on complaints and refunds policy, and there is
some news coming in the next weeks on that subject
about change to that.
Speaker 2 (24:42):
I've got some text on it.
Speaker 3 (24:44):
I think that's something that you know, we've had a
good hard look at ourselves and said we can do
better in terms of taking a customer focused approach to
how we manage that. I'm sure your story is exactly
as you've told it, Michael, and that needs to be fixed.
So first commitment. Second one, we do get, you know,
people trying it on sometimes, so there's a difficult balance
(25:05):
around this. Someday the end of the day, customer first,
where a customer driven organization, that's the focus. We need
to be just straight up and simple about how we
deal with those things. And also I want to know
about that from the point of view of why was
a product that was still used by September rented in
the bottle, because that's a real concern about how that
product's been manufactured and what's gone on. So I'm pretty
(25:29):
sure Dane will know almost now that this has happened,
and I'll be calling them after the show to make
sure that we fix this fast.
Speaker 2 (25:36):
Thank you, Michael. I've got a number of texts around
the margins for supplies, screwing down the supplies and the margins.
Maybe you can explain that after the break right, Chris
quinn is with us ask a guest about co op
charges to supplies for flow and shelf space, large weekly
charges all about selling real estate. Also about the demands
(25:56):
on supplies to supply merchandising staff to replenish displays and
fill shelves on a daily basis. I also have one
around the margin. Why is it that here we are
people have the impression that you screw down supplies yet
increase your margin at the retail end. Can you give
a couple of examples where suppliers prices have gone up,
(26:18):
maybe your margin has gone down or not changed.
Speaker 3 (26:22):
So look the charges. So the mention of you know,
payment or discount for shelf display or end promotional display.
That's a multi decade history of how things have traded
in the supermarket industry between suppliers and retailers. Basically, supplies
have over time developed a model of coming and saying
I'd like to be on the end display or I'd
(26:43):
like to be in the middle of the shelf at
I height, and I'll give you more discount or effectively
pay back some of the money you pay me for
the product in order to get that position.
Speaker 2 (26:53):
So its supplier led, not you demanding with menaces.
Speaker 3 (26:57):
Yeah, it's but then when we are buying on behalf
of customers to make sure that we're getting the best
price we can so we can sell at the best
price we can, we're looking at the offers from all
the suppliers and saying, well, here's the best offer. You know,
what can you do? So it all in the end
nets down to what have you effectively paid overall for
the product? You know, all these bits and pieces that
are added into the trading, it comes down to that.
(27:19):
So I do you know it's an One way to
look at it is to say it's a fee. The
other way to look at it is it's part of
the discount they're applying to the product to encourage the
retailer to prefer their product and to put it out
for customers. Are the merchandiser one. There's actually quite a
lot of change going on in the industry, So for
quite a large number of our supply partners now we're
rearranging so that we do the merchandising because it just
(27:41):
makes more sense at the moment. Merchandises are people who
travel across pretty busy cities like Auckland trying to get
to stores to stack shelves. We can and should be
doing that in the stores, So more and more we're
moving away from that model because it's a cost in
the industry that doesn't help a customer. So wherever we
can to make sure we're doing the best job before.
Speaker 2 (28:01):
Why do supplies want their own merchandises there?
Speaker 3 (28:03):
I think because again in the history, that was make
sure that my products on shelf, make sure maybe someone
else's isn't being able to send a photo back to
head office saying this is how good we looked at
this point in time on a day. They're all part
of where it's come from. We think the future is
that we want our shelves looking full and fruit and
friendly all the time ourselves. That's our retail excellence and
(28:24):
that we've got the people in the store.
Speaker 5 (28:25):
To do it.
Speaker 2 (28:27):
And what about the margins?
Speaker 3 (28:29):
Look, you come back the things I know, because I
don't know what the facts are about supply margins. That's
not something that has been studied in the five years
to date. What's been studied is of the retail dollar,
supermarkets make up nineteen cents. Our profit over the last
five years, on average has been below four about three
point six cents. In the North Island got three point
six cents, and the dollar of the retail dollar net
(28:51):
profit after tax three point six.
Speaker 2 (28:53):
Cents for the products that you sell in supermarkets or.
Speaker 3 (28:57):
The total supermarket return.
Speaker 2 (28:58):
So how much to do supplies normally get on average?
Speaker 3 (29:01):
Look, it varies so much between categories, So you know,
groceries is a very different number to fresh products is
a very different number.
Speaker 2 (29:08):
So how do you retire at forty with your eighty
foot launch on three point six cents?
Speaker 3 (29:14):
In that? I think I think they are way less
of any of those at forty than people would believe.
Well fifty then, and you know in the same way
that many businesses do it same way. Dairy farmer does
the same way. Any successful business might be able to
do that. There's also a number of them where you know,
I've spoken to one this week who's going to retire
at seventy two. So you know, I think it's a
(29:35):
different conversation around in New Zealand. Do we want businesses
to be successful? Because I believe we do, and I
think we creditally need it for our economy. But if
you come back to is the profit reasonable? So I
think that's the real question. So we talked about price
versus LD in Australia. Now you talk about profit. Our
returns are pretty much in the range of the world supermarkets,
(29:55):
so they're not outside, they're not an outlier, they're not
super profits.
Speaker 2 (30:00):
As a previous rep we were charged between one hundred
dollars to one thousand dollars to get the product on
an end for a week. We lined up to book
these ends just to wed clarity, says Tracy.
Speaker 4 (30:10):
Yep.
Speaker 2 (30:11):
Okay, you have a question for Chris.
Speaker 7 (30:14):
Hello Chris, how are you good?
Speaker 3 (30:15):
Thanks?
Speaker 7 (30:16):
Kay, nice to have a talk. Very interesting. I'm just
wondering if you buy something at account they in store
and you get charged the wrong price, you get the
money back, and you get the product, and you will
do not do that. And I'm wondering why that is.
Speaker 3 (30:36):
Look and I think that's a question similar to this
came before what I want to say at this point,
we've had a good hard look at that. We don't
think we're in the right place at the moment. We're
going to be changing that shortly and look forward to
making sure that we tell you all about it when
we're ready to announce, and it's within days and weeks.
Speaker 2 (30:52):
But it's not that hard.
Speaker 3 (30:54):
It is in systems. So you've got to change your
point of sale systems and the way every product is
recorded in our systems so that you can do not
only the refunder the product, but the refunder the price.
It is a US system built. We were ready to
go a little while ago, but then we had to
implement the local area plan change in Auckland around alcohol.
So it's a point of sale that's the system that
(31:15):
works the tills. We have to make a change in
that system. Couldn't you just ask count done how they
do this in their system. We know how they do it,
and I remember countdowns and Australasian business. They do it
the same across Someone's.
Speaker 7 (31:28):
Never any question, you just it's just happened straight away, yep.
And I'm just wondering why a new world could not
do the same. But you sound as if you're looking into.
Speaker 3 (31:37):
It more than looking into it. Okay, it's very soon
to happen.
Speaker 2 (31:40):
It sounds like it's on its way, thank you. Kay.
Why aren't you doing more around security? Why aren't we
just showing our receipts the gates open and we can
take our trolley out. I've had a guts full.
Speaker 3 (31:53):
I think all New Zealanders had enough of retail crime
and crime against small businesses just trying to make it work.
And you know, New Zealanders should not ever feel scared
or worried shopping in a supermarket. For goodness, say, that's
not the New Zealand anyone wants. We've been doing a
lot around facial recognition technology. It's really worked. We don't
want to make you know. Ninety nine points something percent
(32:14):
of our customers are good people, just trying to get
the job done in a friendly, welcoming, easy way. We
don't want to make that any harder, but we do
have to deal with the safety risk that is retail crime.
So so facial recognitions been our big play. It's been
really successful in reducing incidents of crime in stores and
we're very keen to go further with it so that
we can protect every store.
Speaker 2 (32:35):
News Talk said be Chris Quin, Gosh, we've only got
two minutes. They went quickly, didn't it short? Had great questions, Yeah,
they were great questions. Ah, do you really see the
supermarket cooperative model being broken up by the government or
a government, because clearly it doesn't matter which one's in,
they've got you in their sites.
Speaker 3 (32:55):
Look, this is I mentioned at the beginning. It's unpreceded.
No one has done this anywhere in the world, and
you know, it was a real moment when it was
announced that this was on their minds a couple of
Sundays ago. What we're going to focus on, so there's
an RFI out for another four and a half weeks,
we're going to focus on constructively contributing to that as
much as we possibly can, because the issue matters, which
(33:17):
is New Zealand and New Zealand doers getting the benefit
of competition and getting the benefit of food value the
best they can. We will respond with everything we can
see and think of and know the facts about that
will actually achieve that and make sure we're focused on
the right things. There is regulation Land Overseas Investment Act arimay,
there is understanding what actual competition is in the country today,
(33:39):
that over fifteen percent's already not in the hands of
the larger players, and that a co op is not
the same as a corporate in terms of competition. So
we'll contribute. We're keen to keep talking with government and
keep understanding what's on their minds and then how we
can be part of the one market we get to
operate in, which is New zealand how we keep making
it better.
Speaker 2 (33:58):
Do you feel hard done by?
Speaker 3 (34:00):
Look, we want to make sure that on behalf of
our team, you know, so every checkout operator and all
the people that get a lot of this conversation when
it's racked up, and on behalf of the families that
own our stores, that we start with effects and we
focus on the things that will actually make a difference.
Speaker 2 (34:15):
All right, Thank you lovely to talk Chris Quinn Foodstuffs
in North Ireland.
Speaker 1 (34:20):
For more from Kerrywood and Mornings, listen live to news
Talks A B from nine am weekdays, or follow the
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