A good idea for supermarket competition

The Spinoff reports:

Both Labour and National governments have considered the idea of breaking up the big two but ultimately decided against it. A 2023 analysis by MBIE suggested forcibly breaking up the supermarkets could cost as much as $3.8 billion over 20 years, mostly due to the loss of economies of scale. It could make wholesale and distribution costs higher, which could in turn mean higher prices for consumers.

Some solutions end up costing consumers more!

The problem is a shortage of grocery stores. And the reason for that is a shortage of land to build them on. There aren’t many sites that are big enough for a supermarket and near enough customers to be viable. That makes them very expensive. Whenever a suitably large site does come up, the big two snap it up. 

That is the real problem.

Housing advocate Marko Garlick, writing on his personal Substack, proposed an idea called the National Policy Statement on Supermarket Development.

He argues that with a simple regulatory statement, the housing minister could order councils to make zoning changes that would instantly enable hundreds more supermarket-sized sites in appropriate areas.

The minister could require councils to zone for a certain number of large-scale retail sites based on growth projections, remove all anti-competitive zoning rules, or allow smaller “metro” supermarkets as-of-right across medium-density residential areas. He could also state that supermarkets are a “matter of national significance” which should be considered in all consenting decisions.

Garlick’s concept essentially copies the architecture of the 2020 National Policy Statement on Urban Development by Labour’s Phil Twyford which required councils to zone for more housing and allow taller buildings in central areas. 

This seems like a worthwhile policy – take what has worked in housing, and apply it to supermarkets.