Latest / Early Edition with Ryan Bridge / Ernie Newman: Grocery Policy Expert on Costco's possible expansion to Wellington and Christchurch

Transcript

Ernie Newman: Grocery Policy Expert on Costco's possible expansion to Wellington and Christchurch · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Christ Church and Wellington could be next in line for
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  Speaker 1: Costco stores. The US retail chain says it's working on
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  Speaker 1: expansion outside of Auckland. Costco's Westgates store gained one hundred
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  Speaker 1: and fifty thousand members within a year of opening and
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  Speaker 1: just introduced home delivery to both members and non members
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  Speaker 1: across Auckland through door dash. So is this the new
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  Speaker 1: player in the grocery sector that we're looking for? Grocery
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  Speaker 1: policy expert Ernie Newman joins me. Now, thanks for your time,
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  Speaker 1: Ernie Gooda.
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  Speaker 2: Thanks.
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  Speaker 1: Do you think this expansion is likely to Wellington and
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  Speaker 1: christ Church? I mean, now, it would be the time,
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  Speaker 1: right the government's all in to make things happen.
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  Speaker 2: I'd love to think so, but I'm not at all
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  Speaker 2: convinced on this one. You know, Costco is an unusual
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  Speaker 2: kind of retailer. It's very, very successful in the North
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  Speaker 2: American market, mainly, I think because of the high density
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  Speaker 2: housing over there and the think they can form a
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  Speaker 2: supermarket down and get huge numbers of people able to
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  Speaker 2: get there with a relatively short drive. New Zealand is
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  Speaker 2: a much more when it's sort of place, and somehow
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  Speaker 2: I struggle to see how the cost home model will
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  Speaker 2: really work in New Zealand or in fact, there's a
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  Speaker 2: lot of countries outside North America.
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  Speaker 1: Do you think the membership holds people back?
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  Speaker 2: Not necessarily. I think the big problem is the concentration.
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  Speaker 2: You know, most of the supermarkets in New Zealand spread out.
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  Speaker 2: They have a site in every suburb and they basically
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  Speaker 2: go to where the consumers are. Costco expects the consumers
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  Speaker 2: to get in their cars and travel long distances to
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  Speaker 2: go to them. So I think if Nicola Willis really
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  Speaker 2: wants to make a breakthrough here and if she wants
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  Speaker 2: Costco to be part of it, she needs to persuade
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  Speaker 2: them to change their business model.
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  Speaker 1: Okay, and is Costco opening two more Is Costco opening
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  Speaker 1: two more outlets going to have an impact or would
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  Speaker 1: you also like to see the government still step up
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  Speaker 1: and break up the current entities in place to make
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  Speaker 1: an impact as well?
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  Speaker 2: Absolutely, the government needs to still step up. You know
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  Speaker 2: Costco and Australia for example, they've been going in Australia
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  Speaker 2: ten years or so longer than they have here and
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  Speaker 2: they're still struggling to get to two percent market share
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  Speaker 2: over there. You know, it's a very long hard road,
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  Speaker 2: and I think that's because their business model doesn't particularly
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  Speaker 2: well suit the conditions in either Australia or New Zealand.
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  Speaker 2: So if I was Nikola Willis, what I'd be doing
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  Speaker 2: is legally requiring Woolworth Australia and food Stuff to each
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  Speaker 2: sell off, say one hundred or so supermarkets, and then
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  Speaker 2: I'd be working with Costco to buy them, but to
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  Speaker 2: run them in the way New Zealand super I turn
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  Speaker 2: markets tend to run, rather than try to impose the
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  Speaker 2: North American model here.
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  Speaker 1: Do you think they'd be out for that.
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  Speaker 2: I don't know, that's a question for them. But you know,
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  Speaker 2: there's a big there's a good opportunity here for somebody.
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  Speaker 2: You know, this is a highly highly profitable market which
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  Speaker 2: is broken and we really need somebody to come in
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  Speaker 2: with a completely new approach and bring back competition.
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  Speaker 1: I mean, I do know a lot of people in
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  Speaker 1: Auckland who will drive the distance, you know, once a
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  Speaker 1: month to do a big stock up of the non
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  Speaker 1: perishables at Costco.
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  Speaker 2: Yeah, but do you know any in Hamilton or wanger
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  Speaker 2: At will do that. You know, this is a decentralized country.
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  Speaker 2: North America is very different and you know, the market
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  Speaker 2: figures in Australia sort of speak to themselves that Costco,
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  Speaker 2: after all, is the decade or so trying to get
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  Speaker 2: into that market. Are still really struggling over there.
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  Speaker 1: Yeah, it's the problem, isn't it. It's the long term plan,
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  Speaker 1: isn't it, Ernie, It's a.
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  Speaker 2: Very long term plan. But we have a short term problem.
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  Speaker 2: You know, we've got kids going hungry here. We need
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  Speaker 2: something to happen in the next year or two, not
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  Speaker 2: in another generation. And that's why I think Nichola Willison's
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  Speaker 2: answer is to work with Costco, but as part of
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  Speaker 2: a breakup of the supermarkets we already have.
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  Speaker 1: Do you think an expansion would enable other players to
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  Speaker 1: look at New Zealand is a good place to potentially
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  Speaker 1: end the market?
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  Speaker 2: I think divestment, yes, I think it's the you Nichola
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  Speaker 2: Willis has made has said some very good things, like
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  Speaker 2: she's indicated that she is open to an enforced breakup
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  Speaker 2: of the existing structure of the market. That's really really positive.
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  Speaker 2: So I think there will be a lot of other
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  Speaker 2: people sniffing around the market at the moment, but what
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  Speaker 2: we need now is to move from the words phase
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  Speaker 2: to the action phase and show that she's serious about that.
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  Speaker 2: But again, you know, it's divesting what we already have
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  Speaker 2: that'll unlock the potential.
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  Speaker 1: Thanks so much for your time this morning. That was
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  Speaker 1: Ernie Newman. I tend to agree with Ernie. I think
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  Speaker 1: this is a nice step in the right direction, but
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  Speaker 1: it's a long term solution, and I don't think there
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  Speaker 1: is one solution for this, this long running debate that
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  Speaker 1: we have on how we break up the duropoly of
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  Speaker 1: foodstuffs and will Worths. I think he's right. I think
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  Speaker 1: it's going to need a variety of steps and actions
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  Speaker 1: taken kind of across the board to see a difference.
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  Speaker 2: For more from it the edition with Ryan Bridge. Listen
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