Supermarket owners push back against break-up plans

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1. 0:05Speaker 1: Kia ora, I'm Katie Bradford in for Chelsea Daniels and this is The Front Page, a daily podcast presented by
2. 0:12Speaker 1: the New Zealand Herald. Supermarket owners are fighting back as they find themselves firmly in the sights of almost all
3. 0:22Speaker 1: political parties. To recap, National and New Zealand First want to break up the foodstuffs co-operative. The Greens want to
4. 0:30Speaker 1: kick-start a government-owned supermarket. And Labour's announced it'll split foodstuffs in Woolworths retail and wholesale arms, alongside plans to ban
5. 0:39Speaker 1: price gouging and other measures. A concerted campaign from foodstuff supermarket owners is now underway. Clare Gallagher is the owner
6. 0:47Speaker 1: of New World Kaurau and joins me now. So supermarkets are...
7. 0:55Speaker 1: A lot of tension on supermarkets right now. You obviously posted on Facebook about the situation. What made you come out and say that?
8. 1:05Speaker 2: Well, I just, I really wanted, Richard and I actually really wanted to tell our story to our town. It wasn't really a letter to the whole of New Zealand.
9. 1:13Speaker 2: It was a letter to Kawerau. We've been here for three years. Some of our customers have gotten to know us quite well. You know, there's some of our customers that we haven't gotten to know very well because we're like ships passing in the night sometimes. And it's very
10. 1:25Speaker 2: easy for us to say there was more to us before we got to Kawaroa, but we haven't really had that opportunity to talk about how we got here. And I think it has some real relevance given everything that's
11. 1:36Speaker 2: going on because we just didn't rock up one day with a checkbook and say we're going to buy that store.
12. 1:40Speaker 2: And we didn't just wake up one morning and say, we're going to own a supermarket. It took a really long time. I wanted to be a grocer since I was 17, but I was 40 before we even got there. So, you know, there's a lot involved.
13. 1:52Speaker 1: And what is involved? You started off at a four square in Rotorua in 2017. And so it took you, it's been, I guess, nearly 12 years or more than that since you actually first started looking at supermarkets. What
14. 2:04Speaker 1: does that journey entail? How hard is it?
15. 2:06Speaker 2: It's hugely competitive, and it's one of those industries whereby they move and change so quickly. You've got to be moving and changing with them so quickly. So for us, we put in an expression of interest. It was on
16. 2:18Speaker 2: the 22nd of December 2014 and said, hey, we'd love to join the cooperative. How do we do that? And from there, it was a process of interviews, psychometric testing.
17. 2:28Speaker 2: We had to go and visit a bunch of stores and work in a whole bunch of stores, You know, I travelled from Hamilton to Rotorua almost for three years, a couple of days a week, just to get the
18. 2:38Speaker 2: insight and the skill and the training to be able to put my hands up for ownership. We applied for five stores before we ended up at Edmund Road over
19. 2:48Speaker 2: the course of that timeframe. You know, we worked silly hours and contracted out to try and keep the home fires burning and sort of burnt through our savings pretty quickly because you don't know where you're going to go.
20. 2:59Speaker 2: And we were prepared to go anywhere. And you have to be prepared to go anywhere to do it. So, you know, there was a lot involved in training to get into the store. And once you were there, then the hard work really begins.
21. 3:10Speaker 1: And I think the government, Nicola Willis, has acknowledged that supermarket owners work hard. What is a typical day like for you?
22. 3:17Speaker 2: Oh, it can vary hugely depending on just even the day of the week or the time of the day.
23. 3:23Speaker 2: So our store generally has team members here from anywhere 3.30, 4 o'clock in the morning, right through to just after 8 p.m., We don't open until 7.30. We need to ensure that everything is as ready as we can possibly
24. 3:35Speaker 2: get it for our customers to come and shop. No one wants to turn up when they've got only a spare half an hour at 7.30 in the morning and find that their bread and their milk and the likes aren't on the shelf. And then it's working with our team.
25. 3:45Speaker 2: It's upskilling, it's coaching, it's training, it's career development. Some of it's professional, some of it's personal. And then we have all of the office infrastructure in behind as well,
26. 3:56Speaker 2: making sure that we know what stock we've got in the building. We know what we're ordering because we have to make sure that we replace it, that we're putting the right stock on the shelf at the right time,
27. 4:05Speaker 2: at the right place for the customers, that we're actually putting on our shelves what our customers and our community need here in Kawaroa, not what somebody perhaps in downtown
28. 4:16Speaker 2: Auckland might need. So there's a lot to it and a lot of people working really hard to make it look easy.
29. 4:21Speaker 1: How many people do you employ? 87. 87, and they are mostly full-time, part-time, range of ages.
30. 4:29Speaker 2: Full-time, part-time, yeah, range of ages. Our youngest is 16, our eldest is 80. Our 80-year-old team member, she works part-time.
31. 4:37Speaker 2: She's also been a counsellor on Kaurau District Council now for over 20 years. We have a range of people here, right from their very first jobs to their retirement job,
32. 4:48Speaker 2: to people who actually want to do more in the industry.
33. 4:51Speaker 2: So we've got a young man here who wants to be a baker and we're exploring a bakery apprenticeship for him.
34. 4:56Speaker 2: So it's pretty cool.
35. 4:57Speaker 1: Kawaro is quite a diverse community, a lot of low-income people.
36. 5:01Speaker 1: What do people say to you about the cost of groceries?
37. 5:05Speaker 2: We see it at the forefront and yes, they are telling us that groceries are expensive and we understand that we have our families that shop here. We have our friends and our neighbours that shop here as well. And
38. 5:15Speaker 2: we're doing everything that we possibly can where we can.
39. 5:18Speaker 2: And I know that sometimes it doesn't feel like that.
40. 5:20Speaker 2: And I'm really, you know, I know that we don't come to work to not do a good job and we try our hardest, but there's a lot that goes into it. And we want to make sure that our
41. 5:30Speaker 2: businesses stay sustainable. And here long before Richard and I are gone, we need a supermarket to continue to service Kaurau into the future as well. We don't want to to not have it here.
42. 5:41Speaker 1: The Commerce Commission found in 2022 that supermarkets make in excess of $ 1 million a day in terms of profit.
43. 5:48Speaker 1: Now that figure has been disputed by supermarkets. Do you make big profits, you the individual supermarket owners on the ground?
44. 5:55Speaker 2: No, no, we don't. Certainly not in our store here in Kaurau at all. 3.6 cents out of every single dollar that comes across the checkout. It's not a lot
45. 6:05Speaker 2: to come and go on when you have to, or when you choose to reinvest into your store, pay your people appropriately, reduce debt, pay ourselves. You know, we have children and all those things that go. go with that
46. 6:17Speaker 2: to make sure that we're all getting a bit more out of life.
47. 6:20Speaker 1: Yeah there's a lot of talk from politicians now supermarkets have pretty much become the bit of a target over the past week anyway from almost all political parties. Now Labour wants to split up the wholesale and retail arm
48. 6:31Speaker 1: from supermarkets. I know it's very complicated how all this works but for instance are you allowed to buy from local suppliers and growers directly or do you as part
49. 6:43Speaker 1: of the co-operative have to go through the, I guess, the agreed suppliers. Because some would argue that being able to buy from, you know, the farmer down the road or a small supplier in your community helps create jobs
50. 6:54Speaker 1: and puts money back into your community, et cetera.
51. 6:57Speaker 2: Absolutely, we can support local growers and suppliers. We actually have, we've got quite a few watermelons in the ground not too far from here with one of our local growers
52. 7:07Speaker 2: and suppliers. First foray into growing watermelons was last year.
53. 7:11Speaker 2: And we got in touch with Ferdies and said, look, we really want to give these guys as much support as we possibly can. And that was almost the whole conversation outside of, do they meet all of the legislative
54. 7:22Speaker 2: things that they need to meet from a health and safety and MPI perspective, which any customer would want us to go through to ensure that the product we're putting on the shelf is safe. But once we had that
55. 7:33Speaker 2: and that was ticked off, we had watermelons being picked directly from the paddock and in our store, sometimes within an hour and a half. to support that local grower
56. 7:41Speaker 2: and to get a beautiful watermelon to our customers at an absolute reduced cost because we didn't have all the other stuff that went with it. So we can support and we do support as many local growers and suppliers
57. 7:52Speaker 2: as we can. It's never an issue.
58. 7:54Speaker 1: And National's policy to break up foodstuffs have New World and Foursquare on one side, Pack and Save on the others.
59. 8:00Speaker 1: You've owned a Foursquare, you own a New World now.
60. 8:02Speaker 1: How would that affect you? Because you don't own a Pack and Save, you're not being separated from the rest of the company anymore. Would this actually have any impact on you?
61. 8:13Speaker 2: Yeah, it would. And the reason for that is that New World, Foursquare and Pack and Save, we all share the same, I guess, how do we put it, like same engine room in behind all of the stores. And
62. 8:24Speaker 2: that includes things like distribution centres, transport, technology, buying capabilities and other infrastructure that we get as a benefit through
63. 8:32Speaker 2: the co-operative. If those are somehow separated and duplicated, both groups of owners are affected and somebody has to design and repay for all of that when it's already in place.
64. 8:44Speaker 2: I'm not actually worried about the sign above our door.
65. 8:47Speaker 2: I am worried, though, about what happens to the systems behind it that enable us to do what we do for our customers and our communities. That's what actually concerns me.
66. 8:56Speaker 1: But given the number of stores, I think there's 350 new worlds and four squares. you'd still have huge power and have all those people behind you, right? Do you
67. 9:07Speaker 1: like the idea of more competition to help people out?
68. 9:11Speaker 2: Oh, competition is not a bad thing. When you're in business, you expect it, and it's what keeps you really, you know, and this might be a controversial answer, but it absolutely keeps you honest. We're not afraid of competition, not at all.
69. 9:23Speaker 2: What we want to make sure is that any decisions that are made or any legislation that's put in place that there's actually going to be a meaningful difference for the customer at the end of the day. That's what
70. 9:34Speaker 2: this is about, and that's what really concerns us. We need to make sure that there are practical solutions that truly deliver cheaper groceries, because at the end of the day, that's what this is all about. So far, I haven't
71. 9:45Speaker 2: seen anything that has proven that this will do that for our consumers and customers.
72. 9:57Speaker 3: Most businesses are working hard to keep prices low, but a handful of big companies can gouge New Zealanders on the things we cannot do without. For too long nothing has stopped them and when a handful of companies have
73. 10:08Speaker 3: too much power everyone else gets a bad deal. Consumers are paying more, suppliers are getting less and small competitors are like this small grocer, are struggling to grow. Labour
74. 10:18Speaker 3: will change that. This law means competition does the work of lowering prices over time. That's how we put more money back in people's pockets and build a more dynamic economy.
75. 10:29Speaker 1: Labour, for instance, are going to introduce legislation that would make, if they were in government, that would make price gouging illegal.
76. 10:35Speaker 1: Do you see any evidence of price gouging anywhere of people deliberately putting up prices really high?
77. 10:41Speaker 2: No, absolutely not. Quite the contrary. We're are almost, for some of our contractors that we use, such as our rubbish collection and those sorts of things, they are so
78. 10:51Speaker 2: apologetic at any point when there has to be an increase of cost because it's increased to them. Every business has a point whereby it's either sustainable or it's not.
79. 11:02Speaker 2: And when costs increase to a point whereby you can't absorb it anymore, you need to pass it on, Otherwise, maybe you won't be there. Those are the conversations that we're having.
80. 11:12Speaker 1: And if you want to put something on special, what's the process for that? If you think, okay, people in Kawaroa this week really are really struggling.
81. 11:20Speaker 2: This has happened.
82. 11:21Speaker 1: We've just seen a whole lot of job losses or whatever's going on. Can you just put things on special or how does it work?
83. 11:27Speaker 2: Yeah, absolutely. The one thing we can't do is charge more than the recommended retail price. we can charge as little as we want to on a product whilst making
84. 11:38Speaker 2: sure that we're at least covering our base cost. So we do that quite often, you know, particularly on fresh products around produce, bakery and butchery. There's a little more play in that as well because you can, you know,
85. 11:49Speaker 2: add cheese or you can take the cheese away or you can make the pack sizes smaller or anything along those lines. We've done quite a bit of work for
86. 11:57Speaker 2: our elderly customers here in Kawerau, recently stepped into the Super Gold Card Discount. making sure that we have small pack sizes so that when they spend their money, they're
87. 12:07Speaker 2: not buying four steaks where they only need one steak, as an example, but making sure that any discounts that we put in place mean that we can offer a really good product and give a good deal back to
88. 12:17Speaker 2: the customer as well. Nothing stops us from doing that.
89. 12:20Speaker 2: It's just, I guess, the age-old adage is you've got to cover your costs to make sure you can do it again tomorrow.
90. 12:26Speaker 1: And so how much time do you spend on research and thinking about what you need to do to make those specials happen?
91. 12:34Speaker 2: All day, every day. Is that an appropriate answer? Somebody once said to me, if you're not thinking about your business 24-7, are you actually in business? That was before
92. 12:45Speaker 2: we stepped into business and that's absolutely true. Every conversation we have with our team, with our suppliers, with foodstuffs is about how can we do better for our customers?
93. 12:56Speaker 2: No one comes to work to do a bad job.
94. 12:58Speaker 2: And we don't actually just see a supermarket. We see 87 team members here in Kawerau that we employ. That's 87 families that all want to, you know, look for their own future as well, who all want to do
95. 13:09Speaker 2: better and enjoy life. So that's how we look at it.
96. 13:12Speaker 2: We've got to do better for our customers. We absolutely know that. We just need to make sure we do it in a way that really does ensure that we're doing better for our customers.
97. 13:20Speaker 1: Back to where we started on the social media post that you put in, I've then seen some other independent supermarkets coming out and saying, well, we can buy things.
98. 13:28Speaker 1: We don't need all the back office and admin people behind us. You can do this. You can be like us.
99. 13:34Speaker 1: What do you say to that? And are you concerned it's becoming a bit of a us against them debate that's going on?
100. 13:41Speaker 2: I think it was always going to happen and ever us against them debate. But at the end of the day, I applaud them hugely. I assume you're talking about Kaiko down in Christchurch. And you can't sit back but admire
101. 13:52Speaker 2: what they've done, the hard work. They haven't had to do anything less than we have. The reality is, is they're delivering one store at this point. We have hundreds of stores in communities that are really remote and in
102. 14:04Speaker 2: regional areas. I'm not sure if you saw the post from Aroha and Kyle down at, you know, Victoria. Yeah,
103. 14:12Speaker 2: Tokumaru Bay. When those roads got blown out from the cyclone, you know, a small independent, you can't get your deliveries in place, your groceries to shelf, bread, milk, or anything
104. 14:24Speaker 2: along those lines when the roads are closed. But the size and scale of foodstuffs meant that that was never at risk. It was always going to get there. The number one concern of foodstuffs at that time, and a
105. 14:35Speaker 2: lot of us, was to make sure that those communities were supported and had resilience and assurity of supply of food.
106. 14:42Speaker 2: So it is easier to do one thing really great.
107. 14:45Speaker 2: You've got one thing to concentrate on. It's really difficult to do it over and over again in a number of different communities. And without the size and scale, I just don't know how communities even like ours in Kaurau would make it work.
108. 14:57Speaker 1: You'd still, though, on the separation on Nationals plan, you'd still have hundreds of supermarkets to back you up. Those those communities would surely not be at risk because there
109. 15:07Speaker 1: are going to be so many of you still if this was to happen.
110. 15:10Speaker 2: What I know and what we have to do is any changes that are going to be put in place have to bring down the cost of groceries for our customers no matter where they are. And we can't afford
111. 15:20Speaker 2: to lose stores in remote and regional areas. at the cost of a decision. We need to make sure that those communities are still serviced. Some of them only have
112. 15:31Speaker 2: a full square and then the nearest grocery store is two and a half hours away.
113. 15:34Speaker 1: Given all the supermarkets, have your customers or your staff been talking to you about this at all or have they been worried at all about it?
114. 15:40Speaker 2: Yeah, they have had quite a deep conversation with two of our team members today around what it actually means for them, both at very different stages in their lives,
115. 15:51Speaker 2: one's coming close to retirement and one's still raising a really young family. And they ask the question, you know, what do we do? You know, what does this look like for us? And Rich and I have been really clear,
116. 16:01Speaker 2: we're not going anywhere. We're not going to change what we do and why we do it or our ethos or our values around this. But they are worried about
117. 16:10Speaker 2: what that might mean because the question is, oh, will you stop investing now? You know, we needed, you know, that new fridge. Will you still do that? The answer is, yeah, we will because it's the right thing to do. It
118. 16:22Speaker 2: just may not be as easy as it once was if these changes come.
119. 16:25Speaker 1: Are you the only supermarket in Kawaroa?
120. 16:27Speaker 2: We're the only full-service supermarket here in Kawaroa. What is good for our customers, though, for our people that live in Kawaroa, is that Whakatane is 35 minutes away. And there's a lot of people that travel every day to
121. 16:39Speaker 2: Whakatane for work. So they've got a Pick and Save, a Woolworths, and a New World supermarket there as well
122. 16:47Speaker 2: as a plethora of smaller dairies and shops corner grocery stores and a four square as well. So the opportunity is there and Woolworths do deliver out here to Kaurau
123. 16:57Speaker 2: as well and they're very fierce in the competition with that.
124. 17:00Speaker 1: Did Foodstuffs ask the teams to put out those social media messages? Did some kind of comms go out about that or how did that come about? Because everyone sort of started doing them around the same time.
125. 17:10Speaker 2: Yeah, they did. I did notice that too. And I'm not going to pretend like that didn't have an impact or didn't make me think about or make us think about what message we could put out in regards to that.
126. 17:23Speaker 2: I feel like we're all just exercising our right to have our say and to protect what we've worked so hard to build, not just for ourselves, but our customers
127. 17:32Speaker 2: and our communities and our team and our country as well, because we're 100% New Zealand owned and operated.
128. 17:39Speaker 1: If you could do one thing, if you think a government or a political party could do one thing to bring the cost of groceries down, what would it be?
129. 17:46Speaker 2: Or do you want it to be an action or an understanding?
130. 17:50Speaker 1: Whatever you think would actually, you're the one on the ground, you're the one dealing with this, you know, 24 hours a day, seven days a week. What do you think could happen?
131. 17:57Speaker 2: It would be really great if we could simplify some of the things that we had to do on a daily basis that were duplicated. We spend a lot of time and a lot of money checking and rechecking and
132. 18:08Speaker 2: double checking to make sure that we're meeting our obligations under things like you know accountancy as an example um
133. 18:17Speaker 2: making sure that we you know we've got a person here who looks after compliance that's her whole job that's all she does is compliance anything that we can do to streamline and create efficiencies help us do that stuff
134. 18:28Speaker 2: help us take cost out of the things that that are still really really important um so that we can can drive that cost through to the shelf edge.
135. 18:37Speaker 3: Cool.
136. 18:37Speaker 1: Thank you so much, Claire. I really appreciate you taking the time and telling us what it's like out there and in your community. So thank you for joining us.
137. 18:45Speaker 2: Pleasure. Thanks for having me.
138. 18:49Speaker 1: That's it for this episode of The Front Page. You can read more about today's stories and extensive news coverage at nzherald.co.nz. This episode of The Front Page was hosted
139. 19:00Speaker 1: and produced by me, Katie Bradford. It was produced and edited by Richard Martin with studio operations from Kane Dickey and executive production by Jane Yee. Subscribe to The Front
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