A group of entrepreneurs wants to start a third supermarket chain, to shake up the current duopoly in New Zealand. The group is identified only as Northelia Version 1.4 and includes 2degrees founder Tex Edwards.
Foodstuffs and Woolworths NZ are behind the biggest supermarket chains in New Zealand, but a submission to the Commerce Commission reveals there could be a new player in town.
Northelia Version 1.4 has described itself as a group of experienced entrepreneurs who have worked in the supermarket industry. The group members wish to remain anonymous at this stage, but it’s said that Edwards is among them and he has experience in shaking up a duopoly. In 2009, Edwards’ company 2degrees broke into the telecommunication sector, which was then dominated by Spark and Vodafone. It appears the Northelia group now have the same idea.
Northelia says they can mobilise a capital base of more than $1 billion if the Commerce Commission forces existing supermarkets to sell 200 of their stores. The commission is carrying out a market study of the supermarket industry and has suggested forcing Foodstuffs and Woolworths NZ to separate their wholesale and retail operations, and to sell stores, as two possible options to improve competition.
Edwards has previously expressed ambitions for the supermarket industry in 2016, when he said Auckland’s council-owned golf-courses should be dug up to support a third supermarket operator for the city.
However, forming a third supermarket group won’t be easy and there will be significant hurdles to overcome. If the plan goes ahead, local shoppers could be looking forward to cheaper grocery bills.
A “force of nature” that should not be underestimated
FGC Chief Executive Katherine Rich told FMCG Business: “The launch of Monopoly Watch and Northelia is a welcome addition to the discussion about how to improve weak competition within the New Zealand grocery market.
“I met Tex 20 years ago when he lobbied the Parliament, when his ambition was to introduce competition to the telecommunications market. He was a force of nature – and to be honest, at the time I wasn’t sure if he was all talk or a Wall Street guy with billionaires in his Rolodex. There’s always been a certain mystery about him. His track record in terms of getting things done probably scares those profiteering in uncompetitive markets. He reminds me of the T1000 in Terminator 2. Big business can try to shoot him down and he just keeps getting back up again. In telecommunications he did that for nearly a decade and Kiwis today are thankful for the change that occurred through increased competition.
“By putting up alternative policy scenarios for the grocery sector, he is doing New Zealanders a favour as it provides the opportunity for further policy debates. He should not be underestimated,” says Rich.