Supermarket shake-up: How fast-track and government land could boost competition

Increasing competition in the grocery sector is a goal of this government (and the previous), but what can be done to achieve this? (Image credit: Georgia Kahan)

The grocery sector has faced growing scrutiny over recent years, with two main players, Woolworths New Zealand (Woolworths, Fresh Choice and Supervalue stores) and Foodstuffs New Zealand (New World, Pak'nSave and Four Square stores) having significant market share, leading to concerns about lack of competition contributing to high grocery prices. The extent of market share held by these two groups can be debated. One consumer survey by the Commerce Commission found that over 90% of respondents went to a Woolworths or Foodstuffs store for their main shop. The Commerce Commission notes that the major grocery retailers’ own combined estimates of market share, taken from submissions, ranged between 75% and 95%¹.

This alone is not conclusive that there is a lack of competition. Last week, the New Zealand Initiative, a think tank, published a proposal for a Fast-Track Supermarket Entry and Expansion Omnibus Bill² to reduce barriers to entry for new players in the supermarket sector. Removing barriers to entry will, one way or the other, demonstrate that:

a) There is a lack of competition because a new player can come in and compete, or

b) if no new competitor enters, this may indicate there is sufficient competition.

The New Zealand Initiative proposal centred on six key components:

1. Competitive Streamlined Planning Process (CSPP):

   • A new planning pathway modelled on the Intensification Streamlined Planning Process (ISPP).

   • Allows rezoning of multiple sites across jurisdictions with limited appeal rights.

2. Bundled Multi-Site Consenting:

   • Enables a single application for multiple stores and distribution centres.

   • Requires inclusion of independent economic expertise on decision panels.

3. Integrated Overseas Investment Clearance:

   • Aligns OIO approvals with fast-track planning.

   • Treats grocery competition as a national interest.

4. Overrides to Planning Constraints:

   • Statutory override of town centre hierarchy and retail distribution effects.

   • Prevents councils from blocking projects based on location or perceived competition.

5. Transport Objection Override & Cost-Sharing:

   • Blocks non-genuine transport objections.

   • Requires councils to use existing funding tools for necessary infrastructure upgrades.

6. Sunset Clause & Safeguards:

   • The framework expires after 5 years unless extended.

   • Maintains environmental, Māori, and local government safeguards.

Fast-track consenting is certainly critical to a successful entry of a third player. Earlier this year,

Marko Garlick

wrote about all the ways the planning system blocks new supermarkets from being built³⁴. Combined with the OIO approval, I believe this could seriously reduce the barriers for a new entrant, whether from overseas or locally owned, to establish a minimal viable network of retail stores, as well as to build the necessary distribution centres, in a far shorter and viable timeframe. The proposed process would only be open to new players (or small existing ones) for 5 years. After that, it would open to the two main supermarkets. I’m broadly supportive of this bill, and this post does not offer a detailed critique.

Instead, the focus of this post is on a complementary measure the government could take to try and attract new market entrants. This measure would be a targeted government land programme. There are extensive public land holdings across New Zealand, owned by both the Crown and local councils. This portfolio, I believe, includes sites that could be suited to development as supermarkets, and reduce the time and costs of land assembly for a new entrant to establish and compete with the existing two main players. The proposed fast-track system should not be restricted to this land, but in combination with a new entrant potentially assembling a mix of former government land holdings with other market purchases, then receiving the fast-track process.

How much land is needed for a supermarket?

The minimum site size for a supermarket can be debated. Overseas, you see far greater competition achieved in part through smaller stores (often only 300-500m2 in footprint) being dotted throughout (admittedly higher density) cities. Recently, in New Zealand, we have been seeing a general trend towards more large-format stores, as well as a handful of new small-footprint metro stores in urban areas. For example, the new Pak’nSave at Highland Park is ~6000m² on a two-hectare site. But the soon-to-open New World in Point Chevalier will be on a comparatively small 7142m² site, while also fitting 2000m² of mixed-use office space and 147m² of additional retail space along the street frontage. Meanwhile, on the old Carrington Unitec site around the corner, Ockham-Marutūāhu have consented to a 1500m² ‘Metro’ supermarket, in a development that includes 381 apartments, 176 carparks, plus other retail and commercial spaces, on an 11,000m² site. However, the building the supermarket sits in only covers roughly half the site, suggesting a 5500m² or less site may be sufficient for smaller footprint stores that are integrated with other development.

What government land could be suited to this?

Between the Crown and local government, there are significant public land holdings that may be suitable for inclusion in a land for supermarkets programme. After a high-level scan, I believe these fit broadly into the following categories:

• Surplus council land

• Park and Ride land

• Surplus Crown land, including Kāinga Ora land that is surplus to housing plans.

Auckland Council is by far the largest council in New Zealand and manages land use activities in the largest market that any new entrant would likely want to centre their entry strategy on. The Auckland Urban Development Office, formerly Eke Panuku, manages the sale of surplus land holdings for the Council. Some examples of sites they are currently selling include:

• This 7,220m² site in the Ormiston Town Centre.

• A 15,988 m² site in Hobonville Point.

• This 5214m² site in Panmure, across from the Train and Busway Station and the Town Centre. While on the smaller end of what may be suitable, an advantageous location close to transport links and without an existing supermarket could be attractive.

Both Auckland Council, through Auckland Transport, and councils in the Wellington region have significant land holdings currently occupied by ‘Park n Rides’ beside Train and Busway Stations. For example, the Albany Station Park n Ride is around 5 hectares, for just 1210 carparks. Capital from the sale of part of the land could be used to concentrate parking in a multi-story block, if additional capacity is necessary as mitigation.

Crown and central government agencies have significant land holdings, which could be considered to be included in an RFP process. For example, the majority of the 28-hectare site where the Manukau Super Clinic is located is completely undeveloped. Kāinga Ora, the government social housing agency, is set to sell around 1/5th of vacant land in the next 18 months, as part of its reset plan. Much of this is, of course, residential land unlikely to be well suited to large-format supermarkets, but not all. Some examples of land Kāinga Ora will be selling include:

• 80 Don McKinnon Drive, Albany. A 1.5-hectare site with Metropolitan Centre Zoning, which should be comparatively easy to get resource consent for a supermarket on.

• 109 Mount Smart Road, Onehunga. A 1.57-hectare site originally planned for 185 apartments and located on an arterial road in an area with significant residential intensification occurring.

• Elm Street and Racecourse Parade, Avondale. A 0.96-hectare site with Mixed Use Zoning adjacent to the Town Centre.

These are just a handful of examples from a high-level scan of public land in Auckland. These sites represent a valuable, underutilised asset base that could be leveraged to support new market entrants.

What could a process look like?

The proposed fast-track process is intended to be fast. So, a government land programme would also need to be fast and progressed alongside the bill, so as not to slow an entrant who wants to use the fast track process. I see this process as set around three steps.

1. A short study of government land holdings in key markets, considering potential sites owned by the Crown, agencies and local government in key markets, like the Golden Triangle and Canterbury. This should aim to produce a long list of potential sites suited to supermarkets or distribution centres.

   As a central government process, any local government land holdings identified may need the government to purchase options on. However, this could occur post the EOI stage. Overall, this stage should not take longer than a month.

2. An Expression of Interest (EOI) stage to sound global market interest in entry to the NZ market using the Fast-Track Supermarket Entry and Expansion Omnibus Bill process, and in government land holdings from the available long-list. This should evaluate applicants on criteria such as:

   • Financial ability to enter the market.

   • Capability to operate at scale and develop in new markets.

   • Willingness to develop on public land under lease or purchase arrangements.

   This stage should also seek to shorten the long list of government sites by having applicants provide a high-level evaluation and signal of interest in each site. This will free up unwanted sites to be sold on the open market. The EOI stage should not take longer than three months, especially given it can build off the previous Request for Information process the government ran⁵.

3. Subject to interest, it would then proceed to a Request for Proposal (RFP) stage with the shortlisted respondents providing detailed proposals. Proposals should include:

   • Summary of proposed business model and operational plan to give the government confidence in awarding a new entrant exclusive land opportunities.

   • Site-specific development proposals for government land holdings that they are interested in, and the purchase or lease arrangement sought.

   • Community benefits (e.g., local employment, sustainability of construction ).

   • Financial viability and investment plan.

I don’t think we should expect a high number of respondents. One genuinely interested new entrant may be all we get. Irrespective, I do believe the Government should seek a commercial return on the land to ensure fair competition. However, it should be flexible on sale versus lease, and the structure of payments to provide flexibility and maximise the opportunity for new entrants.

Other thoughts

It is important to note that this is not a guaranteed success. The process could well find that there is no interest for a new entrant. While disappointing from a consumer perspective, this may be the reality of the size of our market. It is also important to recognise that even if it is successful, it is only larger markets within New Zealand that are likely to see a new entrant establish itself. Smaller centres will always be of lower priority due to the size of the opportunity. While success isn’t guaranteed, the government is keen to improve competition and increase pressure on the existing duopoly. This dual-track approach, combining regulatory reform with strategic land opportunities, offers a strong proposition to improve competition in the grocery sector and deliver better outcomes for Kiwi consumers.

1. Commerce Commission (2022). Market study into the retail grocery sector. https://comcom.govt.nz/__data/assets/pdf_file/0024/278403/Market-Study-into-the-retail-grocery-sector-Final-report-8-March-2022.pdf

2. Dr Benno Blaschke (2025). Fast-Track Supermarket Entry and Expansion Omnibus Bill. https://www.nzinitiative.org.nz/reports-and-media/reports/fast-track-supermarket-entry-and-expansion-omnibus-bill/

3. Supermarket YIMBYism

4. Supermarkets: More stories of how councils accidentally on purpose banned competition

5. MBIE (2025). Request For Information opened for grocery sector competitors and investors. https://www.mbie.govt.nz/about/news/request-for-information-opened-for-grocery-sector-competitors-and-investors