Grocery Commissioner Pierre van Heerden said a proposed Costco store in Christchurch could strengthen competition in Canterbury, pointing to a fall in major supermarket retailers’ market shares after the company opened in Auckland.

The United States warehouse retailer is seeking government fast-track approval for its first South Island store, on a vacant 17.4 hectare site between Memorial Avenue and Avonhead Road near Christchurch Airport.

“In the year following the opening of Costco in Auckland, the market shares of the major grocery retailers dropped four percentage points,” van Heerden told chrislynchmedia.com.

“This suggests, in my view, a Christchurch store could have a positive effect on competition in the local market.”

“In my view, a new Costco store would increase consumer choice and strengthen competitive pressure on existing retailers in this market.”

The benefits could also extend to local producers, with van Heerden identifying Costco as a potential route for suppliers to reach customers overseas.

“It may also provide opportunities for local suppliers, including a potential channel to access Costco’s international network.”

His comments follow Consumer NZ’s assessment that supermarkets near the proposed Christchurch store could respond by sharpening their prices, although some shoppers would struggle to access the savings available through bulk buying.

Consumer NZ head of research and advocacy Gemma Rasmussen said shoppers needed storage space and enough money to make larger purchases to maximise those benefits.

“Some people will be locked out of the saving potential of bulk buying.”

Asked about potential limitations of Costco’s membership and bulk buying model, van Heerden said it would offer something different from other retailers in the region.

“It may attract consumers from a wide area wanting value-focused grocery offers. Its entry could increase competition and contribute to a less concentrated market in Canterbury over time.”

Van Heerden said the Commerce Commission’s 2022 grocery market study had found weak competition, driven by high market concentration, barriers to entry and expansion, and limited competitive pressure between the major players.

Subsequent reforms had brought some improvements, but competition remained limited, he said.

“Overall, it is likely to deliver positive competitive benefits in the Canterbury region in my view.”

Christchurch City Council has been asked by the Government to provide feedback on the fast-track application.

Waimairi ward councillor Sam MacDonald previously said he welcomed greater supermarket competition, provided traffic was managed to protect surrounding residential streets.