The Government has announced a series of urgent legislative and policy changes designed to make it easier for new supermarkets to open in New Zealand, in a bid to break the dominance of the current duopoly and lower grocery costs.

Economic Growth Minister Nicola Willis said the changes would “create an express lane for new supermarkets to boost competition and deliver better deals for Kiwi shoppers.”

Earlier this year, the Government ran a Request for Information (RFI) asking what measures would help challenger supermarkets enter the market. Willis said the responses revealed “widespread frustration with restrictive zoning, slow consenting, and cumbersome regulations that make it extremely difficult for new competitors to gain a foothold in the New Zealand grocery sector.”

As a result, the Government will:

• Legislate so new supermarkets that improve competition qualify as fast-track projects under the Fast-Track Approvals Act. The legislation will be introduced in November and passed by the end of the year, supported by a new Government Policy Statement on Grocery Competition.

• Streamline building consents by selecting a single authority to standardise and speed up approvals.

• Amend Building Act regulations to enable pre-approved “MultiProof” plans for multiple grocery developments.

• Clarify investment pathways under the Overseas Investment Act, with grocery-specific provisions in the Ministerial Directive Letter.

• Amend the Commerce Act to strengthen tools against predatory pricing, introducing an objective economic test for firms misusing market power.

• Explore options for new food importers to bring additional product lines into the country.

Willis said five prospective new domestic competitors had been identified, along with credible growth plans from existing retailers.

“Ultimately those businesses will make their own investment decisions about whether and when to launch new supermarkets — the Government’s policy changes are intended to give them more confidence to do so,” she said.

Talks have already been held with Costco, which Willis described as “a major international grocery player whose annual revenue exceeds New Zealand’s GDP.” Costco has confirmed the new consenting approach will assist with its expansion plans and sees opportunities for additional stores in New Zealand within the next few years.

“It is disappointing that other major international retailers such as Aldi and Lidl opted not to take part in the initial RFI. It’s possible that the changes we are announcing today will encourage them to take a more serious look at New Zealand,” Willis said.

She noted that some RFI responses argued the only way to truly improve competition was to break up Foodstuffs and Woolworths.

“A decision to restructure the supermarkets is not a decision that would be taken lightly. It would be a significant intervention that would carry costs and risks that would need to be rigorously weighted against the potential benefits to shoppers,” Willis said.

A cost-benefit analysis is now underway to assess those options.

Willis added: “Our objective is a more competitive grocery market that delivers better prices and more choice for Kiwi shoppers. We remain open to potential market-led solutions that may be put forward by the major incumbents.”

The Ministry of Business, Innovation and Employment (MBIE) received 24 submissions to the RFI, including from existing companies, prospective competitors, advocacy groups and other interested parties. The responses will not be publicly released due to commercial sensitivities.