New Zealand’s Mainstream Grocery Retail Market: A Practical Overview

ByOneStopAsia Editorial

1. Market Structure: A Highly Concentrated Industry

New Zealand’s grocery retail market is highly concentrated and effectively operates as a duopoly.
The market is dominated by two major groups: Foodstuffs and Woolworths New Zealand.

In recent years, Costco entered the market with its first store in Auckland in 2022. However, its presence remains limited and does not yet materially alter the overall market structure.

2. Foodstuffs Group: A Cooperative Franchise Model

Foodstuffs operates as a cooperative and is structured as two independent entities:

  • Foodstuffs North Island (approx. 140 stores)
  • Foodstuffs South Island (approx. 56 stores)

The group operates nationwide through a franchise-based model under the following supermarket brands:

  • PAK’nSAVE
  • New World
  • Four Square

Each store is operated by an Owner Operator, and many stores employ their own buying staff, enabling store-level consideration of local customer needs.

Product Listing Structure

To supply products to Foodstuffs stores, suppliers must obtain a product code issued by Foodstuffs head office.
This involves presenting the product to a Category Manager at the relevant regional Foodstuffs entity.

  • Products sold in the North Island must be approved by Foodstuffs North Island
  • Products sold in the South Island must be approved by Foodstuffs South Island

Approved products are assigned a ranking.
Core range items are designated centrally and are expected to be ranged across stores.
Products in other ranking tiers may be ranged at the discretion of individual store buyers, who assess suitability based on local demand and store strategy.

3. Woolworths New Zealand: A Centralised Corporate Model

Woolworths New Zealand operates primarily under the Woolworths brand, with stores run as company-owned outlets.

In addition, Woolworths owns two franchise brands:

  • Fresh Choice
  • SuperValue

These franchise stores are operated by Owner Operators and typically have greater autonomy in purchasing decisions. Depending on the store and product, suppliers may also be able to sell directly to these stores without requiring a centrally issued product code.

4. Category Management and Decision-Making Differences

At Woolworths, Category Managers at head office determine:

  • Whether a product is listed
  • The number of stores in which the product will be ranged

This centralised model means that product ranging decisions are made within a structured, national framework.

At Foodstuffs, responsibility for core range decisions similarly sits at the central level. Once a product is designated as core range, it is expected to be ranged across stores.

At the same time, Foodstuffs’ operating model allows products that are not selected as core range to still achieve success. Through sustained supplier engagement and strong support from individual store buyers, non-core products can gain traction and build performance at the store or regional level.

As a result, Woolworths typically places greater emphasis on:

  • Demonstrated performance within the New Zealand market; or, where such evidence is limited,
  • Established success in overseas markets, most commonly Australia.

5. Key Takeaways for Suppliers

  • New Zealand’s mainstream grocery market is small and highly structured
  • Foodstuffs combines central approval with store-level flexibility
  • Woolworths offers national consistency through a centralised model
  • Market entry generally requires evidence, preparation, and a phased approach

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