Startup online supermarket Supie plans for small store, tech-heavy format

Online grocery startup Supie says it has signed up about 55,000 customers, has about 130 staff, is now planning physical stores — and has already mapped out a first location.

The business was founded in 2021 by Sarah Balle, who sees the online-only supermarket as a potential third player going up against the duopoly of Foodstuffs and Countdown, much like how 2Degrees disrupted the telecommunications market.

Since Supie’s founding two years ago, Balle has been joined as a shareholder by investors including Icehouse Ventures, and seen a successful campaign raise $3.9 million through online investment platform Snowball Effect.

It has also ruffled feathers, with Balle revealing some of Supie’s suppliers had asked the startup to increase its prices, and faced capital-raising hurdles. The National Business Review reported in May that a second fundraising had been “stymied” by some existing shareholders.

Supie wants a slice of the estimated $22 billion supermarket industry which is controlled by store-owner co-operative Foodstuffs and Australian retail giant Woolworths through its Countdown chain.

Supie offers value for consumers every day including on fresh fruit and vegetables, Balle says, by keeping overheads low, getting rid of confusing on-off “sale” pricing, and not investing in competition with New Zealand's food producers with its own-brand products.

Supie is currently operating its online supermarket delivery service in Auckland, parts of the Waikato, Bay of Plenty and Rotorua.

Balle says Supie is cheaper; she does her own regular market comparisons and says her most recent virtual shopping comparison found Supie was on average cheaper by a dollar on most products she compared.

On the basics, Supie is close in price to rivals Countdown and Foodstuffs-owned brand Pak 'n Save, but on branded goods Supie pulls ahead on price, Balle says. For example, a 400 gram pack of Rangitikei Buttermilik Tenderloins on Supie was $10.50, compared with $13.50 from Countdown online or $12.49 at Pak 'n Save Mount Albert. 

Oak Baked Beans were 4c cheaper at Supie, and Mainland Edam cheese was $2.49 cheaper at Supie.

To get free delivery and 2% to 10% cashback on all products purchased, Supie offers a $99 Supie+ annual membership.

Balle says the startup has been growing “like crazy”, with fulfilment staff making up most of the now 130 estimated Supie employees, and 15% growth week-on-week in orders dispatched.

To the regions?

Balle says no giant international retailer is going to come in and shake-up New Zealand’s grocery industry, not outside of the main centres, anyway. She says big box retailers such as Costco might open in Auckland, Wellington and Christchurch, but who is going to bring competition to the regions?

Balle says there has to be a third keeping the duopoly honest, and she’d like it to be Supie. Awareness of Supie in the market is the businesses' biggest challenge, she says.

Her vision would see the main weekly grocery shop order coming from Supie’s website, delivered to your home, with a Supie store close to you for the “top-up shop”.

Balle says the firm's working on its physical store strategy, and Supie won’t be replicating the "big box" style of the dominant players. Instead, Supie’s outlets will be smaller, “community-focused”, high-tech and probably unmanned.

“That top-up shop, you know, when you run out of bananas or you need another bottle of milk or a loaf of bread. [Supie stores] would mean that kiwis, particularly in the regions, will have access to a really handy top-up shop …  There's some pretty awesome tech innovations across the world, and we're really looking forward to rolling that out across New Zealand.”

In Japan, a convenience store operator announced it would open 1,000 unstaffed shops by the end of 2024. These stores would be smaller and tech-centric, doing away with the cost of workers and relying on tech solutions such as artificial intelligence-equipped cameras, and sensors on shelves to track a consumer's in-store selection.

Supie will bring a new wave of customer experience to New Zealand, she says.

Balle says some communities don't want big car parks, or a big box grocer. The Supie solution is 24-7, and trusts customers to "pop in and get something they need".

Supie’s planned physical expansion won’t happen this calendar year, and it will need still need to raise capital.

What next for food prices?

Balle says consumers will get no relief from rising food prices any time soon, with the Government fuel subsidy set to increase fuel prices, and the increase in the minimum wage. The latest Statistics NZ figures showed food prices up 12.1% annually in May.

"Pretty much all food, no matter how it's transported in New Zealand, will be hit by [fuel prices] and it will be an additional cost. So food will continue to go up. It's just that it may be at a lower rate than what we've been experiencing, but the rate that we've been experiencing from a food-inflation perspective has been really high. I don't think consumers should expect prices to go down, I don't believe it's gonna happen. Just the nature of the costs that are being imposed on suppliers, that ultimately will flow through to consumer prices."

Balle isn’t expecting much from the new regulation coming to the industry through the Grocery Industry Competition Bill, either.

Balle says the bill, which includes a supply code of conduct, a grocery commissioner to act as a market referee, and the threat of intervention in the wholesale supply market, will do nothing to break up the hold the duopoly have, or bring real competition particularly in smaller markets.

Balle says it is appalling New Zealanders are being “priced out of food”.

The Grocery Industry Competition Bill had its third reading on June 21. 

Commerce Minister Duncan Webb said in a press release that long-term, consumers would benefit from more choice of where to shop for groceries. Giving consumers the power of choice would push retailers to provide the best deals possible, and bring new grocery services and products to the market, he said.

He said the Government had made sure the legislative changes could roll out as quickly as possible, including already requiring major grocery retailers to open up their wholesale operations so other retailers “have direct access to a range of wholesale groceries at competitive prices”.

Webb said the Government would also announce the start date of the grocery commissioner, “which is expected very soon”.

The new grocery commissioner will have a role similar to that of the telecommunications commissioner.

The Government also introduced the Commerce (Grocery Sector Covenants) Amendment Act in June 2022, which stopped supermarkets from restricting competitors from setting up near to their outlets.