A convenience store buying group which struck a wholesale deal with Woolworths, says it now has an Auckland warehouse, 50 members, and is eyeing expansion to Wellington.
The National Retail Group was launched off the back of the Government’s market study into the grocery sector, which found weak competition and a sector dominated by Woolworths and Foodstuffs.
The group is a membership buying group for dairy and convenience store owners that aims to bring down supply costs and compete with the big two supermarket chains on price.
National Retail Group (NRG) executive director Sandeep Aggarwal said it was now supplying about 50 stores in the Auckland region.
He said its August deal with Woolworth’s wholesale arm meant its members could save about 10% on average when purchasing stock.
To get stock, dairy owners shopped with the rival supermarkets, paying full retail price which meant they struggled to be competitive, Aggarwal said.
Store owners who signed up to the National Retail Group’s KwikMart brand would get access to the Woolworths wholesale arm and a warehouse in Wiri and six delivery trucks, operating in partnership with distributor Foodmasters Co.
About 6000 products were available to members from Woolworths’ New Zealand Grocery Wholesalers arm.
"An important detail is that this model gives them access to a wide variety of products. Number two, they don't have to go out and go to Countdown to [do] the shopping. That's a lot of time for them, and also saves money because they have to have someone back at the shop while someone is out there shopping. So we can deliver them the products. And then the third thing, the retailers will get the products at the right price. These are the three winners for retail."
The group was also importing some products from India and Nepal, and sourced goods from Bidfood, Aggarwal said.
Aggarwal said National Retail Group would need to be strategic about where those stores were so they weren’t competing with each other in overlapping territories.
The buying group was in talks with the owner of 15 stores in Wellington with plans to expand to the capital city. Aggarwal said NRG had a meeting with the Wellington dairy chain later this month and was working on distribution deals there too.
He said the group found Woolworths ready to do business, but Foodstuffs didn’t seem to be responsive.
As part of the Government’s work to boost competition in the supermarket sector it required the duopoly to set up wholesale arms and offer deals to other retailers.
One of the big issues concerning dairy owners was the Government’s move to restrict the sale of cigarettes, Aggarwal said.
The change to limit the number of retailers who can sell tobacco products meant many dairy owners were facing a financial hole. Aggarwal said he hoped NRG’s cheaper wholesale prices, and broadening the range of products its members sold, would help to fill that gap.
The group was looking to also offer “fast moving” food products such ad ready-to-eat meals, he said.
Aggarwal said funding for the retail group was coming from its owners. He is a 40% shareholder in NRG, with the Dairy and Business Owners Group chairman Sunny Kaushal holding 35% and Ravinder Singh the third shareholder.
Steve Sexton, General Manager of New Zealand Grocery Wholesalers, said the NRG deal was reflective of its growing wholesale business which was helping to further increase competition in the grocery sector, and create better outcomes for shoppers around Aotearoa New Zealand.
Woolworths said in August it had signed up 15 wholesale customers.
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