I’m told Woolies expressed surprise to the
Kiwi business they had bought that it was able to source some goods from Australia
cheaper than Woolworths could buy them at home.
This should not be unexpected. Multinational
companies approach different markets of varying wealth and tastes differently –
except Woolworths has allegedly laid down its own law and told them they are
not allowed to.
Woolworths has told its suppliers (ie the
Australian food and groceries industry) it will make the cheaper price for both
sides of the Tasman apply it to all purchases. Thus, if Foodland had a
preferential price for Widget Bars, all Woolworths chains will now pay that
price. Conversely, Woolworths will only pay its lowest Australian prices when
buying for its NZ stores.
The suppliers are powerless. They’ve just
been squeezed again. If they complain, they might well find their lines
disappear from Woolworths’ shelves.
Asked about this situation, a Woolworths
spokesperson said the company would not comment, that all agreements with
suppliers are confidential.
It’s part of Woolworths’ and Coles’ use
of market power to insist they are supplied at the lowest cost.