supermarket

A restraint-of-trade clause in the contracts of shop assistants at Masterton Pak 'N Save has employment lawyers baffled and union delegates outraged.  The three-month clause, which is most often used by employers to protect trade secrets, stops employees working for rival stores after they leave the supermarket.

The Dominion Post was provided with a copy of a contract for a Masterton Pak 'N Save shop assistant which says the person cannot work for a rival or similar store within a 50-kilometre radius for three months after resigning.

Employment lawyer Peter Cullen said the clause was far-reaching and it would be hard to prove it was justified in the case of shop assistants.  "I've never heard of a check-out operator being subject to a restraint of trade."  It potentially stopped former staff working at vegetable stores, bottle shops and similar outlets.

But Masterton Pak 'N Save franchise owner Paul de Lara-Bell stood by the contract. "You can put whatever you want in a contract. Whether you can uphold it in a court of law, and whether people agree to it, are two different things."  He said the clause was mainly aimed at senior staff, but the supermarket would not rule out using it on others.

National Distribution Union secretary Laila Harre said the clause was completely unreasonable and illegal.  "People don't know what their rights are. They are fearful of breaching the contract and the clause keeps them in a job they're not happy with."  She said supermarket workers aged 15 and under usually earned about $6 an hour. Youth workers, aged 16 and 17, were paid $9 an hour, while those over 18 years earned the minimum wage of $11.25 an hour.

Susan Hornsby-Geluk, a partner with law firm Kensington Swan, said the courts scrutinised such clauses heavily, with the onus on employers to prove former staff had specialist knowledge.  "You'd be stretching it to say a packer of groceries has either client relationships or special knowledge that create a risk for the employer."

News of the clause has prompted Foodstuffs, which owns Pak 'N Save, to step in. Wellington region group manager Robert Kent said the clause was specific to the Masterton site only. The company did not believe it was enforceable.  "We need to take the steps to remove it from that particular site's employment agreement."

In March last year Wellington barista Victor Hsieh was stopped by the Court of Appeal from competing near any of Fuel Espresso's coffee outlets after he took the lease of a coffee cart, Beangrinder, a week after leaving Fuel Espresso.  He had a restraint-of-trade clause that stopped him making coffee within 100 metres of any Wellington Fuel outlet for three months after leaving.  But Ms Hornsby-Geluk said a barista was skilled and had stronger client relationships.

The low prices enjoyed by shoppers at British supermarkets are paid for by poor wages, job insecurity and a denial of basic human rights for workers in some of the world's poorest countries, a report has concluded.

The growing power of big supermarkets is the driving force behind a mode of doing business that is made possible by exploiting workers, particularly women, in developing countries, the report says.

The document, produced by the development agency ActionAid, accuses the supermarkets, who take £7 out of every £10 spent on the high street, of using their vast market power to drive down prices at their overseas suppliers.

The investigation found that supermarkets were paying wages of as little as 5p an hour in some Bangladeshi garment factories, while in India some workers processing cashew nuts were being paid just 30p a day.

ActionAid, which works in more than 40 countries, urges the Government to set up an independent regulator and calls on supermarkets to acknowledge publicly the damaging impacts of buying practices on workers and suppliers, and take concrete steps to address them. It calls for "binding legislation" to help protect workers' rights as voluntary initiatives are not working.

"Labour rights abuses in supermarket supply chains remain systematic, and in fact they are becoming more severe. It is becoming painfully obvious that a decade of voluntary attempts to curb the negative impacts of these practices has failed, and that only binding legislation will have sufficient teeth to make inroads," the charity says.

The report comes mid-way through the Competition Commission's inquiry into the £120bn grocery sector. The watchdog is keen to investigate the relationship between supermarkets and their suppliers but is struggling to persuade suppliers to speak out. It has said it has "concerns" about how the supply chain works in the UK.

ActionAid claims that shopping could become a "tool for poverty reduction" if supermarkets treat their suppliers better so that more of the millions of pounds spent every day on grocery shopping in the UK flowed back to the workers producing what Britons buy. "This is how development happens," it says.

An investigation into how bananas are grown in Costa Rica found that workers' rights, pay and conditions have suffered from the intense price war that rages between UK grocers. Suppliers are forced to absorb the costs of the banana price battle because they need the business: supermarkets typically take between 70 per cent and 90 per cent of a banana supplier's stocks.

In response, wages have dropped to as low as 33p per hour and job insecurity has increased, with women being forced out of permanent jobs into casual, piece-rate work. The charity welcomed recent moves by some UK grocers to stock more Fairtrade-certified bananas, such as Sainsbury's decision to sell only Fairtrade bananas, but said there was a danger that "corporate goodwill to respect people's rights can be reneged on when market conditions get tough".

In the Indian cashew growing industry, ActionAid found that for every pound shoppers spent on the nut in UK supermarkets just 1p went to the women workers who processed the nuts. Another 22p was shared between Indian farmers, traders, processing companies and exporters, leaving 77p for importers, roasters and supermarkets in the UK.

Sainsbury's said it was working hard to address the issues related to labour in the Costa Rican banana industry. "We have invested considerable resources into addressing them," a spokesman said, pointing out that, by July 2007, all of the farmers providing Sainsbury's with bananas would receive a Fairtrade price premium for their crops. "This ground-breaking move has led the industry, with other retailers now following suit," Sainsbury's said.

Tesco defended its relationship with suppliers, saying it worked with them and non-governmental organisations to solve any problems. "It's no secret that conditions in developing countries can be difficult. But these countries and their suppliers believe, like we do, that trade is the best route out of poverty," the group said.

'I suffer from severe pain in my toes and knees'
Bindi, a 58-year-old mother of six, from Kerala in India, works for a large processing company that exports cashew nuts to the UK market. "I have severe pain in my toes and knees and sometimes back pain. But I have to work to fend for myself and my family," she said.

Bindi's hands are covered in blisters. Asked why she does not wear protective gloves, she said: "We have to buy the gloves ourselves; the management does not provide us with gloves. Besides, I will only be able to shell five kilos if I wear gloves instead of the usual 10."

She said: "The managers use malpractices and underweigh the shelled nuts.". A survey found that 45 per cent of cashew workers experience respiratory illnesses, compared with 9 per cent of the wider population. "They will make us sit in the smoke-filled sheds where they fry the nuts and it causes suffocation," said Bindi.

Cashew workers' main concern is their earnings and, in Kerala, most women want their unions to bargain for higher wages.

"You get a bit bitter and twisted," says Ken Earby wearily behind his glass cabinet counter. Earby and his brother Philip have been running Huntly Hardware Supplies for 30 years, 17 years from these premises, but now the wretched whiff of extinction rises from the Hitachi drills and hunting knives. Late morning, midweek, and not a customer in sight.

Since The Base, Hamilton's latest big-box shopping complex, opened on the city's northern fringe last year only 20 minutes' drive away, sales here have plunged 30 per cent. Road-works outside are compounding the problem.

"We're going to take another hit because the big Mitre 10's opening up there," says Earby. On some prices, his store beats the big chains like Bunnings Warehouse, but he's annoyed that shoppers have stopped bothering to check.  "People have got a built-in Warehouse culture, unfortunately, these days. They think The Warehouse will supply everything, and if it doesn't, they'll make do with what The Warehouse has got."

He's hoping the new Countdown coming to Huntly will bring shoppers who'll browse the main street after they've filled their trolleys. New subdivisions should also help. "You gotta hang through," he says. "Within six months it should start picking up."

Up the road $5 Max and Mr Max is a different world. Merchandise clutters tables and racks in a twinkling confusion of colour and plastic. A steady flow of shoppers comes to hunt out their bargain; a thin middle-aged man buys a thin-bottomed saucepan.

Huntly has three of these ultra-cheap, lucky dip-style shops that have sprung from the ashes of more traditional local stores in New Zealand's small towns and suburbs since the 1990s.  Owners Clive and Jan Quintal are unfazed by competition from the likes of the Red Shed. "Competition has always been there, it's just getting a bit more aggressive, and the opponents have got to be a bit smarter," he says. "You've just got to go with the flow, wherever you can make a buck, that's what you've got to do."

Since New Zealand's big-box retail revolution spread to Waikato in the 1990s, Huntly's shopping strip has slowly but surely changed. A forlorn Deka sign still towers on spindly poles above K Beez' grocers-cum-$2 shop - the department store chain an early Red Shed casualty.

David Lane is stoical. He and his wife Doreen have run D & D's Family Footwear for 11 years, and Lane is chairman of the local business association.

"We are still surviving. A lot of the shops have changed, but there's only two empty," he says. Huntly is on the up - a new surfwear store has opened across the road; the money-lenders who moved in a few years back have moved out again.

They've had to downsize - Rebel Sport's pulling power resulted in Adidas cancelling its supply to the store five or six years ago, and when The Warehouse in Hamilton started stocking slippers, D & D's had to stop. The Warehouse was selling them for less than the shoe shop used to buy them for. But in a twist, "Now the suppliers can't supply at the price The Warehouse is selling them for, so The Warehouse stopped getting those slippers." He shrugs. "The shoe shop's surviving - it's got good stock. But we just need a bit more foot traffic."

"The Warehouse is a way of life for countless New Zealanders. We make a difference to people's lives, especially family life, by making the desirable affordable." - The Warehouse core purpose

"In everything we do, we're driven by a common mission: to improve the quality of life for everyday people around the world." - Wal-Mart website

Call it the Wal-martisation of New Zealand. On once-pastoral town fringes and in far-flung suburbs, see the monolithic malls and super-sized discount chains sprawl. Last year, the Property Council counted 151 shopping centres nationally. Their combined shop space alone totals 183 hectares. Australian companies such as Westfield own almost all our centres, with the notable exceptions of the Palm Shopping Centre and Ngai Tahu's Tower Junction mega-centre, both in Christchurch. Then there are the big boxes: 87 Warehouse stores, 43 Warehouse Stationery stores, 38 Briscoes stores.

Retail's biggest concentration of power lies in our supermarket chain duopoly. Foodstuffs, a privately owned New Zealand co-operative, gives us New World, Pak'N Save and Four Square and claims 54 per cent of the supermarket market. Progressive Enterprises, owned by Australian's second-biggest retailer, Woolworths, gives us Foodtown and Woolworths and claims the other 46 per cent market share.

We spend $11 billion a year at the two supermarket groups - nearly $1 in every $10 spent overall. Is all this just the latest phase in retail's inevitable evolution? A bargain-basement boon for low-income shoppers?

Or is it a retail cancer poisoning our small businesses, our towns, our land, increasingly bleeding profits out of New Zealand and turning the screws on local suppliers?

Warren Snow managed the Tindall Foundation, The Warehouse founder Stephen Tindall's charitable arm, until he grew deeply disillusioned by the Red Sheds' impact.

Now he heads sustainable-development group Envision that helps small businesses fight back. "We have allowed a destructive model of retail sprawl to crawl over the land, where mega-retailers battle amongst themselves for market share by selling ever-cheaper, non-repairable, unrecyclable, sweat-shop-made junk that all ends up in our landfills. Cheap junk for quality of life - what a bargain!"

And it's no thanks, he says, to the Resource Management Act and Environment Court, where the parties with the deepest pockets tend to win protracted legal wrangles.

Meanwhile, main streets that used to be the heart of their community, where shopkeepers were in the same sporting clubs and school committees as their customers, where locals could get most of their daily needs, are now colonised by some mix of bargain-bin stores, takeaways, bric-a-brac shops and cafes for tourists and chain stores. (At least chain franchises retain a kind of local ownership, Snow adds.)

We've already seen the first wave of casualties from The Warehouse revolution, he says. But wait, there's more. "Buoyant farming and tourism of the last few years have stopped many town centres from declining into dead ghost towns, but if these twin pillars collapse for any reason, there will be a second wave of small business closures... in a long-term Wal-martisation (read pauperisation) of the New Zealand economy."

He's turning his attention to helping local retailers "claw back business that the big guys took from them" by pushing their advantages: their profits go back into the community, they participate in the social life of the community, they know their customers' needs, and they can provide genuine service and product back-up.

Laila Harre, head of the National Distribution Union, believes the jury's still out on the impact of big retailers on local economies. But it's a different story for suppliers. "As retailers become bigger, they're dictating terms of supply in a way that's unprecedented." Most pressing, she argues, is the threat our supermarket duopoly poses to New Zealand food producers. Harre is worried that we're underestimating it.

Woolworths Australia is particularly aggressive when it comes to driving down wholesale prices, she says. Local producers who can't weather the squeeze on their profit margins lose out. And it goes wider. "If we can't produce for the domestic market, we won't have the base for export."

Harre says we're a way off the kind of food-plus-general-retail domination of United States titan Wal-Mart.

The Warehouse Extra, which includes a supermarket, is a baby next to the Wal-Mart. But a step in that direction looms in the shape of either Woolworths Australia or Foodstuffs buying a controlling share in The Warehouse. Both supermarket chains have sought Commerce Commission clearance to make their bids, and the authority has promised a decision in coming weeks. Harre adds that if either gets the go-ahead, this would quash the threat to the duopoly.

There's speculation that Wal-Mart may get a foothold in New Zealand through buying parts of the Coles Group, the remnants of Coles-Myer, Australia's biggest retailer, which would mean more profits going overseas. The group is Kmart's parent company.

Wal-Mart has been widely attacked for shutting out unions, crushing local stores, playing hardball with suppliers, paying low wages and providing poor working conditions - all criticisms vehemently denied by the company. Says Harre, "If Wal-Mart gets a stake in New Zealand through Kmart, then I think we need to be very afraid."

A woman has taken her parents to court to get years of unpaid wages.

The woman sought nearly $130,000 compensation for working seven days a week in her parents' Canterbury supermarket without pay, but settled her case on the day it was due to be heard by the Employment Relations Authority in Christchurch.

Authority member James Chrichton suppressed the name of the woman, her parents, the location of the supermarket and details of the settlement.

The parents declined to comment on the dispute, but their daughter said outside court that she felt years of anxiety wash away as the case was settled.

"It's been worth it," she said. "It just feels like the stress is gone.  "I knew I had to do this. I felt unfairly treated. They didn't want to pay me a cent but finally they had to.

"It was all about control. ... I wanted to go flatting, but they wouldn't let me, so they prevented me from doing so."

The woman said the settlement was also a victory for her brother, who had been required to work part-time at their parents' supermarket, but instead of fighting he had turned his back on his parents.

In the woman's signed statement, obtained by The Press, she claimed she worked without pay for eight years, starting off after school for two years and then full-time for another six years.  She claimed she worked every day until her last year, when she was given one Sunday in three off.

She decreased her claim to take into account the full board at the family home and more than $12,000 she received from marketing companies.

The huge supermarket chains are often seen by farmers as their number one enemy in the fight to get fair prices for their produce. But the tide could be about to turn with UK supermarket chain Waitrose signalling a willingness to work with farmers to ensure they get a fairer slice of the profits. Waitrose's MD Steve Esom says the grocery industry is largely in a situation where many primary producers face "a climate of fear" where honesty and fairness are poorly evident. This is born out by a recent UK survey showing 70% of farmers would not sign a supermarket contract if offered one. "Clearly there is a pressing need for supermarkets to adopt a more consistent approach when working with farmers."

Supplier Value Recognised. Esom also believes retailers need to realise competition is not the 'be all and end all' when it comes to suppliers. Rather they need to "recognise the value of our supply chains which are actually the backbone of our businesses." He also believes differentiation is the future of farming following a growing interest by consumers in food provenance issues. Even the most efficient producers struggle to compete on grounds of price alone - in a commodity-driven globalised market. "For differentiation to work, there clearly needs to be educated and committed support from the Govt, retailer and consumer."

Most New Zealand exporters should not suffer from a move by Britain's largest supermarket chain to label goods imported by air, Trade Minister Phil Goff says.

Supermarket chain Tesco this month unveiled a £ 500 million ($NZ1439 million) strategy to cut carbon emissions and persuade its customers to buy environmentally friendly products.

Tesco said it planned to label food with details of its carbon footprint, showing consumers the amount of carbon emitted during the production, transport and consumption of each of the 70,000 different products it sells.

However it acknowledeged that would be complex and could take several years to implement.

As an initial step it would put airplane symbols on all goods imported by air. Air travel is one of the most carbon intensive forms of transport.

Mr Goff today said the move should have little negative effect on New Zealand exporters as most sold food and drinks – 99.75 per cent of which were shipped overseas.

New Zealand was against the concept of food miles which only took into account the transportation of a product rather than its production.

However, the final Tesco plan, which incorporated both, should benefit New Zealand products, once it was fully implemented.

"We welcome that, provided its done in a full and appropriate manner," he told NZPA.

"New Zealand has got a good track record in that regard, therefore an objective use of food labelling would largely be to our benefit rather than our detriment."

Lincoln University studies had shown lamb produced in New Zealand and shipped to Britain used about a quarter of the energy the British used to produce and freight its own lamb to local supermarkets.

New Zealand dairy products used about half the energy of British counterparts, while onions and apples also used less even when transport halfway around the world was taken into account.

The Ministry of Foreign Affairs and Trade (MFAT) was monitoring any reports on the issue and had set up a group comprising representatives from 25 industries to respond to any incorrect information.

Mr Goff said the Government was continuing to raise the issue with its European counterparts.

Tesco is the undisputed British market leader with around 30 percent of the country's grocery market.

Its new new green plans also include limiting the amount of produce freighted by air to 1 percent from the current 3 per cent and cutting emissions from existing stores worldwide by at least 50 per cent by 2020.

Tesco said that its current direct carbon footprint in Britain was about 2 million tons of carbon dioxide a year, with mass refrigeration of produce accounting for roughly a third of emissions.

The grocer also intends to reward shoppers who buy organic, Fairtrade and biodegradable goods with green loyalty points.

Wellington, Aug 28 NZPA - New Zealand farmers and food manufacturers are being ``squeezed'' by the emergence of huge conglomerates which give supermarket chains greater power in negotiating with producers, says the head of a Government taskforce. ``Profit margins for many NZ producers are being squeezed by forces in the global economy,'' said Food and Beverage Taskforce leader Tony Nowell in Wellington today.

He was releasing the taskforce's final report, which called for increased collaboration in the sector and proposed a development strategy based on increased productivity, new products and new markets.

Mr Nowell, who also chairs the Food and Grocery Council, warned that rival food companies from around the world were expanding into emerging economies where markets were already price-sensitive and expensive to maintain.

And production in large-scale, low-cost economies such as Brazil and China were challenging NZ exports not on price but on quality.

But the most significant barrier faced by food manufacturers was gaining regular and ``meaningful'' access to supermarket buyers. ``For even a medium-to-large New Zealand company to get serious time with those supermarket buyers is extremely difficult,'' he said. It was possible to create a lot of critical mass to do this, but producers needed a more collaborative approach.

Asked how small NZ fruit and vege growers could hope to compete internationally when their profit margins were being squeeze by the two big supermarket chains which controls most food retailing in this country, he said it was a global issue. ``It's not only in New Zealand that supermarkets are squeezing the lifeblood out of people, as you put it,'' he told NZPA.

It was fair to say that while NZ was becoming more ``extreme'' compared with the previous experience of growers, ``it is not as extreme as it is in most of the western world'', said Mr Nowell.

The might of these supermarket conglomerates was mirrored in NZ where Foodstuffs -- Pak n'Save, New World, and Four Square -- and Woolworths Australia (Countdown, Foodtown, and Woolworths) dominated the market.

Woolworths' Australian ownership and presence on both sides of the Tasman had taken the consolidation to a new level, and food producers were cautious about investing in equipment and staff training when the whim of one company could cost them half of the NZ market.

But in the United States, Europe and Britain, suppliers had adapted to the concentration of supermarket buying power, and the same would happen in New Zealand. ``The New Zealand suppliers will learn to adapt and not only focus on producing for the local market, but it will probably be even more important to learn how to develop for the export markets, he said.

Asked why the taskforce set a target of only 5 percent annual increase in export earnings for the sector's existing businesses over the next decade, Mr Nowell said it was because the world was changing rapidly. ``The strong growth in product capability and quality coming out of South America -- that's going to put increased pressure on New Zealand,'' he said. Similarly there would be increased pressure on New Zealand from product being exported from China.

Extra growth would have to come from innovative new products, such as foods for affluent consumers which could be matched to a person's genetic type, and from new markets in Asia. ``It would be unrealistic to reach targets beyond 5 percent, given the increase in the competitive threat,'' he said.