Reader mailbag - supermarket zoning edition

From today's reader mailbag:

Hi Eric,

Why not make supermarkets a permitted activity in any Rural zoned area?

Then another chain could be developed with a lower cost base as they wouldn't be paying retail zoned land prices. Large supermarkets could sit on the outskirts of most cities and towns in NZ with minimal effects. Huge dairy factories and timber mills are permitted activities - why not a supermarket?

There are Aussies chains avail - only Woolworths is here. Also Aldi and Lidl - though they only need quite small sites

One tiny change to the RMA and you could knock food prices down by 25% I reckon. Westfarmers would be here in a heartbeat - they own Bunnings.

Graeme Farr

I thought Aldi was starting to look at New Zealand. But in-town zoning does seem a substantial barrier to entry. In Christchurch, Raeward ran a very nice big supermarket just outside of town by the airport.

Are there currently barriers to putting up supermarkets on rural zoned land? I expect there would be transport infrastructure needed, but there's a lot of rural land on highways. 

Graeme notes the price difference between identical products in New Zealand and Australian supermarkets. A lot of that will be differences in warehousing and transport costs between the two countries, so I'd be surprised if prices came down by quite as much as advertised. But that's not a reason not to open things up.