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Sarah Balle, centre, with Supie staff (Photo: Supplied)

BusinessApril 26, 2022

‘I sleep on the floor … I sleep in my car’: What it’s like fighting NZ’s supermarket duopoly

Sarah Balle, centre, with Supie staff (Photo: Supplied)

At online grocery store Supie, founder Sarah Balle spends her day packing orders, making deliveries, courting investors and, she says, fighting for a fairer deal for shoppers and suppliers.

“Do you want to grab a chair?” Sarah Balle stands in a concrete bunker on a sprawling industrial estate in Wiri surrounded by freshly picked produce. Broccoli drips with last night’s rain, pumpkins glow orange after being chopped with a machete, and huge bunches of freshly picked celery and wong bok cabbage sit waiting to be packed into boxes, then delivered to customers. 

One of Balle’s staff members cuts up fruit — deep purple dragonfruit and a new blood-red kiwifruit — to show off recent additions to their range.

Sarah Balle (centre) with some of her Supie staff members. (Photo: Supplied)

Amid all of this, Balle sips instant coffee and offers me a seat. Only I can’t see one. Finally I realise she’s pointing to a handful of crates dotted around the floor. “We couldn’t afford chairs [so] we built these,” she explains. “We found some beer crates, got the tops from Spotlight, and made them.” Each one cost about $4. 

At Supie, Auckland’s online grocery delivery service that Balle started “on the smell of an oily rag” 11 months ago, the cost-cutting initiatives don’t end there. Upstairs in the company’s head office are wobbly tables constructed out of doors sitting on trestles. “I got them from Bunnings for $40,” says Balle. “They work, right?”

At every possible point, Supie’s small team scrimps and saves to cut down on expenses. Produce is ordered daily to the quantities required, picked fresh, then sent straight to customers on the same day. All packaging, including cardboard boxes and chill packs, is returned and re-used.

She’s not embarrassed. Balle’s proud of her financial initiatives. Every cent she saves means she can pour that back into Supie, the business no one believed she’d be able to build.

Against all the odds, Supie is thriving. Less than a year old, Balle’s small team is delivering to customers across Auckland, who order online and keep coming back for more. Prices are competitive, they’ve just received their liquor license to sell alcohol, and Supie’s range of 5500 products is growing, with a wait list of 100 suppliers hoping to sign up. Customers seem to like the feeling that they’re supporting a true Kiwi battler.

Subscribers, who pay $100 a year for Supie memberships and get free delivery and bonus samples in their boxes, recently topped 20,000. When The Spinoff visits on a drizzly Wednesday morning, staff are busy packing more than 200 orders across four different departments: produce, ambient, chilled and frozen. Drivers will arrive at 3pm, load up, then head off on delivery routes. Orders close off at 2am, so this happens every single day of the week.

Supie’s growth is most visible in staff numbers. “Six weeks ago, we had 26 employees. Now we have 35,” says Balle. “We’re bringing on probably another 10 in the next six weeks.” She met one of those, her sustainability lead, while delivering her groceries to her.

Supie customers can sign up for membership packages that include free shipping and samples. Photo: Supplied

Until they can scale, keeping things lean and mean is the only way Supie can compete in an industry dominated by a duopoly, one so powerful the Commerce Commission recently investigated it. “That’s how we’re going to return profit to our investors, or reinvest in the business to keep growing it,” says Balle. “We need to get more bang for our buck.”

Balle’s constantly searching for savings she can make. Recently, Supie “halved” its labour spend by monitoring how far staff were walking each day, then reworking floor plans to save time. Up late one night, Balle designed her own produce shelves, despite having no prior experience. Then she called a workmate to boast about them. “We need to get those extra tweaks, week on week.”

Being so frugal means there aren’t even enough funds available for a large Supie sign at the front of their Wiri base. When I tell Balle I made several U-turns before finding the right driveway, she laughs. “We literally can’t afford it,” she says.

Then she rethinks her response. “Why would I invest in that?”

Her mission, taking on that duopoly, is huge. In a sector dominated by Woolworths, which owns Countdown, and Foodstuffs, which runs all New World and Pak’nSave supermarkets, its alleged the lack of competition has led to price-gouging, resulting in profits of more than $1 million a day.  A government response to the Commerce Commission’s report, which suggests a mandatory “grocery code of conduct” be introduced, and land freed up for new supermarkets, is due shortly.

Balle’s task is so big that when she initially approached investors about Supie, no one believed she could do it. “They all said … it wouldn’t work,” she says.  They told her, “What makes you think you can take on a duopoly?” or, “There’s no way you’re going to achieve this.” One suggested she’d need a minimum investment of $10 million before she could even think about launching.

Balle gave up on outside investment, instead pleading with family and friends to chip in. To prove she was serious, she threw her life savings into it. “Everything has gone into Supie,” she says. She even sold her car. “I borrow my parents’ car and I live with my parents. It’s a huge personal sacrifice. I’m in my 30s and I’ve given up everything to do this.”

By June 1, 2021, the day Supie opened for business, she’d raised $1 million, one tenth of what she’d been told she needed.

It seems like an impossible mission. So why is she doing this? “Because it’s so important.” Balle has a well-used list of grievances against the duopoly, listing food wastage, lack of innovation and ever increasing grocery prices. “What’s happening in the sector is awful, in terms of how suppliers are being treated. They’ve also been let down on food prices.

“It breaks my heart to see … the amount of waste that the supermarkets don’t pick up and sell.”

Supie customers order through a website for next-day delivery. Photo: Supplied

No one’s debating how toxic the grocery sector has become. With just two dominant players, consumers have faced skyrocketing food prices, leading to some bonkers behaviour. Recently, an Otago woman  found she could save 35% on pantry staples by ordering items through Amazon Australia and getting them shipped to New Zealand.

“It’s so broken,” says Balle. But is a small player like Supie the answer? Consumer NZ says it’s a big piece of the puzzle. “There’s an enormous benefit to an initiative like Supie,” says Gemma Rasmussen, Consumer NZ’s head of communications and campaigns. “Anything that offers more grocery choices for New Zealanders can be counted as a win in our book.”

It’s a start, and Rasmussen says Woolworths and Foodstuffs should be worried about Supie. “If they continue to grow, they could be a real challenger to the duopoly.”

Balle has big plans to do exactly that. Her aim is to become “the Netflix of grocery shopping”. Spend any time at Supie, and you’ll feel that Silicon Valley vibe everywhere. “It is a bit chaotic and startup-ish,” Balle admits. She talks of Supie one day offering a nationwide service from a centralised hub run entirely by robots. “We’ll service all New Zealand from that one site.”

But she’s protective of her tech. When I request to visit Supie’s grocery department, Balle stalls. That would expose her “IP”, she says. “We normally only show our produce area. The rest is on the D-low.” As a compromise, she opens up Supie’s chilled goods section, where two staff members wearing zipped up jackets pack boxes with lamb cuts sourced from Marlborough, Hohepa cheese from Hawke’s Bay, and pork belly from Canterbury.

“We’re pretty guarded of what we do,” she tells me. “You’re lucky to be here.” When I joke all this secrecy sounds a little like Theranos, Elizabeth Holmes’ failed Silicon Valley blood-testing startup, Balle quips that she left her black turtleneck  sweater at home. Then she says: “That’s the nervous part, going, ‘Am I an imposter?’ I have to remind myself, and pinch myself, that we actually send out orders, we are making a difference.”

Balle’s wariness shows just how competitive the grocery sector has become. She loses sleep worrying about new entrants with bigger backers, like Costco, coming into the market. That’s why she doesn’t want to expose any tech advantages Supie’s building in the back end. “Someone with deep pockets could come in and replicate what we’re doing,” she says. “We don’t want things getting out as to how we do things.”

Supie offers 5500 products with more on the way. Photo: Supplied

For any of this to come to fruition, Supie needs many more customers, and much bigger investments. After friends and family came on board to help Supie launch, Balle recruited more investors last year. Now her Auckland site is up and running, she hopes to use it to persuade even more to contribute. “If someone gave us $100m what we could achieve is so much more than what the duopoly could achieve,” she says, like she’s pitching to me.

As she talks, a forklift carrying pallets of carrots and cabbages drives past. It’s the first delivery from her parents’ Pukekohe farm, Balle Bros, the one she grew up and worked on as a teen. Since Supie launched, Balle’s been trying to persuade the duopoly to allow her to carry her family’s products, but exclusivity deals have meant she hasn’t been allowed to stock them, until now.

But there are still family products tied up in deals that she can’t add to Supie’s range of 5500 items. “I can’t get Mr Chips fries made with potatoes from my own family,” she says. “That’s the power of the duopoly. It’s mindblowing.”

The idea for Supie first came to her when she was living in Ponsonby, working as an accountant. Balle had been to the Netherlands, where you can order groceries and get them delivered 15- minutes later. Many other major cities already have this, but Aotearoa lags behind. She wondered why. “The experience of shopping online was awful compared with what was happening overseas,” she says. “Their food innovation is incredible.”

Why hasn’t New World or Countdown done anything about this? “Why would they?” says Balle. “People go into their stores every week, do their grocery shopping exactly the same way. They haven’t had to invest in online.” She notes Foodstuffs only began offering online delivery in the South Island last year. Their range, compared to Auckland supermarkets, is also diminished.

Balle wants Supie to change all of that. She talks of “personalised shopping experiences,” providing a service that understands individual needs, and makes things so quick and seamless that anyone in New Zealand can get their groceries delivered in 24 hours or less. “That’s saving them an hour a week. That’s a huge time saving they can be putting into their children or fitness. It’s quite a significant impact on people’s lives.”

The impact on Balle’s own life, however, is taking a toll. She hasn’t had a holiday since Supie launched last year, her only break a 12-day stint suffering Covid that left her bedridden. Since then, she’s slowed down slightly, but not much. Last weekend, she “jumped in the chiller” to help out. She’s often out doing deliveries, and met one of her recent staff additions that way. She’s also talking to new investors, hoping to raise more funds to make Supie bigger and better, something the duopoly needs to take seriously.

Sometimes, she stays at work so late she doesn’t bother going home. Instead, Balle will head upstairs, lie down on a sheepskin rug and pull the hood of her puffer vest over her head. Then she’ll wake up early, often starting her day at 5am. This is what fighting two behemoth grocery corporations looks like on the frontlines. She’s in the thick of it, and the only way to survive is by taking one step at a time. “Often I go for a nap in the car,” Balle says. “I’ve gotten real used to sleeping in the car.”

After this story was published, Foodstuffs North Island reached out to clarify there are no exclusivity provisions or restrictions that would prevent Supie from selling Mr Chips branded products or Balle Brothers vegetables.

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