Meet Mr Gubay the Housewife's Friend' (With $50 Million to Prove IT)

The first of Albert Gubay's '3 Guys' supermarkets opens in Auckland this week. This supermarket 'king' who emi-grated from Britain in a storm of controversy over the sale of his 'Kwik-Save' chain shares, has been the author of another controversy in New Zealand.

The first reports of his move to New Zealand brought rumours in the press of his association with supermarket developments in Auckland. Mr Gubay denied the rumours, claiming his main interests in New Zealand were in the creation of a racehorse stud in South Auckland. The suspicious investing public didn't believe him — the shares of Progressive Enterprises, Auckland's leading supermarket chain (Foodtown, 1972 sales $22 million) fell dramatically.

Investors' information proved to be quite correct. Gubay is skilful in his use of the media and the news was broken at his own convenience. With the news also came allegations that several New Zealand manufacturers were refusing to supply him. However after meetings with the Minister of Trade and Industry, Warren Freer, no manufacturers except Unilevers were still refusing to supply.

When released by Gubay, these allegations were reported in the press to his advantage and he had gained sympathy and valuable publicity for the opening of his first New Zealand store.

Gubay then announced that he was considering asking the Minister of Trade and Industry to invoke the Trade Practices Act — a law which makes it illegal for a New Zealand manufacturer or distributor to discriminate against a buyer, as 'refusing to supply' would constitute. A brief investigation however reveals that no-one is breaking the law and that Gubay's press releases are no more than skilful manipulation of the media. The 'refusing to supply' is simply refusing to supply on Gubay's terms. Unilevers have publicly stated that they are quite prepared to supply him on the same terms that most of their other buyers get.

With supermarket chains it is usual commercial practice for manufacturers to offer special terms to those that reach a certain sales volume in that firm's products over a consecutive period of 12 months or less. The supermarket chain has to reach that volume before it is granted the extra 3 % that enables the supermarket to 'special' their goods. Gubay wants this 3 % with his initial order, and all the major suppliers, except Unilever have given in. Unilever have maintained that if their rates were good enough for Food town and the others, they are good enough for '3 Guys' and that the extra percentage will be granted when their criteria have been satisfied.

Gubay's threat to invoke the Trade Practices Act was no more than a move designed to keep the press interest high. The new Minister of Trade and Industry will not upset the commercial concerns by telling a company not only to supply, but on what terms. Gubay then alleged that Unilever's refusal to give him direct terms (as opposed to buying through a wharehouse) would cost him $6,000 in relation to his major competitors ($3000 his competitors get + the same $3000 he doesn't get). What he has not made clear is that this $3000 does not remain in Unilever's coffers, but rather to the wholesaler from whom '3 Guys' will have to buy.

The long term benefits Gubay's murmurings are likely to have for his business are debatable, for it appears that he is bargaining from an extremely weak position. After all the English environment is totally different to that in New Zealand. Obviously an astute man, Gubay is surely aware that in the field of powder detergents (Drive, Cold Water Surf), Unilever is the only New Zealand supplier and consequently he must buy from them, for a supermarket without washing powder is going to attract as much trade as a pub with no beer.

At the same time the good will that Unilever must have generated with other major supermarket chains — Gubay's competitors — must surely offset any loss that may accrue from their dealings with Gubay, who has to buy from them anyway. Remembering that the '3 Guys' supermarkets are in areas which are already heavily served by existing chains, an interesting battle can be predicted. But I think that Mr Gubay will find that his tactics may not receive the consumer support in New Zealand that he may have hoped for.

Roger Green.