Superb Supermarkets owner, who identified himself as Masud, said the same day the boutique supermarket opened for business late last month, the Princes St store received the first of a number of visits from local and South Island New World representatives.
The store, which stocks more than 32,000 different products, was able to secure similar suppliers to two large supermarket chains because it had a tobacco-free policy, biodegradable plastic bags and confectionery-free checkouts.
Despite winning suppliers over with its ethical stance, the store has attracted the attention of Foodstuffs South Island representatives, who, Masud says, have pressured sources supplying it.
"It is very hard for these guys, and they don't want to upset their biggest buyers," he said.
As a result, some suppliers had asked him to "take a low profile" on some grocery lines and in one case, supply was temporarily halted.
Masud, a former employee of Foodstuffs and Progressive Enterprises, said he knew most of the New World senior management team and was surprised to see members of it visiting his store.
He said his staff was asked questions about the store, including where it sourced its produce and cabinetry, and prices in the store had been scrutinised.
"This is all about money," he said.
He cited the example of lettuce, which he buys direct from an Outram grower, and which was selling yesterday for $1.89. He said a supermarket chain would buy the same Dunedin-grown item but send it back to the city via Christchurch with a larger mark-up.
Of most concern for his business was the pressure placed on suppliers, who declined to comment to the Otago Daily Times over the allegations.
However, he decided to speak out after the repeated visits by New World representatives to his store, and confirmed he had sought legal advice.
He was unlikely to pursue legal action for fear of upsetting the suppliers, who were vital to his business.
He said business was going well and he hoped to open more stores throughout the South Island soon.
Foodstuffs South Island Ltd retail operations general manager Alan Malcolmson said he was not aware any of his staff had visited the store, but he would not be surprised if staff inspected a new store.
"If a new store opened in Christchurch, we would have a look at it."
However, he rejected claims the company had contacted suppliers.
"That is rubbish. Why would we want to do that?"
Green MP Sue Kedgley, a critic of supermarkets' "anti-competitive behaviour", said the Dunedin situation was "an outrageous example".
"But I am not surprised by this at all."
Ms Kedgley said she was trying to get the Government to follow the United Kingdom's example and adopt a supermarket code of conduct to prevent "anti-competitive behaviour".
Progressive Enterprises and Foodstuffs are estimated to control as much as 95% of the country's grocery retail sector.
