Goldsmith told RNZ's Morning Report today the government did not want "wild west vigilante-ism" - but current laws were not working.
"The general direction is we need to have some better tools available to retailers dealing with people walking out of their shops without paying for things."
Many people would have witnessed supermarket staff being unable to stop someone walking out with a trolley full of goods that hadn't been paid for, he said.
"You can't carry on like that without undermining people's confidence in law and order."
Current rules were very limited - including only making a citizen's arrest at night, he said. People were worried about getting into trouble if they tried stop someone leaving their shop or stealing something.
Under the Crimes Act 1961, anyone can make an arrest at night where there are reasonable grounds for believing a person is committing an offence.
A warrantless arrest can be made if the offender is committing a crime for which the maximum punishment is at least three years' imprisonment.
"The issue that we're trying to deal with is coming up with some clearer rules that enable people to defend their property and actually detain people for longer," Goldsmith said.
"We need a better solution."
There had been a decrease in ram raids, but low-level repeat theft had not been effectively dealt with, he said.
Goldsmith said the advisory group on retail crime had come up with some "good suggestions" and there was "much more to come in this space".
'Grave concerns'
Retail NZ chief executive Carolyn Young is concerned about an escalation of violence and threats to staff.
Frontline retail workers were often young and in their first job and "don't go to work to do law enforcement", she told Morning Report today.
"We have grave concerns about proposals to empower people to physically restrain or physically engage with people to stop them doing a crime, and the fact that could create more violence and people will get hurt.
"We know that in the past where people have chased after alleged offenders there have been deaths."
There may be an increase in weapons people bring as a result of knowing the could be challenged, she said.
Young, a member of the ministerial advisory group, said chair Sunny Kaushal supported an expansion of citizen's arrest powers, and some smaller retailers also backed the move.
However, most Retail NZ members have said they wouldn't use the powers because they were concerned about staff safety, she said. They wanted to be able to approach someone who has allegedly offended, get goods back without any violent interaction, have them removed, and use trespass laws and facial recognition so the person doesn't return.
Like opening Pandora's box: Hipkins
Labour leader Chris Hipkins said he is alarmed at the idea of new citizen's arrest powers.
"The power to detain someone against their will is a very, very big power and at the moment it's largely restricted. The police and Corrections are the only people who can do that, it's a law and order issue.
"I think the idea that fellow citizens could be detaining other citizens without any real legal training, law enforcement power or anything like that - it's a massive step."
If the government were to announce changes it would raise international headlines - but not for the right reasons, Hipkins believed.
"I think this is just opening a Pandora's box and it's pretty dangerous territory."
Labour police spokesperson Ginny Andersen has criticised the government for paying Kaushal $920 a day for his work.
