Ireland’s grocery market is bracing itself for the biggest shake-up in years when the Groceries Order, which bans below-cost selling, is finally repealed this spring. In this seven-page special feature, Simon Mowbray examines what’s in store for the Emerald Isle’s major retailers
Since Micheál Martin, Ireland’s trade and enterprise minister, revoked the Groceries Order that banned below-cost selling just before Christmas, the cries of foul play from some quarters of the Irish Republic’s grocery market have been loud and long.
However, there are few impartial commentators who disagree with the contention that the order, while going some way to protecting suppliers and smaller retailers, has had its day.
As Minister Martin dotted the ‘i’s and crossed the ‘t’s on the order’s impending abolition (it is set to finally cease this Easter), he did so amid a consumer climate where charges of ‘Rip Off Republic’, led by charismatic TV presenter Eddie Hobbs, had centred on Ireland’s grocery industry, with Hobbs citing it as one of the best, or worst, examples of how shoppers were being shortchanged. Facts and figures showing how Irish shoppers were allegedly getting a raw deal were plucked from all quarters, while Ireland’s retailers, even Tesco, pointed to the high level of costs associated with doing business in Ireland compared with other parts of Europe.
Whatever the arguments - more of which will be found in the following six pages - it is hard to deny that the Groceries Order no longer has a place in the increasingly competitive grocery environment of the Republic of Ireland.
Certainly, British suppliers and retailers have been looking on with envy since the late
1980s when the ban on below-cost selling and ‘hello money’ from suppliers to retailers for stocking goods was introduced after the H Williams supermarket chain went down in the wake of a price war with arch rival Dunnes.
The order looked even more outdated from the viewpoint of traders on this side of the Irish Sea, where the debate is very much at the opposite pole as arguments continue to rage about the rights and wrongs of operating in a market of such widely free enterprise.
As one Irish retailer puts it: “It’s certainly a paradox with the British market. But there’s little doubt that the order was past its sell-by date, no matter how much some of us may have liked to see it continue.”
He adds: “What really matters now is what the retail landscape is going to look like in a market where no holds barred competition is an undeniable reality.”
The merits of this view are not necessarily clear cut. For example, the Irish authorities had already handed out fines to Tesco and Dunnes last year following evidence that they had been selling some goods below cost.
And pressure for the major chains to disclose the profits they make in the Republic’s E7bn-plus grocery market have also been growing, led by an Irish all-party parliamentary committee. This demand, in reality, looks unlikely to be met, as all the major players are either privately owned or, in the case of Tesco, listed in another country.
It is also possible that the predicted fall in grocery bills after the abolition of the Groceries Order - estimated by some to be worth a potential saving of E1,000 a year for the average family as prices in-store tumble - may take some of the heat off retailers.
However, despite evidence that some shops are already gearing up for below-cost selling with in-store brags that some products - especially some alcohol lines - are already being sold at cost price, retailers are remaining tight-lipped about the level of below-cost pricing activity that they are planning.
One retailer says: “I think it may well be a game of cat and mouse for the first few weeks when the ban on below-cost selling finally disappears, but it will be interesting to see if it’s a damp squib or an all-out price war.”
He adds: “Clearly, there is something to be said for attempting to retain at least a semblance of the natural order of things. Otherwise we could all end up shooting ourselves in the foot.”
With Asda, buoyed by the demise of the order, said to be poised to pounce on the Irish market at the earliest opportunity, it’s fair to say that these are interesting times for retailing in the Irish Republic.
Since Micheál Martin, Ireland’s trade and enterprise minister, revoked the Groceries Order that banned below-cost selling just before Christmas, the cries of foul play from some quarters of the Irish Republic’s grocery market have been loud and long.
However, there are few impartial commentators who disagree with the contention that the order, while going some way to protecting suppliers and smaller retailers, has had its day.
As Minister Martin dotted the ‘i’s and crossed the ‘t’s on the order’s impending abolition (it is set to finally cease this Easter), he did so amid a consumer climate where charges of ‘Rip Off Republic’, led by charismatic TV presenter Eddie Hobbs, had centred on Ireland’s grocery industry, with Hobbs citing it as one of the best, or worst, examples of how shoppers were being shortchanged. Facts and figures showing how Irish shoppers were allegedly getting a raw deal were plucked from all quarters, while Ireland’s retailers, even Tesco, pointed to the high level of costs associated with doing business in Ireland compared with other parts of Europe.
Whatever the arguments - more of which will be found in the following six pages - it is hard to deny that the Groceries Order no longer has a place in the increasingly competitive grocery environment of the Republic of Ireland.
Certainly, British suppliers and retailers have been looking on with envy since the late
1980s when the ban on below-cost selling and ‘hello money’ from suppliers to retailers for stocking goods was introduced after the H Williams supermarket chain went down in the wake of a price war with arch rival Dunnes.
The order looked even more outdated from the viewpoint of traders on this side of the Irish Sea, where the debate is very much at the opposite pole as arguments continue to rage about the rights and wrongs of operating in a market of such widely free enterprise.
As one Irish retailer puts it: “It’s certainly a paradox with the British market. But there’s little doubt that the order was past its sell-by date, no matter how much some of us may have liked to see it continue.”
He adds: “What really matters now is what the retail landscape is going to look like in a market where no holds barred competition is an undeniable reality.”
The merits of this view are not necessarily clear cut. For example, the Irish authorities had already handed out fines to Tesco and Dunnes last year following evidence that they had been selling some goods below cost.
And pressure for the major chains to disclose the profits they make in the Republic’s E7bn-plus grocery market have also been growing, led by an Irish all-party parliamentary committee. This demand, in reality, looks unlikely to be met, as all the major players are either privately owned or, in the case of Tesco, listed in another country.
It is also possible that the predicted fall in grocery bills after the abolition of the Groceries Order - estimated by some to be worth a potential saving of E1,000 a year for the average family as prices in-store tumble - may take some of the heat off retailers.
However, despite evidence that some shops are already gearing up for below-cost selling with in-store brags that some products - especially some alcohol lines - are already being sold at cost price, retailers are remaining tight-lipped about the level of below-cost pricing activity that they are planning.
One retailer says: “I think it may well be a game of cat and mouse for the first few weeks when the ban on below-cost selling finally disappears, but it will be interesting to see if it’s a damp squib or an all-out price war.”
He adds: “Clearly, there is something to be said for attempting to retain at least a semblance of the natural order of things. Otherwise we could all end up shooting ourselves in the foot.”
With Asda, buoyed by the demise of the order, said to be poised to pounce on the Irish market at the earliest opportunity, it’s fair to say that these are interesting times for retailing in the Irish Republic.
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