Supermarket prices

[Ringo]

TESCO Ireland said yesterday that comparisons with Northern Ireland prices are damaging their reputation and sales, forcing them to start purchasing more goods directly through the UK supply network in order to narrow the gap.

A confidential document circulated to suppliers said they were moving to source all international branded goods directly through their UK commercial operation because of the damage done by higher prices in the Republic. "Consumers, media and Government associate Tesco Ireland almost exclusively with price differentials between Northern Ireland and Ireland," it said.

Because Tesco did not have a strong presence in the border towns, the impact of cross-border shopping did not "net out" across the group through increased sales there, as would be the case for international suppliers, it added

http://www.independent.ie/national-n...s-1711740.html

I think it's all about their lack of Border stores, so it doesn't balance out. I do feel their much cheaper lately.

[Macy]

It's pure buck passing, or trying to drive down the prices they pay in Ireland. The problem isn't the prices of goods, it's the margins that Tesco puts on products that is the problem.

On the wider case of prices, Tesco is only price matching Lidl and Aldi from what I can see, I haven't seen too many examples of it undercutting. And at that, they price match with a smaller and/or inferior product a lot of the time. The CSO figures underlying the Consumer Price Index are only showing marginal reductions in food prices.

[pete]

Retailers will always charge what the consumer will pay & its not like Irish retailers charge less than UK imported retailers.

The states job is to ensure their are no anti-competitive practices & that new new retialers can enter the market. Competition will keep prices down. I am sure Aldi & Lidl would not have come to Ireland if they did not see an opportunity due to high margins of the Irish retailers.

I would guess there may be more middle-men in the Irish market although not sure how Tesco source their products.

[Ringo]

It's pure buck passing, or trying to drive down the prices they pay in Ireland. The problem isn't the prices of goods, it's the margins that Tesco puts on products that is the problem.

On the wider case of prices, Tesco is only price matching Lidl and Aldi from what I can see, I haven't seen too many examples of it undercutting. And at that, they price match with a smaller and/or inferior product a lot of the time. The CSO figures underlying the Consumer Price Index are only showing marginal reductions in food prices.

It must be hurting them, with no border shops. They'll charge what they can get away with.

[Macy]

Irish Times reporting that Tesco Ireland has a profit margin of 9.3% (projected to actually rise despite the reductions to 9.5%), whilst the rest of tesco operates at under 6% Profit margin. Puts all their bs last week into perspective anyway.

http://www.irishtimes.com/newspaper/...246256045.html

[pete]

Irish Times reporting that Tesco Ireland has a profit margin of 9.3% (projected to actually rise despite the reductions to 9.5%), whilst the rest of tesco operates at under 6% Profit margin. Puts all their bs last week into perspective anyway.

I am no expert but 9% margin on supermarket sales seems very large especially for a mass retailer. I would guess the competitors on similar margins.

It would be very interesting to know how the IT got that as I am sure Tesco will be furious that such commercially sensitive info is in the public domain.

[Macy]

It would be very interesting to know how the IT got that as I am sure Tesco will be furious that such commercially sensitive info is in the public domain.

A clue could be in the article...

According to the document, Tesco Ireland’s head office in Dún Laoghaire is being “transformed” into a country office by redeploying roles to the UK and outsourcing work to India. This is expected to save €13 million

[pete]

I saw that earlier but wondered what a country office was... Doesn't sound as glamorous as Head Office. Tesco Ireland losing its independence...?

[OneRedArmy]

What independence? It's a subsidiary of a British multiple whatever way you look at it.

[Sheridan]

Friend of mine has a fairly senior position in Tesco in the UK. Apparently one of the factors which makes their operation less profitable in Ireland is the low take-up on online shopping, which is something like 80% lower than in the UK (where it rakes in obscene amounts for them.)

[pete]

Friend of mine has a fairly senior position in Tesco in the UK. Apparently one of the factors which makes their operation less profitable in Ireland is the low take-up on online shopping, which is something like 80% lower than in the UK (where it rakes in obscene amounts for them.)

Did you see post 5. Apparently they are more profitable in the ROI.

I am not that surprised by higher profits here as far less competition in Ireland. Surprised by 6% profits in other markets but I suppose that is why Tesco are a massive company.

[Lionel Ritchie]

Friend of mine has a fairly senior position in Tesco in the UK. Apparently one of the factors which makes their operation less profitable in Ireland is the low take-up on online shopping, which is something like 80% lower than in the UK (where it rakes in obscene amounts for them.)

I'm not surprised. We tried it a few times with disappointing results. Veg, fruit, bread was commonly tatty. Milk ALWAYS came in plastic see-through cartons NEVER in cardboard ones and no means of specifying a preference with such items existed.

[Macy]

Apparently one of the factors which makes their operation less profitable in Ireland is the low take-up on online shopping, which is something like 80% lower than in the UK (where it rakes in obscene amounts for them.)

But they have a bigger profit margin here.

The document reveals that Tesco Ireland’s profit margin, which has long been a closely-guarded secret, was 9.3 per cent last year and is projected to rise to 9.5 per cent this year. This compares with a margin of under 6 per cent in its parent company.

tbh, trying to blame the lack of online shopping just sounds like another bogus excuse. Every time one of their arguments gets disproved, they come up with another one.

[osarusan]

Maybe he means the bigger profit margin in Ireland is to make up for the lower turnover in online shopping?

[pete]

Aldi announces price cuts

German discounter Aldi has joined the grocery price war with reductions on over one-quarter of its range being introduced from today.

Aldi said the price reductions were long-term and were available in all its 67 stores throughout the country.

The price cuts include 20 per cent off olive oil, €1 off a free-range Irish chicken, 33 per cent off toilet rolls and 33 per cent off bananas.

Aldi, which earlier this week began construction of a major new distribution hub in Mitchelstown, Co Cork, also stressed its Irish links yesterday. It says more than 40 per cent of all grocery sales are on products bought from Irish suppliers, producers and manufacturers and this business is set to grow in the coming months.

Hopefully the starting of a proper price war as this is good news for everyone.

[dahamsta]

Hopefully the starting of a proper price war as this is good news for everyone.

Try thinking beyond yourself and the short-term for once in your life pete. A so-called "price war" may benefit consumers, but it certainly won't benefit retailers - maybe not such a bad thing, but still not "good news" for them - and there's an enormous risk of Irish producers and manufacturers going out of business because of it. That would in turn result in higher unemployment, lower exchequer revenues, and further homogenisation and less competition in retail. And less competition in retail ultimately means higher prices, not lower.

I'm not saying that's what'll happen, but there's certainly a major risk of it if a "price war" gets out of hand. And, once again, it's not "good news for everyone"; which, to be perfectly frank, is the kind of gormless statement I'd expect to hear our retarded friends in the Star trumpeting.

The large majority of "Irish" chickens come from the North by the way.

adam

[Macy]

Hopefully the starting of a proper price war as this is good news for everyone.

Only if they're taking it from their margins. All the indicators are that it is going to be a squeeze on suppliers which is where Dahamsta's point comes in. As pointed out the other day, Tesco expect their margin to go up even with the price drops, so it is of no consequence to them.

[dahamsta]

A Boards.ie summary of an investigative piece on RTE radio:

* Tesco's actual price decrease is 8%, not 22% as claimed by Tesco's chief executive, Tony Keohane, several times (he played the interviews with Tony Keohane). * That 8% decrease is in fact only a decrease on Tesco's 10% plus price increase in its stores since Christmas.
* Tesco has now approached all Irish suppliers demanding a 20% decrease in their prices.
* While Tesco has claimed Irish suppliers would not be affected by the "decrease", all Irish suppliers have reported that almost overnight Tesco has reduced the shelf space for Irish produce
*In 1997 when Tesco entered the Irish market, Richard Bruton, who was minister for Enterprise, signed an agreement with Tesco whereby Tesco committed themselves to purchasing a huge amount of Irish products. There was no attempt by the Irish government to renew this agreement in 2002. This is certainly going to be called for now.
* Tesco refused to respond to any of the report or defend its position.

And from the IT article referenced in that post:

RETAIL GIANT Tesco is to lay off 140 staff at its headquarters in Dún Laoghaire following its decision to import more goods directly from the UK rather than sourcing them through Irish suppliers.

I'm not going to jump on the bandwagon, I'll continue to do my main shop in Tesco for the moment, but I've already started buying some items locally, and I will stop shopping their altogether unless they knock this on the head. It'll cost me more in the short term, but less in the long term.

[pete]

I'm not saying that's what'll happen, but there's certainly a major risk of it if a "price war" gets out of hand. And, once again, it's not "good news for everyone"; which, to be perfectly frank, is the kind of gormless statement I'd expect to hear our retarded friends in the Star trumpeting.

I could also suggest that is a typical Irish response. We all complain about high prices but then when they are reduced we complain about lower prices.

As you say yourself you will still do some of your shopping at Tesco. tesco will stock Irish products if consumers want it. If Tesco suddenly cut Irish products & we as customers don't like it we will shop elsewhere.

[dahamsta]

I could also suggest that is a typical Irish response. We all complain about high prices but then when they are reduced we complain about lower prices.

Which is another typical Star response. I'm not complaining about lower prices, I'm complaining about price cuts being implemented at the cost of Irish producers, and I'm pointing out that in the long term, prices will most likely rise because of that. I've also posted clear evidence of both already happening, which you've typically ignored.

Seriously pete, ask them for a job, it's there for the taking. You can do a George Lee on it later and run for Fianna Fail. It'll be the perfect storm.