Convenience store group Gala has brushed aside claims that the likely abolition of the Groceries Order will decimate the small grocery sector by pledging an investment of €48 million in 40 new stores next year.
Owned by the Storehouse network of independent wholesalers, Gala group is expecting sales at its 200 outlets to rise by 27 per cent this year to €420 million. Some 3,000 staff are employed at these outlets.
Gala's chief executive Tom Keogh said the investment in new greenfield stores and new franchise-run outlets would go ahead even if the Government revokes the order. "While we hope it will be retained, we can't sit back and let this dictate our business going forward," he said.
With a business model similar to that of rival chains such as Centra-SuperValu, Londis and Spar, Gala operates a retail network in which franchisees source their goods from its wholesalers.
Rival brand operators have campaigned to retain the order, joining those who claim that its removal will destroy the viability of the small grocery sector and ruin the character of small-town life.
While the order bans below-cost selling of packaged goods, smaller retailers argue that its removal will free the hand of big chains to boost their business with loss-leader promotions.
Mr Keogh said it appeared that Minister for Enterprise, Trade and Employment Micheál Martin was preparing to revoke or amend the order, but said the sector would have to deal with whatever change was made.
He expressed confidence that Gala would continue to grow its brand and said most of the €48 million investment was coming from franchise owners.
While Mr Martin made no reference to the debate about the order, in a statement issued by Gala, he said the investment was further evidence of the growing strength of the convenience market and reflected strong consumer demand in a buoyant economy.
There are 17 independent wholesalers in the Storehouse group, among them 4 Aces in Portlaoise and M&P O'Sullivan in Cork.
Some 25 of Gala's outlets are in Dublin, Cork, Galway and Limerick, but most are based in rural locations.
More than 90 per cent of the existing outlets are run by franchisees although Gala has a small number of group-owned stores. Mr Keogh said there would be "no real change" in the ownership profile of the group's outlets. The brand was established in 1998, a year in which it had annual sales of €1 million.
The Cabinet is expected to be asked to abolish the Groceries Order within the next four weeks, according to a Government source.
Following consideration of more than 500 submissions on the topic from interested parties, including independent grocers' body RGDATA, the department's review has come down in favour of abolishing the below-cost-selling ban.
The review has come to the conclusion that it is anti-competitive, against consumer interests and has contributed to high grocery prices. The report concludes that there is no economic justification for retaining the order and says that it does not benefit consumers.
The Government's Consumer Strategy Group recommended the order's abolition last May.
