What's the deal with supermarket prices?A survey comparing Tesco prices in Ireland and the UK caused a bit of a stir when it was released by a rival supermarket in Britain last week, writes Conor Pope.
It showed that Tesco stores in the Republic were on average 15 per cent more expensive than in the UK. The reaction from anyone with even a passing acquaintance with Irish prices probably stood somewhere between "Only 15 per cent?" and "So what's new?".
"If we weren't driving down prices, UK consumers would be paying far more for their groceries, like Tesco shoppers are having to in the Republic of Ireland," said Andy Bond, chief executive of Asda when the survey, clearly leaked to the press by executives in his company, became public.
It covered more than 4,000 products and involved an online price trawl by what Asda described as an "independent" market research company - it refused to be drawn any further on the provenance of the survey. You'd almost wonder why this "independent" market research company bothered with its extensive trawl, as there is so little in it that is new or shocking for Irish consumers, except, perhaps the news that people in the Republic are expected to fork out €13 more for a packet of 18 Durex condoms than people living in Belfast.
More than two years ago, an Oireachtas committee published a report on the supermarket and grocery industry which concluded that consumers here were paying 15 per cent more for their shopping. Pricewatch has been carrying out price comparisons including Tesco outlets in the Republic and in Northern Ireland for years, and only very, very occasionally have we managed to find a product selling for less in a Tesco outlet south of the Border.
SOME REPORTS THAT the Tesco price survey had stirred the National Consumer Agency into launching an investigation into overpricing at the store were wide of the mark - a spokeswoman for the NCA told Pricewatch that it was unable to comment on the contents of the survey as it had not been furnished with a copy and had not been given any information about its origins.
She did state that the NCA was in the process of preparing two separate price surveys - one comparing the price of non-branded products across the Irish supermarket sector and another providing a snapshot of the costs of a basket of groceries in a number of jurisdictions across the EU. Both surveys will be available later this year.
When the story appeared last week, Tesco Ireland wearily dusted down its arguments about a significantly higher cost base here. Wages, rents, waste disposal charges and electricity charges were all higher here, they explained. It is a mantra that comes from all stores when quizzed about the discrepancies between prices here and there.
A spokesman told Pricewatch that the price differences between the Republic and the UK were "well established" and said that they were not unique to Tesco. He claimed that the price differences in Tesco were closer to 10 per cent. He pointed out that electricity costs were 20 per cent higher here and starting hourly salaries in the Republic were €9, compared with £5.26 (€7.56) in Britain.
Questions about the higher prices in Irish supermarkets might not arise with such frequency if major supermarket chains were more upfront about their costs and the profits they are making in the Irish market. Lidl, Aldi and Dunnes Stores have what could best be described as a frosty relationship with the press and don't publish their profit figures.
Musgrave, which owns SuperValu and Centra, publishes wholesale accounts, but doesn't provide details of its profits, while Tesco publishes the accounts of its Irish arm in its "international" division, which makes drawing conclusions next to impossible.
More light may be shone on the darkest corners of the supermarket sector in Ireland before Christmas, when a study offering an in-depth analysis of the Irish grocery sector is published by the Competition Authority. The authority has for some time monitored the monthly inflation figures in the grocery sector, but this new approach will look beyond pricing.
It was commissioned by Minister for Enterprise, Trade and Employment Micheál Martin after he abolished the Groceries Order more than a year ago, and it aims to find out who has got the power, who is competing with who and what is driving the prices higher in the Republic. Lengthy questionnaires about business practices have been sent to all the major retailers, and face-to-face interviews with senior executives have been carried out.
ACCORDING TO THE Competition Authority, the analysis will go far deeper than simple price comparisons, and while there will be no recommendations issued, it will give people "a far greater understanding of how the sector works," a spokesman told Pricewatch last week.
The Competition Authority believes there are a lot of misconceptions about the grocery sector. When it comes to pricing, the supermarkets "are always saying that the public don't understand how the market works. We are giving them a chance to explain it," the spokesman said.
Its report is due to be published before Christmas - a time when the supermarket queues are at their longest. It may help to counter the spin of the big supermarkets, once and for all.
