Madam, — I write on behalf of the retail sector to reject the conclusions of your Editorial (January 15th) about retailers and the euro-sterling exchange rate.
The retail sector is facing the most difficult trading conditions in a generation due to the recession. Retailers are suffering more than anybody because of these trading circumstances. Intense competition between retailers keeps prices to a minimum and numerous new entrants have made the market even more competitive.
The Forfás report you refer to validates what retailers have being saying for several years. It concludes that the cost of running a retail business here is some 25 per cent higher than in the North at an exchange rate of €1=£0.79.
The cost penalty on retailers here has got much worse with the collapse of sterling to £0.90. It is extraordinary that you do not draw the obvious conclusion that retailers here are lumbered with an uncompetitive cost base by comparison with the North, which is where the main competition for retailers is.
It is disingenuous to suggest that the Forfás report is the full picture. As Forfás has stated, its report does not address the 75 per cent–80 per cent of a retailer’s cost base, namely the cost of goods purchased for resale.
All local product has to carry the uncompetitive local cost base and hence is more expensive than similar product in the UK.
Internationally branded product is frequently only available to retailers here at higher prices than in the UK. The unprecedented currency situation in recent months has added to this.
The Forfás report does not point out that the North is part of the UK economy and that retailers there get the economies of scale of operating in a market of over 60 million consumers.
The significance of the much higher excise rates on alcohol here by comparison with the North can not be overstated in stimulating cross-Border trade.
The 6.5 per cent difference between the Irish and UK VAT rates is also a significant factor; proportionately our rate is 43 per cent greater (21.5 per cent versus 15 per cent).
Both Irish and international retailers are major employers in every community, are the key purchasers of Irish product and have been a major source of investment over the last decade.
Retailers are confronted by the same challenges as the rest of the country. Unfortunately your Editorial adds nothing to the debate and merely seeks to scapegoat the retail sector.
The Irish Timesis priced at "€1.80 (incl. VAT)" and "£1.10 Northern Ireland". When the £1.10 sterling price is converted into euro at today's exchange rate, it is €1.23.
Even adding the Irish VAT, it still only comes to €1.40. Perhaps you can explain this 28 per cent price difference between what The Irish Timescosts here and in the North. – Yours, etc,
Madam, – Today in a major chain store in Dundrum Town Centre, I paid €6.66 for a UK monthly magazine with a sterling cover price of £4.10.
This is a major rip-off which cannot be justified. The assistant admitted that they were getting complaints.
I am due to get my free travel pass soon and will then be joining the throngs heading north to avoid this exploitation.
I will also have my £1.10 Irish Times to read on the return journey. – Yours, etc,