Dunnes Stores beats Musgrave into second place in cut-throat retail sector

DUNNES STORES has beaten Musgrave into second place in the cut-throat multiple retail sector.

But it may have been a Pyrrhic victory as Dunnes may have written off 60m in profits to recover that second slot behind Tesco.

Last year's figures show that the two German low-cost groups Lidl and Aldi have seen their upward march halted.

Having peaked at 5.6% in the summer, it had slumped to 4.9% by year end as the price war attracted more consumers to Tesco and Dunnes.

Year-end figures for market share produced by Taylor Nielsen Sores shows Tesco extending its market reach from 24% to 25.4% during the 12-month period. Dunnes Stores, due to its aggressive pricing policy, saw its stake grow from 22.1% to 22.8%, while Musgrave, owners of the SuperValu and Centra franchises have seen the combined market of the two groups dip from 23% to 21.5%.

However, the real losers were the two German discounters whose presence is seen as a huge threat in the years ahead.

They will not have been cheered by their dip in market share from 5.6% of total retail grocery sales in September to 4.9% by year-end.

Lidl and Aldi have pitched themselves at the low prices no-frill wing of the grocery market.

They are still seen as a huge threat to the established players in the grocery market as price resistance builds up among consumers.

However, further changes are expected as the major players and others battle it out for the hearts and minds of the consumer. It is expected that the battle for market share will stay intense, driven by the rivalry of the key players.

The Musgrave dip in market share is believed to have been as a result of the head-to-head competition between Dunnes and Tesco, which won more customers for both of them.

Market sources said it would be wrong to write off the Lidl and Aldi threat, however.

They entered the Irish scene in the late 1990s and have built up a demonstrable presence.

They plan further store openings this year and will continue to attract support.

Just how intense the battle has become was demonstrated by the Roches Stores' decision to close three SuperValu outlets in their retail department outlets with the loss of 250 jobs. Aldi and Lidl plan store openings in south Dublin this year, so the battle for consumer loyalty will continue.