Suppliers blamed for higher Irish prices
In one case Mullingar supermarket owner Jim Marshall stated that a southern wholesaler was charging the equivalent of €2.40 more than a northern counterpart for a powdered milk product made in Limerick.
The committee also heard that the price differential between north and south was increasing.
Musgrave chief executive Chris Martin stated that in November the price differential on 700 products had been just under 20% but was now nearer to 30%.
Retailers offered several reasons for the higher prices, primary the “competitive devaluation of Sterling” which had seen the currency go from being worth about 70c to 95c in recent months.
Domestically developers refusing to reduce “artificially inflated rents” was forcing retailers to maintain high prices.
Retail Excellence Ireland chief executive David Fitzsimmons stated that it was common for rents to be falsely inflated through the paying of secret rebates by landlords to some tenants.
He added that sales had dropped by 14% in December 2008 compared to the previous year meaning “Christmas didn’t come to a lot of retailers”.
The wholesale price differential was resulting in increased numbers of retailers sourcing goods in the North and Britain. According to RGDATA president John Foy in some cases products were sold at cheaper prices in northern supermarkets than they were available from southern wholesalers.
RGDATA also accused multinational chains of “bullying” wholesalers who attempted to sell products cheaper to their members.
This claim was strongly disputed by Tesco Ireland chief executive Tony Keohane. He stated his company’s main focus was on getting the benefits of the sterling differential “to flow to Irish customers”. However, despite repeated requests from the committee, the Tesco delegation refused to disclose the company’s profit margin in Ireland.
Scepticism about the cause of the higher prices came from National Consumer Agency (NCA) chief executive Ann Fitzgerald. She said the issue of higher wholesaler prices had only emerged as a complaint from retailers in the last month.
Ms Fitzgerald said her agency’s research pointed to greater profit margins from southern retail operations. As a whole, in Ireland “we have all paid too much for a long time”, added Ms Fitzgerald.
The NCA warned if retailers did not curtail prices more shoppers would be encouraged North to giant super markets such as the massive Tesco development planned for Banbridge.
However discount retailer Aldi supported the retailer’s position.
Aldi managing director Donald MacKay said that higher VAT, insurance costs, utility bills and a 35% wage difference all made retail more costly in the Republic. While business banking was estimated to cost 10 times what it does in Britain.
Mr Mackay added Aldi profits from their Irish stores were only on a par with the nine other countries the company operated in.
Price comparisons between Ireland and Britain (Irish figures first)
* Cadbury’s chocolate digestive biscuits: €1.47 - €1.18
* Gillette Mac 3 razor pack: €9.88 - €6.87
* SMA Infant Milk Formula Gold: €11.24 - €8.78
* SMA Infant Milk Formula White: €11.24 - €9.24
* Mars Bar: 52c - 39c
* Johnson and Johnson Baby Oil 500ml: €3.13 - €1.85
* Tin Roses chocolates: €9.62 - €6.43
* Chum dog food: 98c - 67c
Wholesales prices supplied by RGDATA representative Jim Marshall
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