Low prices set to roll out across country in weeks

SUPERMARKET giant Tesco has slashed prices by as much as 25% to stem an exodus of cross-border shoppers into the North.

Prices were cut yesterday morning on thousands of ranges of household goods and groceries at 11 Tesco outlets in border counties worst affected by the flow of shoppers to mainly Sainsbury’s and Asda in Northern Ireland.

Bosses said they will finalise plans to roll out the price reductions across the rest of the 116 stores in the Republic within the coming weeks – if it's a success.

Key reductions are in the price of milk, meat and poultry. The supermarket says prices have been reduced on these goods by an average of 22% and some by 25%.

It also says the new prices are long-term structural changes and not promotional prices and if the move succeeds in keeping shoppers south of the border, it will be rolled out nationally.

The company claimed the move will narrow the difference in weekly shopping bills between the North and South to its lowest level in three decades.

Food industry leaders and farmers warned it could spark an all-out price war which would further threaten thousands of jobs among suppliers and distributors in the recession-battered Republic.

On Saturday, Tesco shut 11 stores in counties Donegal, Sligo, Leitrim, Cavan, Monaghan and Louth for two days to restock them with directly imported brands, in a new system it says cost €100m to implement.

Announcing the reopening of the stores this morning, Tesco Ireland chief executive Tony Keohane said prices on 12,500 goods were reduced by an average of 22%.

“This substantial investment will enable us to compete in the long term with prices north of the border and will remove the incentive or the need for consumers to travel, which has been bad for jobs, for local economies and the national economy,” he said.

“When currency costs and travel and journey times are taken into account, we believe many customers will find it is cheaper to shop in these stores south of the border.”

Mr Keohane said the new prices were “long-term structural changes” and are not just temporary promotional prices.

Tesco also insisted that Irish products familiar to customers would not be taken off the shelves but would remain alongside a new choice of less familiar and cheaper brands.

Paul Kelly, director of industry representatives Food and Drink Industry Ireland, said the strategy will threaten homegrown Irish brands.

“We think this is a black day for the Irish food industry,” he said.

“We are very concerned at the implications this will have for the availability and range of a lot of well-loved Irish brands.”

Mr Kelly said it was a wake-up call for the Government to cut energy, waste disposal and transport costs as well as wages, which were making Ireland massively uncompetitive, and already threatening 10,000 jobs in the sector.

“It’s very, very unlikely there won’t be some reaction from the other retailers and I think the concern would be, if there is a price war, the biggest losers tend to be suppliers,” he said.

“Whatever happens I don’t think it will be good news for suppliers and jobs in the sector.”

Padraig Walshe, president of the Irish Farmers’ Association, said food producers are being pushed into the frontline of an imminent supermarket war.

Asda welcomed the Tesco move, but insisted shoppers from the Republic will still make significant savings by buying groceries in Northern Ireland.

“This is good news for Irish Republic customers but despite knee-jerk price cuts, we’re confident customers will continue to travel across the border to take advantage of Asda’s prices,” said head of corporate communications Dominic Burch.

Official statistics recently estimated shoppers from the Irish Republic spent between €350m and €550m in the North last year.

“We have retained all the familiar Irish products and brands which have proven popular with customers over the years. We fully expect these levels of support for Irish products to sustain for the future,” Mr Keohane added.

Tesco says that each year the company buys €2 billion worth of Irish food, including €655m worth of Irish food that is exported to Tesco stores outside the Republic.