Shoppers will benefit as Tesco moves to extend cuts

CONSUMERS are set to benefit from a new price war that has broken out among supermarket chains after Tesco announced it is to expand its price cut promotion on a national basis over the next two months.

The British supermarket group has promised to slash prices on 12,500 products at its stores in the Republic by 22% on average as part of its €100m Change for Good campaign.

Shoppers can hope to see up to €50 cut off their weekly grocery bill as a result of the price war between the leading supermarket chains.

Tesco has launched the initiative in response to criticism about the group’s slowness in passing on reductions in euro/sterling exchange levels to consumers, as well as increased competition from discount retailers like Aldi and Lidl.

Other supermarket groups including Dunnes Stores, SuperValu and Superquinn have also launched major price promotions as the battle for market share intensifies.

Tesco claims that 25,000 additional customers are visiting its stores each week since the chain introduced its price cuts to outlets near the border, as it was losing business to thousands of shoppers who were travelling to the North where grocery products were considerably cheaper.

Tesco’s chief executive officer, Tony Keohane, said business was up by 30% on average in stores where the price cuts had taken place.

From today the full range of price cuts will be available in 31 stores, including nine stores on Dublin’s northside. The cuts will be expanded to 29 other outlets in other parts of Dublin over the next fortnight.

Mr Keohane said the same price cuts will be rolled out in remaining stores in the southern part of the country by the end of August.

Tesco claims that €50m which would otherwise have been spent on groceries in the North in 2009 will remain in the Republic as a result of the group’s initiative.

“Without these price reductions, there would be more leakage from the Republic at a time when the country can ill afford it and it is allowing retailers here to win back trade,” said Mr Keohane.

However, Tesco has also admitted that they were forced to increase prices on 200 items in the past month in response to higher charges from suppliers.

Despite widespread criticism that Tesco has stopped stocking a number of Irish-made products as well as giving others less shelf space in favour of British-sourced, own-label goods, Mr Keohane maintained that Tesco was committed as ever to sourcing products from Irish suppliers.

Tesco also confirmed that it is sponsoring Gerry Ryan’s radio show on 2FM for July, while the broadcaster, who recently suffered a large pay cut, is also due to earn a five-figure sum for fronting the Change for Good promotion.