Consumer agency wants new rival for supermarkets

EVEN though grocery prices have fallen by 14% over the last 18 months, the National Consumer Agency (NCA) wants restrictions to be lifted to allow the entry of foreign retailers to increase competition.

NCA research found a 14% drop in the price of branded groceries and items in the last year and a half but concluded shopping around saved buyers only a few euro.

Commenting on the survey results, NCA chief executive Ann Fitzgerald called for planning restrictions on supermarket sizes to be lifted so foreign retailers could enter the Irish market and boost competition.

“This suggests that competitive pricing is still not a feature of the Irish grocery market and to address this there is a real need for a new entrant to the market to offer consumers a real alternative,” she said.

On a basket of 87 common products surveyed between Tesco, Dunnes Stores,Superquinn and two SuperValu stores, the difference between the cheapest and most expensive was just €5.75 or 2.4%.

The cost of the basket was cheapest in Dunnes Stores at €235.95 and most expensive at SuperValu at €241.70.

The margin was even less on a basket of 103 branded goods between Tesco, Dunnes Stores and Superquinn with a difference of only €1.14 or 0.4%.

Items commonly surveyed included bread, nappies, beverages, milk, tea butter, cheese as well as alcohol.

The largest cost gap included a 47% difference between an Easi Singles 10 pack in Tesco (€1.15), Dunnes Stores (€1.15) and Superquinn (€1.69).

Elsewhere, there was a €1.17 gap for a four-pack Kittensoft White Toilet Roll between Dunnes Stores, Superquinn and Tesco.

Around a quarter of brands had identical prices among the four retailers checked, while close to half the cost of goods in the larger basket survey were the same.

Despite the lack of difference between basket costs, overall prices at the largersupermarkets fell by 14% between January 2009 and July 2010.

The research concluded though that the rate of reduction among supermarkets was now slowing and retailers were competing mainly on the basis of special offers and promotions.

But the majority of consumers questioned for the NCA said they wanted long-term lower prices as opposed to short-term special offers.

Ms Fitzgerald admitted yesterday that “the price war was over” among retailers and the best way to encourage competition would be to chop restrictions on supermarket planning sizes.

However, Retail Ireland hit out at suggestions of a lack of competition in the market.

Director Torlach Denihan said: “How can a state agency complain after we have experienced the largest price falls in the eurozone?

“This smacks of an agency struggling to justify its existence.”

Fine Gael’s food spokesman Andrew Doyle claimed that there was a “phoney” price war being waged by supermarkets and that “their pricing structure more closely resembles that of a cartel than a properly competitive market”.

Family-owned grocery stores called the survey “fatally flawed” as it had focused on a select number of items and retailers.

Both Superquinn and Tesco claimed their prices gave consumers value for money. Dunnes Stores and SuperValu made no comment.