Competition decline - Challenging the chains

A year after the Groceries Order was abolished with the promise this would lead to savings of about €500 per year for every consumer, the predicted savings have turned out to be just another empty political promise.

The problems are compounded by a distinct loss of competition. Our population has been increasing, but the number of shops selling groceries has declined by more than 20% between 2001 and 2006.

Instead of going down — as forecast — prices have increased significantly since the lifting of price controls. Part of the increase is being attributed to a rise in food prices on world markets, but the competition watchdogs are seriously concerned about a decline in actual competition, as the big established supermarkets have been charging similar prices.

Tesco has as much as 20% of the market, while Dunnes Stores and SuperValu have up to 15% each, and Superquinn has about 10%. The Competition Authority concluded after a two-year study that 80% of the independent wholesale grocery trade is in the hands of two giants — BWG Foods and Musgrave’s — which also own retail chains Centra and Spar.

Although the arrival of the German-owned discount chains Aldi and Lidl has been providing real competition in prices, they have only up to 10% of the market. More of this kind of competition is needed to challenge the cosy consensus that has developed in pricing among the more established chains.