Grocery policy must be based on the real story

IRELAND is experiencing a profound economic shock. The apparent gains and progress of recent years are being rolled back. Government, industry and citizen alike struggle with what is a gloomy short-term future.

As we grapple with unpalatable new realities an informed national debate is required. Such a debate must embrace all stakeholders in our economy and focus on our collective future.

It is imperative that business and government combine to find a way forward. Problems must be probed and solutions tested and agreed upon.

At present there is considerable debate on value and price in the retail sector. Consumers are naturally, in these tough times, focused on price, but are also concerned about choice and value, while it would appear that government in the past has been purely fixated on price. Retailers are working to address consumer concerns and prices are being driven down.

In some cases, this is a result of collaborative efforts by suppliers and retailers, while in others it’s by substantive changes to the supply chain. It is vitally important that we have clarity from all participants on these issues. The recent contribution by Food and Drink Industry Ireland (FDII) was profoundly disappointing because such an organisation should be an authoritative and constructive participant in this debate to the benefit of the consumer.

In its recent report, Closing the Gap – FDII Competitive Indicators 2009, it was stated that Ireland has one of the highest levels of grocery concentration in Europe. The market share of the top three retailers was said to be 70.5%.

This figure could only be arrived at by taking a highly selective view of the grocery market which grossly underestimates the share of both independent and convenience store operators.

The Government’s own Competition Authority’s April 2008 grocery monitor report found that in 2006, Tesco, Supervalu and Dunnes Stores had the greatest share of turnover, accounting for approximately half of grocery goods turnover in the state. These figures are supported by the authoritative 2008 IGD report on the Irish grocery industry which indicates that Tesco, Dunnes and SuperValu’s market shares amount to 48%, increasing to 57.5% when Centra is included. This is not an academic point as the degree of retail concentration will play a major role in shaping Government policy for the sector.

Public policy initiatives should be based on accurate information and analysis, widespread consultation, and should not seek to punish an entire industry for the actions of any one player.

I would therefore urge the Government not to rush to action, but to formulate a public policy response to the issues facing the grocery trade based on accurate information, sober analysis and wide consultation. There are few fields where the old adage “act in haste, repent at leisure” is as appropriate as the formulation of public policy.

Chris Martin

CEO

Musgrave Group

Musgrave House

Ballycurreen

Airport Road

Cork