German discounters the big winners in mostly dismal 2013 for Irish retailers
There are signs that retailing is emerging from the doldrums
In the €9 billion grocery trade, the two big stories of 2013 were the alarming fall-off in Tesco’s Irish sales, and the relentless onwards march of the German discounters Aldi and Lidl. Photograph: Aidan Crawley
The retail sector was the laggard of the Irish economy in 2013. Consumer sentiment may have risen to a five-year high on the back of the nascent economic uptick, but it didn’t translate into a stampede of shoppers rushing back to the tills.
The first half of 2013 provided retailers with little or no solace from the misery of the past few years – consumer spending kept its now familiar downwards trajectory, dipping 1.2 per cent by June as the sector bumped along the bottom.
There were clear signs of life in the second half of the year, however. Retail sales rose 4 per cent in the third quarter. Imports also rose 6.8 per cent in the latest CSO data, indicating that shoppers are buying more consumer goods. Consumer spending should rise about 0.4 per cent over the year, it is predicted.
In the €9 billion grocery trade, the two big stories of 2013 were the alarming fall-off in Tesco’s Irish sales, and the relentless onwards march of the German discounters Aldi and Lidl. Competition in the trade – always intense – has descended into a war of attrition with pricing as the main weapon.
As 2013 drew to a close, Tesco was in a real pickle in this country. In February it reported Irish sales of €3.15 billion (including non-grocery, such as petrol), but its performance has gone downhill since.
By the third quarter, Tesco’s sales had slipped by 8.1 per cent, according to its latest trading update. Kantar Worldpanel estimates its market share is now at 26.5 per cent, down from a Q3 2012 peak of 29 per cent.
In an attempt to staunch the flow, earlier this year Tesco introduced its ‘price promise’ to match or beat prices from Aldi and Lidl, or refund the difference of up to €10 with a customer’s next Tesco shop.
The move sparked a ferocious response from Tesco’s rivals, especially Dunnes Stores. It reversed a negative trend in its market share with a massive voucher scheme, posting money-off coupons to its loyal customers and boosting its market share to 23.6 per cent.
Aldi increased its market share by 20 per cent during the year, and now holds fourth spot with 7.4 per cent of the market. Lidl’s growth rate, while still impressive, is only about half that of Aldi – Lidl’s slice of the grocery market grew at a rate of 8 per cent during the year to a November share of 6.9 per cent.