The Irish grocery market, a vital part of the domestic economy, is now worth an estimated €9 billion. But, as yet, the major supermarket groups do not disclose the profit margin they enjoy on their Irish sales. Their customers, therefore, do not know whether they are paying too much for their shopping, but suspect they are. In a market where five main players compete for business, none of the companies offers a detailed breakdown of its financial performance in Ireland. Tesco, a publicly quoted company, publishes sales figures for Ireland. But the other supermarket groups provide little indication of their turnover and offer no guidance on their profitability. However, the market share that each supermarket group enjoys is known. Tesco with over a quarter, remains the market leader while Aldi and Lidl, the newest arrivals, have rapidly increased their share. And in so doing the German discounters have raised the level of competition in the grocery trade – much to the benefit of consumers in the form of lower prices.
The supermarket groups, unwilling to reveal their profitability, are much keener to emphasise and publicise their contribution to the Irish economy. Tesco, one of the largest employers in the country, with almost 15,000 staff, buys Irish food and drink products worth some €706 million for export to its overseas stores. All the supermarket groups have long favoured a policy of minimal disclosure of their financial operations in Ireland, while insisting they have also fully met all their legal obligations. Their reticence no doubt reflects a common concern of all the supermarket groups: that publishing their Irish profits – and almost certainly revealing higher profit margins than those they enjoy in the British market – would only serve to highlight how much they are profiting at the expense of Irish consumers.
Recent months have seen some significant changes in the Irish grocery market. The decision by Musgrave to rebrand Superquinn’s 24 shops under the SuperValu brand, and that of Marks & Spencer to close four of its Irish stores, indicates a sharp contraction at the premium end of the market. The change reflects the difficult trading conditions experienced in the overall grocery market. Five years of austerity have taken their toll on consumers and despite rising food prices, the grocery market has shown little overall growth. The arrival of Aldi and Lidl – which together account for over 14 per cent of the market – has brought greater competition. One reason for the success of the German budget retailers has been their willingness to take a longer-term view: to accept lower margins on the sale of their products in order to build their market share. They have done so at the expense of their larger rivals, who have shown they are keener to maintain high margins and high profits, at a higher cost to their customers.