Should profitable grocery retailers get State energy supports?

The recent huge increases in energy prices undoubtedly have affected retailers. Even still, it will have surprised many over the weekend to see retailer and wholesaler Musgrave, which had a glorious pandemic, calling for a tailored package of financial help from the State to help retailers cope with the rising costs of electricity and gas.

Ian Allen, managing director of Musgrave’s SuperValu and Centra networks, was quoted on Sunday as calling for “urgent” taxpayer assistance for the independent SME retailers that operate as its franchisees and which buy much of their stock from the Musgrave group.

Allen, according to the Sunday Independent, wants taxpayers to fund “a temporary financial support package for SME food retailers” including an “energy rate cap, the suspension of commercial rates, a capital allowance super-deduction and VAT warehousing”.

Such a package, which was not costed by Musgrave, would require hundreds of millions of euro in taxpayers’ cash. That would be difficult to justify in any circumstance, as pensioners, the unemployed, working families and others also face crippling energy price hikes. The State’s resources have a limit.

The best way to finance a new car

---

French investor pays €28.6m for Dublin and Kilkenny investments

---

Tricky judgments on when to reduce interest rates

---

Wild Duck theatre and pub in Dublin’s Temple Bar seeking €8m

---

But for a sector — grocery retailing — that has just experienced a once-in-a-lifetime bounce due to booming sales during Covid lockdowns, the call for taxpayers to step in to help the sector now seems optimistic on Allen’s part.

Inflation in the sector is running at its highest in 15 years, so many retailers are be passing on input cost increases. They also have the fat of the pandemic to fall back on — retailers in Musgrave’s network had sales of €6.1 billion in 2020, up €700 million on the prior year. Sales would have been buoyant in 2022 also, as more lockdowns kicked in. Musgrave group, meanwhile, grew its profits to €98 million.

Allen called for State assistance for independent SME retailers, and not for the Musgrave group itself. But any taxpayer assistance for the retailers would inevitably strengthen their ability to buy wholesale goods from the group. Much of the cash would flow up through its network.

Musgrave’s concern for its independent retailers is understandable. Given the huge financial bounce it has experienced in the pandemic, perhaps it could put together a package of energy supports itself.