As confidence flows back into the economy, competition is hotting up in the €9 billion supermarket sector. It was always intense, especially since Aldi and then Lidl arrived either side of the millennium.
Now that they have a near-quarter share of the market between them, rivalry in the sector is fiercer than ever.
The German discounters are complaining that market incumbents Tesco and SuperValu, as well as RGData lobbyists aligned to SuperValu's Musgrave parent group, are using planning objections to slow their expansion plans.
The southern suburbs of Dublin city are a front line in the supermarket sector’s competition war.
In 2011, Aldi paid €5 million for a shuttered Heiton Buckley builders yard on Castle Street in Bray, Co Wicklow. It submitted an application for a two-storey development on the site just before Christmas, 2014.
At 11.28am on January 30th, 2015, an objection was lodged by four locals employed at the SuperValu outlet directly across the street from the site. The time is stamped on a receipt for the objection fee paid to Wicklow County Council.
The objectors cited the “consequences” a new Aldi would have for the SuperValu and their fears that their hours, and possibly even their jobs, might be cut. They also cited traffic concerns.
At 11.30am, a similar objection was lodged by five more SuperValu staff. Five more objected at 11.31am, and a minute after that, a further five again. All of the objectors used identical letters to outline their concerns.
At 11.33am, a different letter was filed by a SuperValu staff member who said the effect of a new Aldi on his employer would be “severe”. Two minutes later, an objection identical to that one was filed by the store’s union representative.
Four days later, Tesco Ireland, which has a large store at the other end of Bray town centre, filed an objection to the proposed scheme on the basis of the proposed storefront design and the use of that particular site.
On the same day, Musgrave Operating Partners Ireland, owner of the rival Castle Street SuperValu, also objected, again citing the design and site usage.
The council concluded a discount supermarket was an acceptable use of the site, but it rejected the planning application due to traffic concerns and on the basis that the entrance inswing from the street is inappropriate.
Aldi appealed to An Bord Pleanála (ABP), but lost again, the decision arriving one short of the anniversary of its original application. Two years on, the old Heiton Buckley site remains derelict, an oasis of weeds in the heart of the town.
On this occasion, the objectors won and planners agreed with some of their concerns. Yet it is notable that nobody else in Bray objected, apart from Aldi’s commercial rivals and their staff.
The State’s planning laws are notoriously generous in the opportunities afforded to objectors. Is the system, as the discounters allege, being manipulated to stymie them at the expense of growth and jobs in local communities?
Or are the Germans simply encountering some “senior hurling”, realpolitik that is inevitable in one of the most cut-throat corners of the Irish economy?
In the last four years, Aldi’s commercial rivals have objected 35 times to the 33 new store planning applications it has lodged in that time. Almost two-thirds of the schemes eventually went ahead anyway, following delays.
This week, Aldi, which is in the middle of a €100 million expansion plan, accused its rivals of using planning “obstruction” to deny consumers choice and it market share.
Lidl says that it has received 32 objections from its rivals in the same timeframe. Just four of the objections were upheld by ABP. Lidl believes the objections are being used as a delaying tactic by the incumbents.
Both of the German discounters say they maintain a policy of not objecting to any of their rivals’ planning applications.
"But as a rule of thumb, around two-thirds of all of our applications are opposed by our other rivals," said Alan Barry, Lidl Ireland's property director.
“All they are doing is delaying the timeline and the creation of jobs.”
The discounters’ rivals deny using the planning system to take the heat out of Aldi and Lidl’s expansions.
Tesco insists its objections – 16 against Aldi in four years and more than 20 against Lidl – are not systematic and are all on “legitimate planning grounds”. SuperValu says many of its stores that object are independently run and, in any event, there is not a policy across its network to block discounters.
Lobby group RGData, which sometimes objects alongside SuperValu but often goes alone, claims it only wants to see planning guidelines upheld.
The group, which is run by the formidable lobbyist, Tara Buckley, makes no secret of its campaign of objections against new Lidl and Aldi stores, which would invariably be a competitive threat to the interests of its members. Indeed, it showcases its activities each year in the organisation's publications.
In each of the last few years, RGData’s annual has contained page after page detailing its planning objections against the discounters, which it says are aimed at upholding “retail planning guidelines”. It also sends a regular planning e-zine to its members.
"We often submit objections to the stores of the discounters. But this is because the discounters often apply for edge-of-town locations where people cannot walk to, which can be against guidelines," Buckley told The Irish Times.
Yet RGData has also, records show, objected to some discounter developments near town centres and residential areas.
For example, it opposed Aldi’s 2016 application near the main street of Graiguenamanagh, Kilkenny, as well as Lidl’s proposed redevelopment at Blacklion in Greystones, within walking distance of many large housing estates.
Lidl insists that it only submits applications for sites that are already zoned for retail. “That is 100 per cent of the time,” says Barry.
The patchy success rate of RGData appeals to ABP suggests that its objections can often be misplaced. In the last three years, it has lost appeals against Lidl at sites including Mitchelstown, Kanturk, Greystones, Drogheda and Swords. It won only once in that period, against Lidl on the outskirts of Galway.
In the same timeframe, it has lost at ABP against Aldi in sites including, amongst others, Graiguenamanagh (where SuperValu also objected) and Laytown . It has won twice against Aldi in Ardee, and in Athenry.
SuperValu stores or Musgrave have recently objected to discount stores in locations such as Waterford, Bandon, Skibbereen, Killaloe, Newcastle West and Roscrea, all deep in the Munster heartland of the Cork-based Musgrave group.
Its recent battle in picturesque Graiguenamanagh against Aldi was especially emotive. The local SuperValu is independently run by a father and daughter, who separately objected.
The daughter wrote to planners to say 20 families in the town rely on wages from their store, and that she herself has a large mortgage based on her earnings. She mused an Aldi could directly threaten “12-15 jobs” and claimed that “not a single Irish person” is employed in Aldi in Athy.
Almost every member of SuperValu staff separately objected on the grounds of fears for their jobs. Once again, they used identical phraseology in their letters. RGData also objected on the basis Aldi would “counter the retail core of the town”. ABP waved away an appeal to give the store the green light last year.
Meanwhile, Tesco executives often privately complain about the volume of RGData and SuperValu objections to its stores when it was expanding heavily in pre-crash Ireland.
It appears to be applying some of that experience as it faces the threat from the German discounters.
Many of its objections based in the lucrative greater Dublin and Leinster regions where it is strongest, and Aldi and Lidl are most active. It has objected to discounters in 38 locations in recent years including Ardee, Swords, Shankill, Bray and Ballymun.
It also objected to Lidl in Edenderry, where it has a store directly across the road, in part because the view of the proposed discount store was of “little visual interest”.
“Our aim is to ensure that the planning environment considers all retail developments on the same merits,” Tesco told The Irish Times.
A frustrated Lidl wrote to the chair of ABP recently to complain about what it alleges are the blocking tactics of its rivals, but the board responded that appeals are an accepted part of the system.
It is also understood to have informally contacted the Competition and Consumer Protection Commission (CCPC), but was, again, told that there is nothing that can be done.
A 2008 report to the government by the body then known as the Competition Authority (now the CCPC), said the Irish planning system is unusual in Europe because it facilitates third-party appeals by competitors.
“Given that the effect of third party appeals, especially by competitors, is primarily to delay the planning process and therefore raise the cost of entry,” the competition authority said.
“It is recommended that further research be undertaken with a view to limiting grounds for appeals by competitors.”
It appears nothing has been done since.
Battle of Bray
In the meantime, the Battle of Bray continues. This time, it is Lidl’s turn. Last week, it secured local authority approval for a new store on the Boghall Road, over objections from Tesco and Musgrave. It fears one of them will appeal to ABP, delaying the project further.
“I’d start building in six weeks, but if there is an ABP appeal, it could be delayed by a year,” said Barry.
Lidl is also worried about a major development it is planning in Ballymun in north Dublin, which will also include 350 beds of student accommodation. There is only one objector on the planning file – a retail development engineer, based in Blarney in Co Cork, 165 miles away from north Dublin.
That objector did not respond to emails from The Irish Times querying if he was connected in any way with any of Lidl’s rivals.
Lidl currently has 154 stores. Barry says it is committed to reaching 200 stores within “three to five years”. Aldi, too, has vowed to press ahead with its plans.
There are clearly many more planning battles ahead for the discounters.