An unrivalled exercise in everyone passing the buck

ANALYSIS: Retailers’ explanations on price differences do not hold water, says consumer agency chief

ANALYSIS:Retailers' explanations on price differences do not hold water, says consumer agency chief

WHY DO groceries and other basic items cost so much here? What can we do to improve competitiveness in the retail sector and provide better value for consumers?

For the past two days, TDs on the Oireachtas Committee on Enterprise, Trade and Employment have been wrestling with these fundamental questions. With 60,000 jobs expected to go in the sector this year and shoppers travelling in droves to shop in the North, they, and the Government, need answers soon.

Yesterday didn’t help. Retailers, suppliers, producers and consumers all trooped in to give their spiel, and, as an exercise in finger-pointing, it was unrivalled.

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Retailers blamed suppliers and commercial landlords, suppliers blamed retailers, a few blamed the Brits for deflating their currency and everyone blamed the cost of doing business here.

Retailers told of their fear of being delisted by suppliers, and suppliers claimed they were worried about being delisted by retailers for speaking their mind.

Tesco painted itself as little ‘ole Tesco Ireland, smaller than Dunnes and Musgraves and dwarfed by its giant suppliers – not the Irish arm of the world’s fourth largest retailer with annual profits of over €2 billion.

Neither Tesco nor Aldi wanted to talk about their profits, and few were willing to say how much of the massive price differential between here and the North was due to currency fluctuations, supplier costs, business costs or other factors.

Committee chairman Willie Penrose welcomed National Consumer Agency (NCA) chief executive Ann Fitzgerald and told her his committee had been talking to those involved for the past two days. She said she had been talking to retailers for the past year and was none the wiser.

As far as Fitzgerald was concerned, none of the explanations received – many of them trotted out again yesterday – held water at this stage. Nine months on from the NCA survey which showed a 31 per cent difference in grocery prices on branded goods on either side of the Border, that margin is now probably up to 40 per cent or even more.

The effects of hedging, or advance purchasing, would have worked their way out of the system by now. Meanwhile, a Forfás study showed that only 5 to 6 per cent of the price differential could be explained by the extra business costs incurred in the Republic.

Individual retailers produced some alarming figures about the mark-ups they face when purchasing from Irish wholesalers, relative to UK prices – up to 220 per cent in one case. Yet this issue doesn’t arise in relation to Irish goods, and the IFA was able to show that farmer producers get just a fraction of the value of the meat and vegetables they sell to the big retailers.

With so many fingers now pointing at the multinational suppliers behind the big brands we buy every day, the committee has taken up the suggestion of Tesco and the NCA to invite some of these suppliers to appear shortly. However, it is clear it will take a lot more research and investigation to get to the bottom of the great Irish rip-off on retail prices. Tánaiste please note.

Paul Cullen

Paul Cullen

Paul Cullen is Health Editor of The Irish Times