TESCO HAS changed the layout of nine more of its stores around the country to give more space to UK brands but hasn’t yet passed on widespread savings to consumers in the form of lower prices.
New planograms, or shop layouts, have been put in place in Tesco branches in Wexford, Carlow, Galway, Douglas in Cork and five other stores in Connacht, The Irish Timesunderstands.
The new layouts follow the approach taken in 11 of the multiple’s stores near the Border, where thousands of prices were dropped earlier this month as part of a marketing plan to stem the flow of shoppers going North and win market share from competitors. However, it is expected that Tesco will wait until next month before rolling out the price reduction strategy to its other stores.
Many familiar Irish brands will no longer be stocked under the new planogram adopted by Tesco, while others will enjoy less shelf space than before. The retailing giant is using the savings made by sourcing product directly from the UK, bought using the strong euro, to fund a “war chest” for promotional activity.
Supplies of one of the country’s leading brands, Barry’s tea, ran out in the Douglas stores two hours after the new planogram was adopted, according to trade sources. The store is located just 10 minutes’ drive from the family tea firm’s headquarters in Cork.
It is understood the company initially refused to restock the Douglas store with tea, in protest at the reduced visibility of its product, but relented. Tesco declined to comment on the new planograms apart from saying: “We have received excellent customer response to our Border initiative and as stated at the time of the launch it is our intention to bring new lower prices to Tesco customers across Ireland.”
The company has been demanding cost price cuts of 20 per cent from many of its Irish suppliers in return for a continued presence in its stores. Suppliers that refuse to reduce their prices have been threatened with delisting, or a removal of their product from the shelves.
The new approach is being driven by commercial director Jacqueline O’Neill, who was drafted in from the multiple’s UK headquarters last year to take up a leading role in Tesco Ireland. Earlier this year, Ms O’Neill introduced euro-sterling price parity on clothing products and is now extending the price-cutting strategy to food products.
Barry’s ranges of speciality teas are among the Irish products that have been delisted by Tesco. The company declined to comment on the matter when contacted yesterday. Meanwhile, independent retailers’ group RGdata has called on the Oireachtas Committee on Enterprise and Employment to reopen its investigation into the retail trade.
Last February, Tesco representatives appeared to tell the committee the company’s profits in the Republic were in line with margins in the rest of the company. It has since emerged that Tesco Ireland’s profits are at least 50 per cent higher than in other parts of the company.