ANALYSIS:Savings of €1 on €300 basket of branded goods hardly backs up agency's traditional call to shop around
THERE IS considerably less to celebrate in this latest food price survey than the 14 per cent drop announced yesterday by the National Consumer Agency.
A fall of this magnitude is in fact last year’s headline, as food prices in the past year have actually remained static. The agency hasn’t published a global figure for the change since its last research in June 2009, but, for Tesco, prices dropped just 0.58 per cent and, for Dunnes Stores, the fall was a minuscule 0.05 per cent – that’s just 5 cent on a basket of goods costing €100.
The only retailer to lower prices significantly over the last year was Superquinn, where they fell 6.15 per cent as they played catch-up with rivals. But if Superquinn, with its historically higher cost base, smaller buying power and inferior distribution channels, can match the prices of Tesco and Dunnes, what does that say about the margins enjoyed by its competitors?
Tesco deserves some credit for driving prices downwards with its Change for Good strategy last year, but exactly how much? The results of earlier research show prices at the UK-owned retailer went up in four surveys before they dropped sharply in the first half of last year. They now stand 7.5 per cent lower than they did since the first survey in December 2007, hardly a dramatic change.
Falls in some prices have masked increases in the cost of many household staples. For example, of 40 products included in the Tesco basket since these surveys started, 19 have fallen in price since December 2007 and 19 have increased.
Bully for you if you buy nappies and baby wipes, which are significantly cheaper, but products which are now dearer on Tesco’s shelves include many well-known brand names – Tayto, Coca Cola, 7Up, Lyons, Barrys, Avonmore, Kerrygold, Batchelors, Domestos and so on. Commodity price increases may account for some rises but it seems strange that Budweiser and Guinness cans cost more now, when VAT and excise has been lowered, than they did over two years ago.
It is remarkable, and perhaps coincidental, that the big retailers stopped dropping prices when the agency stopped surveying these prices, in June 2009.
Once the public glare was removed, did they take their foot off the pedal and do what they like best, tracking the prices of their competitors? As a result, the traditional call by the consumer agency for consumers to shop around seems pointless, at least for brand name goods.
Why waste petrol and shoe soles when there is no difference in price? You can now spend almost €300 on branded goods in Tesco, Dunnes or Superquinn and save no more than €1 by moving from one to another.
There are differences in price for own-label goods, but these have not been included in the latest survey. Some retailers were unhappy at the price comparisons made in previous research, and made their dissatisfaction known to the consumer agency. As a result, it backed off, for now, and consumers are left in the dark.
