North's market underdeveloped

 

INDUSTRY analysts say the grocery market in the North is seen as underdeveloped and is attractive because of its growth potential and the buying power of customers. The retailing market is considered to be behind the Republic in terms of service and innovation.

In recent times British multiples have begun to focus their attention on the North. Sainsbury has entered the market by developing greenfield sites while Tesco has acquired the Stewarts/Crazy Price chain as part of its acquisition of Power Supermarkets. Speculation regarding yesterday's deal had been rife for months. Retailing in Britain - like the Republic is extremely competitive - and margins on groceries are said to be running at around 6 per cent.

Ireland - both the Republic and the North - is seen as offering good growth potential for the British multiples, but the problem is how to achieve critical mass. British chains who have tried to build their own stores have run into planning delays and objections.

Sainsbury, for example, has had several problems regarding planning applications.

The obvious way to build critical mass is to buy or buy into existing chains. Yesterday's deal will help Safeway establish a strong presence and utilise its own economies of scale as well as introduce its own innovations.

The move will up the ante and will ultimately benefit the customer. Although no major price wars can be anticipated, all operators will offer keen prices as well as specialist services.

Wellworth has announced that 15 of its larger stores and four development sites in Northern Ireland are to be acquired through its new joint venture company with Safeway.

These are its stores at Armagh, Ballyclare, at Shore Road and Westwood in Belfast, Coleraine, Downpatrick, Dundonald, Enniskillen, Kilkeel, Lisburn, Spencer Road in Derry, Newtownards, Omagh, Portadown and Strabane. The four sites are in Bangor, Cookstown, Downpatrick and Dungannon.

In a separate transaction, Fitzwilton has sold the business of 21 other stores to Musgrave. These stores are to be leased initially, with a conditional option for their eventual sale to Musgrave.

The stores involved in the Musgrave deal are those at Antrim, Ballynahinch, Banbridge, at Clifton Road and Main Street in Bangor, Carrydufl, Comber, Cookstown, Dungannon, Enniskillen, Larne, Limavady, Creggan, at Shantallow and Waterloo Place in Derry, Lurgan, Magherafelt, Newry, Market Street in Omagh, High Street in Portadown and Main Street in Strabane.