In an era when we were paying through the nose for most goods, the online revolution and discount supermarkets supplied new ways of bargain-hunting
OVER THE past 10 years Irish consumers have consistently been asked to pay more than most other EU residents for food, alcohol, cars, clothes, electronics, dentists, doctors, medicines, restaurants, games, music, cinemas, concerts, fuel, electricity and houses. It is, in fact, difficult to think of a single thing that costs less in the Republic of Ireland than it does elsewhere in Europe.
While prices were high, our capacity for spending was higher. Throughout the noughties, Irish shoppers became world leaders in conspicuous consumption.
Luxury car marques flew off garage forecourts faster than bankers could say “of course we’ll give you the money, sure we know you’re good for it”, orderly queues formed outside Brown Thomas when the poshest of posh handbags went on sale, and increasingly exotic overseas holidays – sometimes several each year – became the norm for many people.
As consumption reached its high-water mark in 2007, annual spending in the Irish economy had increased to about €75 billion, up nearly 1,000 per cent in a generation. The acquisition of more stuff was aided by rising levels of personal debt: Irish household debt, as a percentage of disposable income, stood at 48 per cent in 1995; by the end of this year it will be 176 per cent.
Although prices rose throughout the decade, Irish consumers had the good fortune to be presented with more choice than they ever had, thanks to the almost frightening speed with which the internet transformed the global commercial landscape.
It is hard to imagine it now, but at the beginning of the decade people using the web to book holidays were something of a rare breed. Online travel’s take-off was delayed by frequently repeated stories of tourists turning up in hotel lobbies in far-off countries clutching online confirmation details in sweaty hands only to be met with blank stares and head shakes from receptionists.
Such confusion wasn’t surprising back in 2000, when many airlines had yet to wake up to the possibilities the web offered, and very few hotels had the capacity to take online bookings. In early 2000, Aer Lingus had no website to speak of, while Ryanair’s reservation system was taking its first tentative steps online.
In March of that year, Ryanair was taking £1 million in online bookings a week, and company spokeswoman Ethel Power was quoted in this newspaper as saying she did not believe the internet would replace travel agents or telephone bookings.
In 2000 Irish travel agents saw their business grow by an impressive 17 per cent, prompting the Irish Travel Agents Association to confidently predict that the web would not negatively affect its business at all. No more than five years into the new millennium and their world had changed utterly. As the decade ends, dozens of big-name travel agents whose positions seemed unassailable back then have faded into memory.
While the growth of the online travel industry over the last 10 years may have exceeded the wildest expectations of Michael O’Leary at his most bullish, its success pales in comparison with the wider e-commerce explosion. E-tailers such as Amazon and eBay have grown from garage start-ups to multinational companies worth tens of billions of dollars in little more than 10 years, and now, more often than not, consumers with a keen eye on prices will search for value online before parting with money.
The past decade hasn’t been all about cheaper deals online – it is 10 years since discount giants Lidl and Aldi began their expansion into the Irish market. The Germans initially struggled to make much of an impression on middle-class wallets. While many shoppers popped in occasionally to source cheeses and cured meats and to marvel at the higgledy-piggledy nature of the aisles, as often as not they left bemoaning the absence of recognised brands – typically the stores stock only about 2,000 items, compared with 20,000 in the likes of Tesco.
But as the boom came to a shuddering halt, Aldi and Lidl found favour with people from all walks of life and income brackets who wanted better-value food. A major study published by the National Consumer Agency (NCA) in the middle of last year found that almost a third of shoppers had changed their spending habits in 2008, with some 61 per cent of those switching to Lidl – found to be the cheapest in Ireland.
Many of those people who weren’t shopping in the German discounters were going in search of better value in Sainsbury’s and Asda across the Border.
Over the last half of the decade, as the euro grew stronger against sterling, more and more people started to complain about the price discrepancies that existed between the same products in shops in Northern Ireland and the Republic.
From Argos to Zara, shops stood accused of ripping off their shoppers in the South.
One reason the price gaps between the Republic and elsewhere grew so large was contained within the pages of 2005’s Consumer Strategy Report, which led to the establishment of the NCA. It found that while consumers knew they were being overcharged, they accepted it because they felt nothing could be done to change things.
In summer of the same year, however, there was a subtle but discernable shift in collective thinking. Anger at sky-high prices became more pronounced. The unlikely consumer champion was an accountant from Cork. Eddie Hobbs’s Rip-Off Republic focused on inflated development-land prices, high levels of personal tax, big companies’ profit margins and the Groceries Order.
On his urging, militant shoppers started sending letters of protest as well as nappies – unused – to the minister for enterprise, Micheál Martin, asking him to repeal the Groceries Order, which effectively banned below-cost selling. The order was eventually repealed, but prices did not come tumbling down.
Prices eventually started to fall at the beginning of last year, but it had more to do with the economic collapse coupled with dramatically increased consumer awareness of the benefits of shopping around than anything the authorities had done.
