SUPERMARKET BOSSES may be recalled before an Oireachtas inquiry following revelations about high profit margins in the grocery sector.
Willie Penrose, chairman of the Oireachtas Committee on Enterprise and Employment, said yesterday the group would revisit its early inquiries into retail margins in the light of fresh information about the profits made by market leader Tesco.
Earlier this week, The Irish Times revealed that Tesco makes profits of about €250 million in the Republic, with margins significantly higher than elsewhere in the group.
Mr Penrose expressed his deep concern about the “significant differential” between the company’s profits in Ireland and elsewhere. He said that on the face of it, the figures seemed to be at variance with the information given to the committee at a hearing last February.
He also expressed concern that Irish suppliers were losing out on space on Tesco shelves to overseas rivals as a result of the multiple’s new price-cutting strategy of importing more brands directly from the UK.
“We’re absolutely delighted that prices are going down, but there is a balance to be struck. We can’t lose sight of the importance of the food sector here at home,” he said.
In February, the committee held a two-day investigation into the retail sector, attended by representatives of all the main supermarket chains. Aside from some small independent grocers, none would disclose their profit margins in Ireland.
Tesco representatives told the committee the company’s group returns in Ireland were lower than those in Northern Ireland or in the United Kingdom.
In 2004, company representatives told the Oireachtas committee on enterprise and small business that profit margins in the Republic were lower than in the UK.
Siptu has expressed grave concern at Tesco’s announcement that 140 jobs are to go at its Irish headquarters in Dún Laoghaire. It said the company’s plans to boost profits by transferring jobs overseas and by sourcing product abroad was threatening the viability of many of its Irish suppliers.
“We are concerned that if Tesco rolls out this strategy on a nationwide basis it would have a devastating effect on jobs in companies that supply Tesco,” said Siptu’s national industrial secretary Gerry McCormack.
Meanwhile, German discounter Aldi has joined the grocery price war with reductions on over one-quarter of its range being introduced from today.
Aldi said the price reductions were long-term and available in all its 67 stores throughout the country.
Food and non-alcoholic drink prices fell 1.1 per cent last month, according to the latest CSO figures released yesterday. The latest round of price cutting is likely to see even greater food deflation in coming months.
Last week, the State’s biggest supermarket chain, Tesco, cut prices at 11 of its stores in Border areas by almost 10 per cent and said it would roll out the price reduction in the rest of its network in the near future. The price cuts are part of a strategy to stem the flow of cross-Border shopping and are funded through the sourcing of cheaper product from the UK.
Other chains, including Lidl, SuperValu and now Aldi, have responded with their own price cuts. No announcement has been made by Dunnes Stores or Superquinn, although both have advertised a limited number of price reductions.