Tesco Ireland says shoppers no longer need to go to the North in search of value after it reduced thousands of prices in 11 of its stores near the Border by an average of 22 per cent.
The State’s largest supermarket chain claims that as a result of its price reductions, the price gap with the North now stands at 10 per cent, the lowest since the break with sterling in 1979.
“When currency costs and travel and journey times are taken into account, we believe many customers will find it is cheaper to shop in these stores south of the Border,” Tesco Ireland chief executive Tony Keohane told journalists at the unveiling of the price reductions at the company’s flagship store in Drogheda.
Tesco this morning announced price reductions of up to 45 per cent on 12,500 goods at the 11 stores. Most of the reductions are on international branded products which the company is now sourcing from the UK rather than through local distributors. It says the new prices are long-term structural changes, not promotional prices.
Responding to difficult trading circumstances resulting from the recession and the growth of cross-Border shopping, the company has also cut the price of milk, meat and poultry products in all its Irish stores.
Mr Keohane said the changes would protect the jobs of the company’s 12,500 staff but he admitted that Irish distributors would be squeezed. “People shopping outside the State is doing no good for anyone, while people shopping in the State is good for the economy.”
He said Irish brands would continue to be stocked on Tesco shelves but added that more “international brands” would be available in the 11 stores where prices are being cut.
“Our commitment to our Irish supply base is as strong as ever,” said Mr Keohane, adding: “Buying Irish is important for consumers but value is also important."
The increased competition Irish brands will face was evident in the Drogheda store today, where on many shelves traditionally favoured brands now vie for limited space with brands imported from the UK.
Tesco says it will roll out the price reductions to all its stores “in the near future” but was unable to say when this would happen. It estimates the cost of the changes at €100 million in the coming year.
The stores where prices were reduced today are Bailieborough, Ballinamore, Cavan, Carrick-on-Shannon, Dundalk (two stores), Drogheda (two stores), Letterkenny, Monaghan and Sligo.
Tesco, which has its headquarters in Britain, does not disclose the profits of its Irish operations.