SHOPPERS NO longer need to go to the North in search of value, Tesco Ireland has declared, following its move to reduce thousands of prices in 11 of its stores near the Border.
The State’s largest supermarket chain claims the average price reduction involved is 22 per cent and that as a result, 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 yesterday at the unveiling of the price reductions at the company’s Extra store in Drogheda.
The move means consumers on the island of Ireland will pay more for their groceries the farther south they live.
The company claims 12,500 prices are being reduced across the 11 stores, in some cases by 45 per cent and more. 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, the weakness of sterling 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. Irish products currently account for 40 per cent of sales.
“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 yesterday, where on many shelves traditionally favoured brands now vie for limited space with brands imported from the UK.
The market-leading Roma brand of pasta, for example, occupied one shelf, while a rival imported from Italy occupied four shelves and was selling for half price.
The store also stocked some Barry’s Tea products, but most of the space in the tea section was taken up by imported rivals.
Tesco said it would roll out the price reductions to all its 116 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 are Bailieborough, Ballinamore, Cavan, Carrick-on-Shannon, Dundalk (two stores), Drogheda (two stores), Letterkenny, Monaghan and Sligo. All 11 stores were closed for the weekend for restocking with directly-imported brands.
Tesco, which is headquartered in the UK, does not disclose the profits of its Irish operations.
Shoppers from the Republic spend up to €500 million a year on household items in the North.
