TESCO HAS increased prices on hundreds of food items just over a month after they were reduced as part of a heavily-promoted price-cutting campaign in some stores.
The country’s biggest retailer confirmed yesterday it had increased prices on about 200 lines in its “change for good” stores, which stock large numbers of products directly imported from the UK rather than sourced from Irish suppliers.
However, it pointed out that some 300 items had fallen further in price since the new store layouts, or planograms, were introduced in stores near the Border and then Connacht.
Of 50 products reduced in price for the "change for good" strategy in early May, six had risen again to the previous level while five had been reduced further, according to a price survey by The Irish Timesin Tesco's Drogheda store earlier this month ( see panel).
At the time of the revamp in early May, the retailer said the new prices were long-term structural changes, not promotional prices, aimed at stemming the flow of shoppers across the Border. It stated in newspaper advertisements that prices had been reduced “for good”.
A spokesman said most of the changes were necessitated by increases in supplier prices, but there were also some errors in which prices were either under- or over-stated, as well as “adjustments” to take account of local competition in some stores.
Tesco’s strategy has provoked a price war among retailers with most of the main players dropping their prices, especially on international brands, to retain market share. However, suppliers have complained that the space allocated to Irish brands and produce has reduced significantly, leading to job losses.
The multiple is due to announce a further rolling out of the “change for good” stores to other parts of the country today. The price cuts will be extended to another nine stores: Artane, Ashbourne, Balbriggan, Blanchardstown, Clarehall, Clearwater, Prussia St, Santry, Jervis St and Parnell St.
Last week, leading economist Jim Power claimed more than 100,000 jobs would be lost in the Irish food industry over the next two years if other big retailers follow Tesco’s example of sourcing products directly from the UK. Labour TD Ruairí Quinn said the “Tesco-isation” of the Irish food sector was having a serious effect on local suppliers.
However, the company says prices have fallen by an average of 15 per cent for a typical basket of food items. It says that virtually no Irish suppliers have been dropped and Irish products have been dropped only when poor sales would justify such a move.
Last week, SuperValu became the latest retailer to enter the retail price war by announcing €86 million worth of price cuts in its stores. The chain claimed this would cut the price of an average weekly trolley of goods by 23 per cent.