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Three major international grocery retailers are now operating in Ireland. All emphasise price and own brands and all are gaining market share. There is also a new price consciousness on the part of the shopper. Margins are being increasingly squeezed. But a ‘price-war’ in Irish grocery will only suit Tesco, Lidl and Aldi. Both retailers and suppliers need to develop strategies which go beyond price. Grocery suppliers feel the effect of change in two ways. They are concerned with the erosion of brand shares. Discounter growth limits the size of the market they can sell into. But more immediately, the effect of the discounters and Tesco's policy has been to create a price ware. How long will this last? Will Dunnes meet the challenge head-on? Is price the only weapon in Irish grocery? After initially targeting Musgrave territory, Lidl and Aldi now look set to tackle Dublin. Here price counts for less, service counts for more, and the ‘continental’ appeal of the discounters may appear unsophisticated. Increasingly, planning barriers are being erected and the campaign to enforce Irish sourcing may start to bite. Lidl has had great success in the old Ireland. The new Ireland will be more difficult. How can manufacturers help other retailers to fight the discounters? In principle they have a common interest. But increasing commercial tension makes common action very difficult. Manufacturers and retailers need to work together to improve merchandising techniques and clarity of offer. Promotions and pack sizes need to be adapted to make a discounter visit unnecessary. Range, service and on-shelf availability need to be improved. What will happen in the future? High perceived inflation and economic downturn are common to the whole Euro zone. Part of the current price pressure comes from the strength of the Euro. This currently gives UK producers a 13% price advantage in Ireland compared with January 2002. Future exchange rates may be more favourable to Irish producers. Meanwhile some Irish suppliers see an opportunity to gain access to a Europe-wide market without fluctuating currency barriers.
Published: October 2003 Price: £ 495, US$ 720, € 695
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Insight Research .:. 2 Severn Street, Welshpool SY21 7AB, United Kingdom |
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