Competition needs regulation
Fionnuala Carolan highlights the fact that although promotional activity is helping to get more customers through the doors, it is often not helping the retailer's bottom line
19 May 2015 | 0
We are approaching the middle of the year, a year that everyone expected would see real economic recovery and stability. Unemployment has shrunk, wages are increasing in many sectors and we are generally thought to be over the hump. However, just to give us a dose of reality, Ibec released its Retail Monitor report yesterday and the results have shown that while sales volumes have improved by over 5% in the first three months of this year, sales values remain sluggish, finishing just 0.9% ahead of the same period last year. It would appear that shoppers are still extremely price conscious and led by promotional activity. The multiples have been responding to these trends with a dedicated value offering and an increase in couponing activity, which might be getting the customers through the door but is unfortunately not helping the bottom line.
Our cover story this month dissects the competition in the grocery market at present. While it was a major coup for SuperValu to outperform Tesco for the first time last month, the latest figures from Kantar Worldpanel have revealed that Tesco has regained share and the two are back level, both holding exactly 25% of the market. Dunnes is sitting comfortably at 22% and is actually leading the charge in the Dublin market. The strike action taken by Dunnes Stores staff on Holy Thursday seems to have done little to affect the retailer’s fortunes, much to the dismay of those currently boycotting the retailer on behalf of its staff. You would imagine that Margaret Heffernan was smiling smugly when these results came in.
Another important element from this month’s Kantar results is that the growth of the discounters is beginning to slow. While they are still performing very healthily and majorly affecting the antics of the multiples, with Aldi recording growth of 8.8% and Lidl at 7.8%, this is the first time since 2010 that both have recorded growth of less than 10%.Yet this is to be expected as they cannot hope to continue growing at such a level forever because the amount of new store openings has diminished due to their concentration of outlets throughout the country. Although they may seem immune, they too are competing in a tough market and susceptible to losing share to the multiples during certain periods.
On page 14, Dan White writes about the issues at Tesco Ireland after revealing that it had overstated its profits by €88m, a practice we had presumed was unique to the UK market. With these kind of antics being uncovered and the constant battling for the number one spot, the grocery sector is really crying out for some regulation. White asks Minister Bruton to explain why he has not yet signed the long awaited grocery regulations into law and encourages him to do so as soon as possible. It’s time to see some progress on this matter.
On a more cheery note, this issue holds a special supplement documenting the 60th anniversary of the Barry Group. This family run, Cork based business that owns the Costcutter, Carryout and Quik Pick brands has plenty to celebrate having successfully weathered decades of intense competition in the grocery market. It’s great to see this type of business flourish in the face of so much international and indigenous competition. We wish them success for the next 60 years in business and beyond!