Competition Authority report on retail planning slammed

Research from IGD demonstrates that larger format stores dedicate up to 30% of their square footage to non-food
Research from IGD demonstrates that larger format stores dedicate up to 30% of their square footage to non-food

Criticisms mount for report “far removed from the reality of the retail trade”

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13 September 2008 | 0

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The Competition Authority Report on the retail planning guidelines, released Wednesday 10 September, has been strongly criticised by RGDATA, which described a number of the authority’s recommendations as “misinformed and just plain wrong.”

And in a press statement, the Musgrave group stated that while it “looks forward to engaging constructively with Government in the period ahead, [it] has serious concerns regarding the content of the report.” Most notably, it disagreed with “the contention that the current planning regime limits the entrance and expansion of retailers or reduces choice and value for money to the consumer.”

Tara Buckley of RGDATA rejected claims that changing the planning laws would lead to cheaper prices and reminded consumers of similar claims made by the Competition Authority on the Groceries Order.  At the time, the authority claimed this would allow consumers to save an average of €500 a year.

 “Not only have these savings not materialised, but the abolition of the order led to the Government having to introduce emergency legislation to curb low cost alcohol, which was causing public order and health concerns,”said Buckley.

Retail caps essential

The organisation has also rejected the recommendation that the caps on the size of grocery outlets should be removed. It stated that left to their own devices, local authorities “could opt to grant the largest size possible because they are cash strapped and would welcome the development levy and rates gain involved. The key to sustainable development is good planning policy.”

Similarly, the Musgrave group rejected the assertion that the removal of retail caps would facilitate large scale, low cost grocery retailers; providing greater shelf area which would increase competition. “The reality is that larger stores do not provide greater shelf space for food items,” said Musgrave. “Research from IGD, the leading authority on international grocery and retail trends,  items such as books, DVDs, electrical products, toys and household items. This does  not  lead to better choice or lower prices  but  in fact  leads to the  closure of smaller  food and non food stores reducing competition.”

“Nonsensical” claims about discounters

What’s more, RGDATA claimed that some of the Competition Authority’s recommendations were nonsensical, and that in particular, its belief of discrimiation against discounters showed it to be “far removed from the reality of the retail trade.”  The organisation noted that “since the Guidelines have been introduced, the discounters have mushroomed throughout Ireland, with 135 new discount stores built since 2000, creating nearly 200,000 sq metres of retail space.” Buckley believes the guidelines don’t contain any cap on the size of discounters, but merely describe the self imposed size requirement that the discounters place upon themselves. She points out that since 2000, no discount retailer has been refused planning permission on grounds of their proposed store being too big.

Facing a “bleak, banal and dismal landscape”

Buckley said she hoped that the Competition Authority Report would be viewed as an inadequate and flawed analysis of the planning system by a body that demonstrated its lack of competence in this area.

“ Thankfully expert planners in the Department of the Environment and not boffins at the Competition Authority have responsibility for planning in this country. If the Competition Authority had its way we would be faced with a bleak, banal and dismal landscape with big retail sheds throughout the countryside, derelict shops on many main streets and food deserts in rural communities,” she said

Musgrave also reiterated the importance of the Retail Planning Guidelines, which “are critical to the sustainable development and competitive nature of the retail sector as well as to the social infrastructure and fabric of Irish society. To protect communities, the planning system should continue to operate in a way that brings shops to people and not people to shops,” said the group.

 Major Criticisms leveled at report

“The report indicates that between 2001 and 2006 the number of outlets of the vertically integrated retailers (Tesco, Dunnes, SuperQuinn) increased by 65% from 204 to 337 while the number of affiliated retail stores (SuperValu, Centra) increased from 1,549 to 2,569 a 66% increase. Over the same period, grocery retail floorspace of the vertically integrated retailers increased by 102%.  Aldi and Lidl have increased their combined store numbers by 119 effectively opening at least one store per month over the past seven years.”  (Musgrave)

“The report only evaluates part of the grocery market namely the seven largest retailers and takes no account of the choice provided by smaller shops in towns and villages around Ireland, which constitute almost a third of the grocery market.   It also makes no reference to the number of stores within easy access for shoppers, which the Competition Authority in its recent Grocery Monitor Report concluded that, by standards applied in both the UK and beyond, the Irish consumer was very well served.” (Musgrave)

 “Since the Guidelines have been introduced, the discounters have mushroomed  throughout Ireland, with 135 new discount stores built since 2000, creating nearly 200,000 sq metres of retail space.” (RGDATA)

 

 

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