Thursday 21 November 2019

How Irish shoppers could benefit from multi-million euro price war among UK retailers

Plummeting pound will spark retail war - but homegrown shops struggle

Tesco says it has reduced retail prices by 4.6pc since June. Stock picture
Tesco says it has reduced retail prices by 4.6pc since June. Stock picture

Ralph Riegel

Irish shoppers are set to benefit from a multi-million euro price war as UK retail giants, boosted by weak sterling, fight to regain lost market share in Ireland.

If sterling reaches parity with the euro, UK-based retailers will effectively secure a 25pc price advantage.

But there are growing concerns that consumers will still head North or online to secure savings from the plummeting pound.

Major UK-based retailers are slashing prices in Irish outlets as their margins have been boosted by the falling value of sterling.

Other UK retailers including Marks & Spencer, Carphone Warehouse, PC World and dozens of boutique outlets will be under pressure to pass sterling export savings on to customers here.

With experts predicting that the euro and sterling will reach parity within months, giant UK retailers are now determined to win back sales from German rivals such as Lidl and Aldi.

UK retail giant Tesco confirmed it has already slashed its average retail prices by 4.6pc since June.

Tesco said it was clear sterling was having an effect on the Irish retail landscape.

"Managing currency fluctuations is something that is a constant factor and the ongoing weakness in sterling clearly impacts businesses," a spokesperson said.

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"The latest Kantar data shows we have reduced our average selling price by 4.6pc in the last 12 weeks, far more than any other retailer."

Marks & Spencer confirmed it was also focused on competitive pricing.

"We work hard to ensure we offer our customers in Ireland great quality products that are competitively priced," a spokesperson said.

"Like any business, we have to take into consideration a number of factors specific to the Irish market when setting our prices, such as higher employment, rental and operational costs."

But Irish retail groups warned the Government that hard-hit local traders must be helped in remaining competitive if Ireland is to further avoid a flood of trade across the Border.

Retail Ireland director Tom Burke said Ireland faces huge retail challenges.

"It is a very, very good time to be an Irish shopper," he said.

"But it is a very, very challenging time to be an Irish retailer."

Mr Burke pointed out that Irish retail prices are now effectively back at 2008 levels.

Traders are now struggling to cope with reduced margins and a higher cost base due to commercial rates increases, wage demands and higher utility charges.

Retail Excellence Ireland (REI) executive Lorraine Higgins warned that Irish retailers are hurting.

"Retail has been adversely impacted for some time as a consequence of Brexit, which saw sterling devalue consistently since then," she said.

Currency volatility means yet more pain for Irish exporters - and mounting problems for the Irish car industry.

New-car registrations for last month were down 21pc to 5,754 and are trailing year-to-date by 10pc (124,711).

However, car imports, the majority from the UK, are up 40pc (62,161) so far in 2017 and are hitting both second-hand car prices and new vehicle sales.

Irish Independent

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