Looks liike the groceries order is gone.

MrPudding

Heard on the radio that it will be announced later today that after 18 years the grocery order will be abolished.

Personnally I am not sure this is a good idea. At first glance it seems good but apparently it isn't. Heard a guy on the radio at the time when there was all the talk about Ikea. His main hobby is stopping Walmart and other large chains setting uo in town in America. It was his opinion that we would be mad to get rid of it. Christ, even St Vincent de Paul asked the gov to keep it.

Thoughts?

MrP

MrPudding

I think the main concern is that large retailers will force smaller retailers to close by selling items at prices they cannot compete with, eventually forcing them out of business. This leaves them able to increae prices as they see fit. Apparently this is a common tactic with Walmart.

The thing I alway found interesting was that the restrictions only covered a limited list of things. If the retailers wanted to give us a good deal could they not sell other items not on the list below cost.

I also heard someone from the competition authority saying it would not be a good idea to abolish it.

Who did the government listen to when making this decision?

MrP

Culchie

MrPudding wrote:

Who did the government listen to when making this decision?

MrP

The PD's and Eddie Hobbs.:rolleyes:

It's a bad day for Irish Consumers, farmers and small shops out of business in the next 5 years.
Food may be cheaper in the short term, but when competition is gone, it will increase as in UK.
Traceability of food gone, support for local businesses (and jobs) gone. Main point of social fabric....gone.

simu

Culchie wrote:

Traceability of food gone,

Why do you say that? In my experience, it's easier to find out where meat etc came from in supermarkets than small shops.

jrey1981

Culchie wrote:

The PD's and Eddie Hobbs.:rolleyes:

It's a bad day for Irish Consumers, farmers and small shops out of business in the next 5 years.
Food may be cheaper in the short term, but when competition is gone, it will increase as in UK.
Traceability of food gone, support for local businesses (and jobs) gone. Main point of social fabric....gone.

It would have made more sense just to adapt the groceries order instead of abolishing it...you can be sure the supermarkets were lobbying hard for abolition.

The point is that supermarkets can get huge discounts and benefit from economies of scale...they can afford to make a loss if necessary for a period of time to generate business...a smaller business cannot...

The ability to make modest profits is being taken away from smaller businesses and the ability to make huge profits is given to larger ones

Micheal Martin was not very convincing and would not put a figure on possible savings...

Sarsfield

There's no denying this is a result of a populist Government responding to a gullible TV audience and a manipulative Eddie Hobbs.

However I'm not as pessimistic as others. The small local shops are mostly owned by Musgraves and other franchise organisations and they have lots of buying power too.

But I do think it will be necessary to beef up general competition law to prevent predatory pricing. However, maintaining competition shouldn't automatically mean banning loss leaders in key grocery items. The groceries order was a bit of a blunt (and ineffective?) instrument in terms of protecting competition and the small retailer.

I sincerely hope the press and Eddie Hobbs keep a close eye on developments and come down as hard on the supermarkets as they did on the Government if the abolition of the groceries order does not have the promised effect. And quickly.

Cabaal

Sarsfield wrote:

There's no denying this is a result of a populist Government responding to a gullible TV audience and a manipulative Eddie Hobbs.

Thats fine and all but not all are and not all want to be, this spells the end for such business.
I'm just happy my parents sold up shop and retired back in 2001, I guess we'll no longer see small family business last 75 years anymore

Sarsfield

Cabaal wrote:

Thats fine and all but not all are and not all want to be, this spells the end for such business.
I'm just happy my parents sold up shop and retired back in 2001, I guess we'll no longer see small family business last 75 years anymore

If the small family business can fill a gap, serve a niche market etc then they can survive. They can't (and never could) compete on price alone. Convenience, service, product mix (local produce, home made produce etc)are all options to compete against the multiples. I know it's not that simple, but it's not all lost.

Or to put another argument, if there is nothing that the small family grocer can compete on, then why should they be helped survive?

Tazz T

At worst small convenience stores will have to adapt their product lines. As I've said before convenience stores are a completely different marketing proposition from supermarkets. If run correctly, they will survive and prosper.

Take one example, Murphy's in Baggot Street. There's a Tesco's literally across the street. Murphy's is always crowded and must be one of the most successful businesses in Dublin, despite having prices well in excess of those n Tesco's. The Grocery Order will make no difference whatsoever to their business.

Anyway, we have to wait to see if any actual price reductions result from this. The big supermarkets will be reluctant to start cutting their profit margins. I think there will a small gradual cut in prices combined with a couple of special deals, 2 for 1s, etc. Although the anti-competitive legislations that's being strengthened with the abolition of the groceries order will lessen the effect of this on small businesses.

Eoin

Sarsfield wrote:

There's no denying this is a result of a populist Government responding to a gullible TV audience and a manipulative Eddie Hobbs.

No denying whatsoever

Sarsfield wrote:

However I'm not as pessimistic as others. The small local shops are mostly owned by Musgraves and other franchise organisations and they have lots of buying power too.

Is a franchise not run by an individual who actually takes all the risk?

I have quite mixed views about this. I can't see it actually affecting convenience stores all that much because they are already more expensive than supermarkets, yet people still go there.

A huge amount of "Money rich, Time poor" professional people in their 20's and 30's can not be àrsed to take the extra 20/30 minutes to do some basic grocery shopping in the supermarket, they are much happier to go around the corner and get the basics there. I can't see this changing.

Why I am unsure about it being a good thing is because:
1) As mentioned, St Vincent de Paul want to keep it. I can't find any references to this on their site, and I would love to know why they have taken this stance. Another Irish charity (can't remember which one) are also in favour of it.

2) Eddie Hobbs recommended it. So far he has been caught out (misleading or just plain wrong) on numerous occasions, but when someone says this, it is a "smear" campaign.

3) Why are the supermarkets in favour of getting rid of it? They are not charities, and they know they are in for a lot more money somehow. Maybe this will only be the money they make from people buying basic products there instead of in the local shop, but I don't believe this.

I think they will make more money by raising the price of 90% of their products, as the average consumer only knows the value of 10% of their shopping basket. This means that prices can rise on most products, and the average consumer won't readily realise this.

Tazz T

I don't understand why St Vincent De Paul want to keep it either, as it is low income individuals that will benefit. People in the higher income brackets don't even look at the price of a pint of milk when they go to the supermarket or corner shop. Whereas if you know you've a fiver to last you until the end of the week, then ten cent off a pint of milk or 20c off a loaf of bread is going to make a big difference. it gives them better budgeting power.

Regarding the UK there just as many if not more cornershops and off licences doing business there, as there is here, without a grocery order.

Eoin

Tazz T wrote:

I don't understand why St Vincent De Paul want to keep it either, as it is low income individuals that will benefit. People in the higher income brackets don't even look at the price of a pint of milk when they go to the supermarket or corner shop. Whereas if you know you've a fiver to last you until the end of the week, then ten cent off a pint of milk or 20c off a loaf of bread is going to make a big difference. it gives them better budgeting powr.

That was my thinking as well. Someone in a previous thread made the point that they could be worried about competition to their shops, i.e. if Tescos can sell clothes seriously cheap, it may reduce traffic through their own charity shops.

The only reason I could think of was that if convenience stores close down due to competition, low income people will have to travel further to get their groceries. But that doesn't really make sense, as the market would then dictate that a convenience store could open in the area.

By the way, Spain also has a ban on below cost selling. One huge difference between Spain and Ireland is that their minimum wage is several euros less than ours, but of course Eddie Hobbs didn't recommend lowering ours as he would have lost his popularity.

mike65

I was half listening to someone from St Vincent de Paul and they were apparently worried that the corner shop would go bust leaving the poor isolated (cos they have no cars) and having to spend money on buses, cabs etc to reach the nearest Super Dooper Shop-U-Like Mall, nonsense if you ask me. If there's a market someone will serve it.

Mike.

Eoin

mike65 wrote:

I was half listening to someone from St Vincent de Paul and they were apparently worried that the corner shop would go bust leaving the poor isolated (cos they have no cars) and having to spend money on buses, cabs etc to reach the nearest Super Dooper Shop-U-Like Mall, nonsense if you ask me. If there's a market someone will serve it.

Mike.

Seems like a strange viewpoint for them to take. It certainly wouldn't be the default view I would expect them to take given that the common perception is that grocery prices are going to drop, so I am wondering if they taking other factors into consideration.

beer enigma

jrey1981 wrote:

It would have made more sense just to adapt the groceries order instead of abolishing it...you can be sure the supermarkets were lobbying hard for abolition.

The point is that supermarkets can get huge discounts and benefit from economies of scale...they can afford to make a loss if necessary for a period of time to generate business...a smaller business cannot...

The ability to make modest profits is being taken away from smaller businesses and the ability to make huge profits is given to larger ones

Micheal Martin was not very convincing and would not put a figure on possible savings...

Talking from a franchise shopkeepers point of view....good riddance to it !

We can never complete fully with the multiples, primarily because of the range that they can carry. Where we can complete is local convenience and quality of service, the groceries order prohibited us from offerieng 'specials' that would get new customers through the door.

The point is that supermarkets can get huge discounts and benefit from economies of scale.

True....but the groceries order prohibits the selling of goods below the wholesale price.....the wholesale price achieved by the multiples is often far lower than ours & therethore the groceries order stopped us matching the multiples even if we wanted to.

An average franchise store can achieve a net margin of roughly 22% if run correctly....the abolition of the groceries order now allows me to run 'loss leaders' to try to encourage new customers. I'd see the baby market as a prime candidate for this. Imagine if I ran a 33% off babyfood sale in conjunction with an offer on nappies, i.e buy one & get 33% off the other...I'd still make money & probably be thronged with new customers who may just go away saying ' that was a nice shopping experience'

I've no complaints about the groceries order going away..............

el Bastardo

Any fresh food I buy comes straight from a loca retailer. The supermarkets fruit/veg/meat etc is tastleless. So, I'll second the product mix theory. Then again, I'm probably not representatiive of the irish population.

dudara

i do my main shopping in Tesco, or the like, and always will, because of the range of products stocked and prices.

However, when I'm stuck for bread, eggs, milk, newspapers of a morning, where will I go? To my local Centra or small shop. There is a market for convenience stores.

Plus Martin also said that they are going to strengthen the competition act to compensate for the loss of the Groceries Order.

deisemum

I don't think the local convenience stores will suffer too much because most people use them for convenience.
I remember a report from a couple of months ago that stated that 30% approx of food ends up being thrown out. I can well believe it as I know I'm guilty of throwing out food, either left overs or something fresh that didn't get used before the use by date.
I've started doing more and more shopping in a family supermarket (bigger than Centra) and using local Tesco a lot less. This family supermarket stocks much better quality food that actually tastes as food should. My children wouldn't know which supermarket that I bought particular food in but they've also noticed the better flavour. It actually works out cheaper because I'm not tempted as much as I'm tempted in Tesco to buy stuff I hadn't planned on. Having watched Trevor McDonald's report recently on how far the big supermarkets go to, to induce people to buy more than they plan on is eye opening. I also find that this particular independent family supermarket provide a better service and are a lot more friendly with a community feel to it.
I find the big supermarkets are dreadful for long queues at the checkouts and they seem to be getting worse so I'd pay more at a local shop just to avoid the queues especially.
As long as the smaller local stores provide a convenient service they will stay in business

Eoin

deisemum wrote:

Having watched Trevor McDonald's report recently on how far the big supermarkets go to, to induce people to buy more than they plan on is eye opening.

Any highlights?

MrPudding

Tazz T wrote:

I don't understand why St Vincent De Paul want to keep it either, as it is low income individuals that will benefit. People in the higher income brackets don't even look at the price of a pint of milk when they go to the supermarket or corner shop. Whereas if you know you've a fiver to last you until the end of the week, then ten cent off a pint of milk or 20c off a loaf of bread is going to make a big difference. it gives them better budgeting power.

Regarding the UK there just as many if not more cornershops and off licences doing business there, as there is here, without a grocery order.

The main issue seems to be what it *could* lead to. In the UK there are, apparently, many towns and villages that have no shops at all. THe local shops were put out of business my the large chains.

Now, imagine you are someone with a very low income in a small village. The local shop may not be the best option for you to do you shopping but it could easily be the only one. People with the means will travel to the next big town to go to tescos. This kills the local shop's business forcing them to close. I presume it is this kind of thing that SVP are worried about happening here.

MrP

Eoin

MrPudding wrote:

The main issue seems to be what it *could* lead to. In the UK there are, apparently, many towns and villages that have no shops at all. THe local shops were put out of business my the large chains.

Now, imagine you are someone with a very low income in a small village. The local shop may not be the best option for you to do you shopping but it could easily be the only one. People with the means will travel to the next big town to go to tescos. This kills the local shop's business forcing them to close. I presume it is this kind of thing that SVP are worried about happening here.

MrP

But then surely the market would dictate that a shop could survive in that town?

MrPudding

eoin_s wrote:

But then surely the market would dictate that a shop could survive in that town?

No, not nessecarily. I suppose it depend on the demographics of the town. If poorer people without independent means of transport made up the bulk of the population then yes, I would expect the shop would survive. There would be a kind of captive market. But if the majority of the population had the means and were willing to travel to make savings what is left might not be enough to sustain the local shops.

Of course the arguement is the small shops charge more and so the poorer people would have the most to gain from going to the large chains. But the fact is it would not be fun trying to get to a tesco 20 miles away with your baby using a bus service that has 2 buses each way each day.

This is what is happening at the moment in the UK. Think of all the villages here with little or no public transport. If the same thing happens here it could prove very difficult for our older people and others with low incomes.

Don't get me wrong here. I love a bargain. I shop very little in the small shops. I learned a long time ago, when I was on the dole, the advantage of shopping in tesco and the likes. But for some it is the only option they have.

MrP

Solair

Irish convenience stores are extremely well developed compared to their UK counterparts and this isn't exclusively thanks to the groceries order. It's down to the fact that they've turned themselves into real convenience stores with good delis and takeaway foods. For the most part, at least in England, the typical cornershop is a dingy and just sells groceries at vastly inflated prices offering nothing unique / different.

It's not the 1970s or early 80s and I really don't think there's any question of our local convenience stores dieing off. Nor is there any risk of our supermarkets going into a pricewar that leads to some sort of a melt down of the industry, which was feared in the 1980s.

The groceries order was put in place to satisfy the small retail (RGDATA), farming (IFA) and quite possible to protect the major irish supermarket chains of the day. The size limit that it placed on stores prevented the entrance of any of the major UK or European multiples. It was never meant to protect the consumer - that's for sure.

The biggest problem in Irish retail is the lack of competition. I'd very much welcome the entrance of another large retailer to take on the current little cozy cartel. Aldi and Lidl will never do it as they're far too cheap and nasty to be mainstream. They do have good value, but they're unlikely to attract your typical middle class tesco or dunnes shopper on a regular basis in a way that's going to shake up the entire market place.

It'd be interesting to see what would happen if ASDA or Carrefour entered the market.

Dub13

Interesting times ahead.

RTE News wrote:

19 March 2006 22:37
The new Competition Act 2006 has been signed into law and takes effect from tomorrow.

The act will finally abolish the controversial Groceries Order, which banned selling goods at below cost price.

The order was first introduced 18 years ago to prevent small shops being driven out of business by large supermarket chains.

Following a review by the Enterprise Minster, Micheál Martin, and despite calls from RGDATA and a number of Fianna Fáil backbenchers for the retention of the order, it has now been replaced.


Last March, the Consumer Strategy Group recommended that the order be scrapped and replaced with more competitive legislation.

A review was undertaken by Minister for Enterprise Trade and Employment Micheál Martin and, despite calls from RGDATA and a number of FF backbenchers for its retention, it has now been replaced.

Minister Martin said the single most important reason for getting rid of the order is that it has kept prices of groceries in Ireland at an artificially high level by allowing suppliers to dictate price.

The new act also governs unfair price discrimination and bans 'hello money'.

http://www.rte.ie/news/2006/0319/groceries.html

rubadub

I actually thought this was scrapped a few years back. You can already get bread for 35cent in tescos, and many "value" items are so low I thought they had to be below cost already. They must have some fancy invoicing going on, i.e. buy a variety of products as a batch and overall charge more for them, while asking the suppliers to invoice more on particular items and less on others.

Were there particular exemptions already? If stuff is close to its use-by date in tescos it is sold off for well below cost price already.

Can't see what SVP have against it. I also do not think it will benefit the average till reciept either since they will be working to the same profit margins so just charge more on other items. So unless you go out specifically seeking underpriced items you will pay the same for a trolley of food.

Eoin

rubadub wrote:

Can't see what SVP have against it. I also do not think it will benefit the average till reciept either since they will be working to the same profit margins so just charge more on other items. So unless you go out specifically seeking underpriced items you will pay the same for a trolley of food.

You have hit the nail on the head. Do people really think the supermarkets were in favour of scrapping the order so they could save the consumer money?

As I have said countless times on this thread and/or forum, the majority of consumers don't know the normal price for the majority of products when they do a big shop. That leaves an awful lot of products that can be marked up to restore any losses they may make on the essentials.

I suppose time will tell as people can easily compare their receipts and prove the sceptics wrong.

Savman

The thing is, local shops can be generally more expensive than supermarkets or so I've found anyway. Local shop owners know you're stuck so they tend to whack the price of stuff up.

It's not an attack on the "small businesses" - its just competition and its fair and just in my eyes. If Tesco want to sell off groceries below cost price, I'll give my cash to them over the greedy shop owner.

Competition is a good thing people

MrPudding

Savman wrote:

The thing is, local shops can be generally more expensive than supermarkets or so I've found anyway. Local shop owners know you're stuck so they tend to whack the price of stuff up.

It's not an attack on the "small businesses" - its just competition and its fair and just in my eyes. If Tesco want to sell off groceries below cost price, I'll give my cash to them over the greedy shop owner.

Competition is a good thing people

I don't think it is fair to say that they jack up the prices per se. Some of them lack the buying power to compete. Some of them may well be overcharging.

My local supervalu is very competitive compared to my local dunnes on a large number of items. Some things are more expensive but a lot is very similar and somethime cheaper.

Why would the large supermarkets be screaming to abolish this act? Think about it. Why? Tesco have thousands of lines which even with the act they could sell below cost. Did they? Not normally.

If you have the large chains with huge buying power asking for it to be scrapped and SVP and other "concerned" people calling for it to be kept you really have to ask yourself who is best served by it being being abolished.

They had a guy on Newstalk ages ago talking about his campaign to stop Walmart opening in his town. He was asked in passing what he thought of the groceries act. He thought it was excellent and should not be scrapped. If there was a similar act in the US, and more recently in the UK, larger chains would not be able to decimate local economies and send suppliers to the wall.

MrP

MrPudding

Savman wrote:

Competition is a good thing people

This is the problem. There is a considerable fear that abolishing the act will destroy competition. This has already happened in the US and the UK I see no reason why it wouldn't happen here, well not anymore.

It goes something like this:

Large chain decides to have a price war. They pick a selection of staple items that families need. They then start squeezing their suppliers demanding that they cut their margins so as to minimize the loss the chain makes.

The smaller chains and shops cannot bring the same pressure to the suppliers and therefore cannot get the same discounts. They either cannot compete on the price and lose business to the large chain or compete anyway making larger loses hoping they can weather the price war.

The large chain keeps the pressure on. They have thousand of products and so, with the margin squeeze they force on the suppliers, are better able to cope with the price war. They keep dropping prices and increasing the items they are selling below cost.

Eventually the competition fails and shuts up shop. The chain is now the only game in town and starts to increae prices now they have a captive market.

MrP

Savman

MrPudding wrote:

They keep dropping prices and increasing the items they are selling below cost.

Eventually the competition fails and shuts up shop. The chain is now the only game in town and starts to increae prices now they have a captive market.

Not true at all. It's been displayed in the last 5-10 years anytime a large company thought it had the irish market all wrapped up, along came a rival and, in the spirit of competition, shook up the industry. Think of Aer Lingus' astronomical prices before Ryanair came along, think how bad insurance would be for young drivers if Quinn Direct were'nt around and 10 years ago were all still using "Eircell 088" Mobile Phones, now there's o2, Meteor, Vodafone and Three all competing for customers by trying to keep prices down. How is that bad for the consumer? We may not like the price, but we now have something we've never had before, choice and choice = power

I see where you're coming from MrP but I've done some work with Tesco and seen how they operate, as long as Dunnes Stores, Aldi and Lidl are around, Tesco wont have the luxury of shooting up prices, granted they're more expensive for some things in an A-B comparison but I've yet to see how a competitive market CANNOT benefit the consumer.

rubadub

eoin_s wrote:

the majority of consumers don't know the normal price for the majority of products when they do a big shop.

That is very true. I have an odd quirky memory for prices of things. Many people comment/joke about it. But I also reason the value of items too. One big thing I have is "if you can't tell the difference, why pay the difference", e.g. apple juices can be 50c or 1.60c and I cannot taste a difference at all. Same goes for white granulated sugar, 80c a kilo in some supermarkets. 1.99 a kilo in my local centra.

Another reason for high prices in small shops is the lack of "value" goods. Go to a cash & carry and many items like the sugar I mentioned cost far more than a bag of tesco sugar. But I do not think shopkeepers are allowed to buy and sell on from supermarkets. I know aldi have signs saying no retailers can buy certain products, or have limits on how much you can buy.

Hardware is a big one where shops can inflate prices due to sheer ignorance. Go to a small hardware shop and many things are cheaper than in woodies or powercity. Powercity have cheap TVs etc, but items like lightbulbs can be twice the price they are in other stores. You are in powercity thinking "can't get cheaper than these, and look! the sign says they are on offer".
The "sales" and "special offers" catch many people out. People presume it is "the going rate".
Tescos have really cheap energy saving lightbulbs now. They have gardening stuff too, though I noticed they charge twice as much for grass seed as a local tiny hardware store.

MrPudding wrote:

Eventually the competition fails and shuts up shop. The chain is now the only game in town and starts to increae prices now they have a captive market.

With the coming of aldi and lidl there is better competition though. Full page ads make people more aware of "the going rate" for food items.