MEA CULPA - 'Rip off' Irish Prices

Lplated

With no little embarassment....

On a number of threads on this fourm, related to the high prices charged by Irish retailers, I consistently argued (with Rubadub, among others), that it was unlikely that Irish retailers would be paying significantly more than their UK counterparts.

It seems I was wrong - see article and table here ...
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS+FEATURES-qqqm=nav-qqqid=39196-qqqx=1.asp

The gist of it is that manufacturers, particularly larger brands, are setting much higher prices for this jurisdiction than others, and that if retailers seek to buy outside the jurisdiction, their accounts are being pulled. (in some cases, e.g. pampers, the difference in price is 150% higher to the irish retailer).

To say the least, there are european competition law issues here.

For consumers, I don't think the article makes that much difference - while the article may explain why the prices are so much higher here, consumers will, and should imo, continue to buy wherever they can get best value.

For retailers though, the article should result in sustained action. If certain brands insist on selling at inflated prices here, then this should lead to a boycott of those brands. It should also lead to an anti competitiveness legal case with 'lost profits' and damage to business reputation being sought as damages.

_Whimsical_

Lplated wrote: »

For consumers, I don't think the article makes that much difference - while the article may explain why the prices are so much higher here, consumers will, and should imo, continue to buy wherever they can get best value.

For retailers though, the article should result in sustained action. If certain brands insist on selling at inflated prices here, then this should lead to a boycott of those brands. It should also lead to an anti competitiveness legal case with 'lost profits' and damage to business reputation being sought as damages.

That's an interesting article.

While it may be true that Irish retailers are at the mercy of wholesalers who are not passing on the favourable exchange rate to them, the situation is not the same for larger UK retailers here like Debenhams,M&S and Tesco. Alot of complaints on threads here have focused on these large retailers who buy all their stock at the same price regardless of whether they are destined for the UK or Irish Market. They do still have some case to answer here.

It looks like political help may finally be at hand for Irish consumers and retailers though.On "This Week in Politics" Mary Coughlan has said she's eager to address the price differential issue. She will be meeting with both retailers and wholesalers "very soon" to discuss it and may bring in price control legislation if it is necessary.

http://www.rte.ie/news/2009/0201/consumer.html

Lplated

chilly wrote: »

That's an interesting article.

While it may be true that Irish retailers are at the mercy of wholesalers who are not passing on the favourable exchange rate to them, the situation is not the same for larger UK retailers here like Debenhams,M&S and Tesco. Alot of complaints on threads here have focused on these large retailers who buy all their stock at the same price regardless of whether they are destined for the UK or Irish Market. They do still have some case to answer here.

It looks like political help may finally be at hand for Irish consumers and retailers though.On "This Week in Politics" Mary Coughlan has said she's eager to address the price differential issue. She will be meeting with both retailers and wholesalers "very soon" to discuss it and may bring in price control legislation if it is necessary.

http://www.rte.ie/news/2009/0201/consumer.html

Yes, I think that point re retailers who are buying across jurisdictions is made in the article.

The finger seems to point at specific brands rather than more general wholesalers.

I'm not at all enthusiastic about 'price control' legislation - I don't remember the last attempt at it as being all that successful.

ejmaztec

Something definitely smells in that direction. Recently, I was on the look out for a new central heating pump and knew which one I wanted. I couldn't actually find a supplier in the area that had one, so it was off to the internet.

I happened upon two or three different UK sites, telling me that they have exported to five continents, and to ask for a delivery quote if I was outside the UK.

Two of the sites told me that they didn't deliver to Ireland.

I contacted each of them to let them know that, surprisingly enough, Ireland was actually on one of the continents. Whilst I was waiting for an answer from these people, I contacted the third website for a quote. They actually gave me one and charged £4.50 delivery.

It seems to me that Grundfos, the pump manufacturer, must have a restriction in place so that an Irish customer can only buy their products in Ireland.

I won't mention the name of my supplier in case they broke Grundfos's rules.

Since then I've discovered that a supplier in Ireland sells a smaller version of the pump that I got, for about €80 more than I paid.

ch750536

What often happens in business is that certain manufacturers, such as the pump above, will give exclusivity in a region for an amount of time to their first suppliers, to make the deal more attractive without any extra cost.

This means that the Irish supplier knows he can charge a bit more to get back some of the extra marketing costs for the item.

I wouldn't look at this as unfair for a certain amount of time but if it were still happening after 5 years it would be wrong.

gerrycollins

chilly wrote: »

That's an interesting article.

While it may be true that Irish retailers are at the mercy of wholesalers who are not passing on the favourable exchange rate to them, the situation is not the same for larger UK retailers here like Debenhams,M&S and Tesco. Alot of complaints on threads here have focused on these large retailers who buy all their stock at the same price regardless of whether they are destined for the UK or Irish Market. They do still have some case to answer here.


http://www.rte.ie/news/2009/0201/consumer.html

your true about the english retailers but because Dunnes etc have to sell at the price they do to survive the UK store just follow suit and hence Ireland is Tesco most profitable country.

If the UK retailers sold at a reasonable margin in ireland thus reducing the cost to you and I then the rest would follow through.

However they would have to source stock outside of Ireland causing job losses etc here.

What should be targeted is the manufacturers, retailers are the second last point of call of a product why should they be the first to blame?

silversurfer

and if the pricing gets reduced, do you really expect the retailers to pass the majority of the reductions to the Irish consumer?

jdivision

Lplated wrote: »

With no little embarassment....

On a number of threads on this fourm, related to the high prices charged by Irish retailers, I consistently argued (with Rubadub, among others), that it was unlikely that Irish retailers would be paying significantly more than their UK counterparts.

It seems I was wrong - see article and table here ...
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS+FEATURES-qqqm=nav-qqqid=39196-qqqx=1.asp

Not really valid anymore as many of the retailers, including Superquinn, are now buying from UK suppliers. Nisa Today's for instance has seen huge growth in its sales into Ireland.

rubadub

Lplated wrote: »

that if retailers seek to buy outside the jurisdiction, their accounts are being pulled.

This is especially the case with supermarkets. I remember Levis tried (successfully?) to stop tesco putting their jeans in their stores, importing from the US. This was a interesting case as tescos did not currently sell the jeans, so there was no account to "pull".

chilly wrote: »

While it may be true that Irish retailers are at the mercy of wholesalers who are not passing on the favourable exchange rate to them, the situation is not the same for larger UK retailers here like Debenhams,M&S and Tesco. Alot of complaints on threads here have focused on these large retailers who buy all their stock at the same price regardless of whether they are destined for the UK or Irish Market.

I still do not think they can do this for everything. It would be especially the big boys that the manufacturers will keep an eye on. You will not get the same bottle of coke here as in the UK in any of the supermarkets. Many have region specific branding, some blatant with prices in euro, some more subtle, some just manufactured in that particular country. Some items might be bought in the same place, especially own brand goods, which are often a tiny fraction of the cost of home manufactured goods.

Some shops can get away with this "smuggling", €2 shops have bars (in date) far cheaper than any supermarket, I presume they buy them in the north, I must check the labels next time for differences. Takeaways sell foreign coke.

Lplated wrote: »

I'm not at all enthusiastic about 'price control' legislation - I don't remember the last attempt at it as being all that successful.

I don't remember it at all? what did it entail?

ch750536 wrote: »

I wouldn't look at this as unfair for a certain amount of time but if it were still happening after 5 years it would be wrong.

In the US Levis have costed a fraction of what they do here, for donkeys years. I was talking to a software supplier to my company who said China are now buying the product, they can only charge what the market will bear without going to illegal copies, so they charge very little. Companies will do the same here, it would be poor business sense not to.

silversurfer wrote: »

and if the pricing gets reduced, do you really expect the retailers to pass the majority of the reductions to the Irish consumer?

There is free competition, if shops charged €500 for an item that costed €100 then I would open my own shop to get a piece of the action, and undercut them. Thing is some retailers are probably paying more wholesale here than UK retailers can sell to a customer for. Many things have fixed prices, it is nothing new, region coding of cds/dvds/games is just another more stringent form. I remember getting "grey area imports" of consoles in the 80's years before they were out here. Remember when films were out in the US ages before here. Ipods, phones, consoles etc are all subject to great variations in region pricing.

The retailers here cannot compete so will simply have to sell new product or shut down, then the manufacturers will lose out. They will have to drop the wholesale price to a level where the retailers can survive, it is probably more profitable to the manufacturers to do this too.

e.g. say coke sell a 2L in ireland for €1, and in the UK for 50cent. If all takeaways went up north to buy then they would only get 50cent for each bottle. Now the retailer might spend 20cent in transport for each bottle, therefore Coke know they could charge 70cent and win them back AND get a greater profit than if they all went up north.

Lplated

Re 'price control' legislation -

rubadub wrote: »

I don't remember it at all? what did it entail?

The Restrictive Practicies (Groceries Order) 1987 - was a price control, albeit in reverse of what I think Couglan is presently suggesting.

The idea of the 1987 Order was to prevent below cost selling in an attempt to keep small retailers in business. It didn't work for a whole variety of reasons, was removed in 2005.

Couglan now seems to be hinting at a reverse type of order - instead of fixing a minimum price, she would be fixing a maximum cost.

Excuse my cynicism but i think there are too many (legal) ways around these type of controls that they do not work.

rubadub

Lplated wrote: »

The Restrictive Practicies (Groceries Order) 1987 - was a price control, albeit in reverse of what I think Couglan is presently suggesting.

The idea of the 1987 Order was to prevent below cost selling in an attempt to keep small retailers in business. It didn't work for a whole variety of reasons, was removed in 2005.

Yes, I remember that one alright. The RTE link said

The Tánaiste has said the Government could re-introduce price controls if retailers refuse to pass on the sterling differential to consumers.

I thought there had previously been a case of making them charge below a certain level, which I cannot imagine is enforceable.

If they did force them to match nearer UK prices then some UK companies might be able to do this, just ditch the "anti-smuggling" companies like Coke and sell there own stuff or find manufacturers who do allow "smuggling". Then there will be loads complaining that the UK companies are forcing Irish retailers to close down.

Can't imagine it happening TBH, its a free market, seems like they are all talk, there hands are tied, all this crap of "demanding reasons" etc, the retailers do not have to answer to her...

_Whimsical_

rubadub wrote: »

I still do not think they can do this for everything. It would be especially the big boys that the manufacturers will keep an eye on. You will not get the same bottle of coke here as in the UK in any of the supermarkets. Many have region specific branding, some blatant with prices in euro, some more subtle, some just manufactured in that particular country. Some items might be bought in the same place, especially own brand goods, which are often a tiny fraction of the cost of home manufactured goods.

Some shops can get away with this "smuggling", €2 shops have bars (in date) far cheaper than any supermarket, I presume they buy them in the north, I must check the labels next time for differences. Takeaways sell foreign coke.

I agree with you that grocery pricing is a complex issue because of all the factors that you have outlined.As you say it will probably be impossible to apply across the board price cuts in that sector.

It's old ground here but it really is harder to understand the diveragance in price on items like clothing,hardware and homewares between same brand UK and Irish stores. Large chains purchase all of these items in bulk from the same source regardless of what country they are destined for.After taxes,wage differences,increased rent and delivery and handling fees are accounted for, the average 35%-50% price hike on goods still seems grossly inflated.

Expecting parity between Irish and UK prices,even when the Euro and sterling have reached parity, is unrealistic. However a price cut of even 15%-20% would result in a small but necessary cash injection into our economy.As far as I know the Tainiste's plans to look into pricing in the Republic is not confined to groceries.