Irish Retailers over-exaggerating the 'high operating costs'?

Skopzz

Its been claimed on a number of occassions that it costs more to operate in Ireland. Fair enough it does, but why is there still up to 30% difference between here and the north when it comes to clothes and food? Ok, the VAT has been reduced by 0.5% but I've been unable to see any savings being passed onto the customer. Supermarkets and clothes shops still skimping on their prices, very limited sales offers on most things.

Are the Retailers keeping it for themselves?

ScouseMouse

Skopzz wrote: »

Its been claimed on a number of occassions that it costs more to operate in Ireland. Fair enough it does, but why is there still up to 30% difference between here and the north when it comes to clothes and food? Ok, the VAT has been reduced by 0.5% but I've been unable to see any savings being passed onto the customer. Supermarkets and clothes shops still skimping on their prices, very limited sales offers on most things.

Are the Retailers keeping it for themselves?

Er, in short NO.

Operating costs have not come down. There are a gazillion threads about this already. Take a read through a few and you will see nothing has happened to lower operating costs.

cojomo2

well I rent a small retail unit in the city ctr, i can get a similar sized unit in the heart of belfast city for about 65% less.

gerrycollins

here come all the retailers ha.

First half of last year my cost(everything) to run my shop exceeded my sales by €20k. This does not include any stock loss for the period which erodes at my profit also.

So in effect at my current(and there is no sign of improvement) sales im already at an annual loss of €40k before I even open the door.

I have offered and do so again for a non retail person to come and view my books if they so wish as proof that we are not talking through our you know whats.

HappyHarry

cojomo2 wrote: »

well I rent a small retail unit in the city ctr, i can get a similar sized unit in the heart of belfast city for about 65% less.

That's pretty irrelevant without stating what portion of your annual sales the rent is. There is no argument that rent, wages, energy and taxes are higher here, but SOME retailers are still taking the piss with their prices and then asking for handouts from the Government.

ScouseMouse

Skopzz wrote: »

Its been claimed on a number of occassions that it costs more to operate in Ireland. Fair enough it does, but why is there still up to 30% difference between here and the north when it comes to clothes and food? Ok, the VAT has been reduced by 0.5% but I've been unable to see any savings being passed onto the customer. Supermarkets and clothes shops still skimping on their prices, very limited sales offers on most things.

Are the Retailers keeping it for themselves?

HappyHarry wrote: »

That's pretty irrelevant without stating what portion of your annual sales the rent is. There is no argument that rent, wages, energy and taxes are higher here, but SOME retailers are still taking the piss with their prices and then asking for handouts from the Government.

Hiya Harry,

The original question was a comparison between fixed costs north and south.

Your answer about the rent being irrelevant makes no sense. It is one of the main fixed costs (after wages)

My mortgage is 5500 per month. It has come down, but so have sales - by 30%.

So your arguement is nonsense.

mcaul

Skopzz wrote: »

Its been claimed on a number of occassions that it costs more to operate in Ireland. Fair enough it does, but why is there still up to 30% difference between here and the north when it comes to clothes and food? Ok, the VAT has been reduced by 0.5% but I've been unable to see any savings being passed onto the customer. Supermarkets and clothes shops still skimping on their prices, very limited sales offers on most things.

Are the Retailers keeping it for themselves?

The differerence in price is certainly not 30%. It may be on a few items in a few store such as some of the UK retailers with irish operations, but generally prices between UK & ireland have quite a small difference when you compare a basket of say 100 items.

Don't forget uk residents pay a council tax whereas here it is paid by retailers. Uk min wage £5.65, Ireland €8.65. Add in the extra rents, wages, utilities, rates & insurances and you'll find that irish retailers are offering quite good value on a REAL comparitive basis.

HappyHarry

superscouse wrote: »

Hiya Harry,

The original question was a comparison between fixed costs north and south.

Your answer about the rent being irrelevant makes no sense. It is one of the main fixed costs (after wages)

My mortgage is 5500 per month. It has come down, but so have sales - by 30%.

So your arguement is nonsense.

I never said rent was irrelevant, I said without knowing the ratio of that fixed cost to your total sales throwing out a percentage was irrelevant. Of course the ratio of a fixed cost to your total sales is important. It's not an an argument it's a fact!

Lets say rent is €5,000 per month in Dub and you could get the same size premises in a good location in Belfast for the equivalent of €2,500. So your fixed rent cost is 100% more in Dub.

Now the question is if all other costs were the same how much extra (percentage) would you have to charge in Dublin to keep your profits\losses the same as Belfast.

Well of course it depends on the total of you sales. If you were selling €25,000 in Belfast you would need to charge 10% more in Dublin. €50,000 and it would only need to be 5%

Now, leaving all of that aside you are talking about a Mortgage, so you are buying an asset too, not part of your retail business.

gerrycollins

they reckon on average the price difference between north and south has been reduced to 3.5%

also to Skopzz, the vat changes have been passed on but relatively speaking its only a few cents unless you start to look at larger priced items.

ScouseMouse

HappyHarry wrote: »

I never said rent was irrelevant,

HappyHarry wrote: »

That's pretty irrelevant

???

Turnover is not relevant. A store in the south with high fixed costs is much more expesive to run than any size of store in the north with sustantially lower fixed costs. Common sense really.

HappyHarry

mcaul wrote: »

The difference in price is certainly not 30%.

I think you'll find that it varies greatly across different retailers, and it seems that larger chains in particular bump up prices based on what they think the Irish will pay.

For a prime example read the post about Spanish retailers charging 60% more here than in Spain. That is 60% more than the price that includes profit in Spain.
You can find articles where the profits for the same shop (a single branch) were 1 million euro last year and 1.3 the year before.

Tesco make higher profits in Ireland than in the UK and there are many more examples, the higher costs in Ireland are not solely due to increased costs, but higher profits.

Look at the cost of Dell laptops in ROI v UK, most of their costs are the same regardless of where they sell the laptop to. They are made in Thailand & Poland and the support is in India. Why the large difference?

No-one is saying there aren't higher costs, there certainly are, although some of them are starting to fall. The fact remains that MANY retailers in ROI are putting on extra margins.

No point in using the excuse that sales are going through the floor either, if your sales drop by 20% it's doesn't mean you should increase your prices by 20% to make up for it. See where that got the publicans!

HappyHarry

Superscouse:

If you are going to quote me at least quote it in context. The full sentence was:

That's pretty irrelevant without stating what portion of your annual sales the rent is.

And as for your strawman argument ...duh... but that's not what I was talking about. The OP was about the proportions of sale prices.

Good luck with your business, I'd say you'll need it.

ScouseMouse

HappyHarry wrote: »

b.b.
Now, leaving all of that aside you are talking about a Mortgage, so you are buying an asset too, not part of your retail business.

My company pays rent to the landlord, a sum which is equal to the mortgage, so I still pay rent.

Mylow

mcaul wrote: »

Don't forget uk residents pay a council tax whereas here it is paid by retailers. Uk min wage £5.65, Ireland €8.65. Add in the extra rents, wages, utilities, rates & insurances and you'll find that irish retailers are offering quite good value on a REAL comparitive basis.

£5.65 next time your in Belfast (especially Victoria Square) look at age of the 'kids' working in the shops there. Majority appear to be under 18, I didnt realise how low the minimum wage is for under 18's, it's £3.57. My daughter tries to pick up work in the South when she is on school holidays as it leaves what she can get in UK/NI for dead. She did say Primark pay way better than all the other store's.

mcaul

Mylow wrote: »

£5.65 next time your in Belfast (especially Victoria Square) look at age of the 'kids' working in the shops there. Majority appear to be under 18, I didnt realise how low the minimum wage is for under 18's, it's £3.57. My daughter tries to pick up work in the South when she is on school holidays as it leaves what she can get in UK/NI for dead. She did say Primark pay way better than all the other store's.

That certainly is a problem in the UK. The stores can get away with paying very low wages as social welfare is very low. Jobseekers is £62 which means you live on a day to day basis with very little dignity. - So any job even at £5.65 / hour will be accepted along with fairly poor working conditions.

Thankfully we have a fairer system in Ireland and people who have been unlucky to have l;ost jobs can at least still feed themselves & their families properly. The back end of this is employers must pay a fair wage and treat staff a lot better than many in the UK are treated. Yes it may add a few cent to the shopping - but its a fair price to pay for a more civil society.

HappyHarry

mcaul wrote: »

Yes it may add a few cent to the shopping - but its a fair price to pay for a more civil society.

Quite right, nobody minds paying a little extra. But the complaint is that MANY retailers use this as an excuse for charging much higher prices in ROI, far above and beyond the additional expenses.

Furthermore the retailers associations are looking for handouts from the governments because sales are down. If they charged reasonable prices sales would rise.

Nollog

This problem would be solved if they published their proffit/losses like every other company.

ejmaztec

/\/ollog wrote: »

This problem would be solved if they published their proffit/losses like every other company.

Who?

Pacing Mule

From a thread elsewhere in this forum ...

Pageant Messiah wrote: »

I don't mean this to be a demanding patronising post so please don't take it this way but it seems to me that a post like this is badly needed to be stickied here.

This forum is about rip off ireland and there is no doubt that there are genuine cases of rip offs within the Irish economy. However before you post a "this retailer charges more here than they do in the UK" or "Irish retailers rip us off because I got this cheaper up north" please take the following into account.

• VAT rates are different. In some cases like magazines which regularly come up here there is VAT levied here in Ireland while there is none at all on the UK sterling cover price.
• Converting a sterling price using a site like XE.com is not accurate. This is the base conversion rate and not the rate generally charged by banks.
• The cost of actually trading in Ireland is a lot higher than the UK. There are a lot of factored here but to name a few ...
• Wage rates in Ireland are a lot higher than the UK.
• Property prices here although they have come down recently are enormous versus the UK. Bear in mind that the majority of retailers here are locked into leases / mortgages at the much higher rates.
• Rent and wages are the biggest expenses any business occurs so not only does the retailer here operate with these higher costs every service provided by other local businesses and suppliers is also effected by the same. This means that most other expenses incurred are also significantly higher.

All these factors make the cost of doing business here in Ireland higher than our immediate neighbours. The fact is that the wages and property prices which went up and up and up each year during the boom was adding to the base cost of doing business here which has to be reflected in the sale price of the goods and services.

Again to emphasise I'm not saying that there are not genuine rip off cases going on but please bear the above in mind before posting your thread and make sure it's a genuine rip off rather than a price difference caused by different economies. This will avoid the countless repeating of the same threads and responses that are spread across the forum.

And once you have a genuine rip off post be assured that everyone will be very supportive of you bringing it to public attention.

gerrycollins

/\/ollog wrote: »

This problem would be solved if they published their proffit/losses like every other company.

most retailers do. the exception is Dunnes Store as its a trust and Tesco only ever give a group report for uk & ireland combined.

Alcatel

It's damn expensive to run in Ireland... Wages and rents are two big costs, but it's also a self feeding cycle - if the truck driver who delivers my goods has his salary weighted on the minimum wage (as in any country), well, he costs more to run on the road than a driver in the UK. Plus the mechanic to fix the truck when it wears down. All these costs get passed along and passed along.

There are very few areas where Ireland is cheaper than the UK or Europe. Plus we have to contend with costs incurred in shipping goods to and from our island - unlike the UK, and certainly Europe, we have to put most goods on a boat as well as a truck to get it to you. Maybe a truck on one end, a boat, and another truck again.

Add this stuff up, on top of wages, rents and other costs - including, though people forget it, things like corporation rates that business pay here, not private individuals - and it gets pricey.

sold

Define "high operating costs". The fact is that the bottom line of a companies balance sheet in Ireland is a lot healthier than if they operated in other EU countries like Germany, Poland, Italy, France. we are a low cost economy. What did Google, Ebay, Paypal, Wyeth, Intel, boston scientic, Coca Cola, Pepsi, Pfizer, GSK, dTS, Medtronic, Merck, SAP, to name some setup they european distribution in Ireland? Answer because taking everything into account they make more money in Ireland than in any other EU country.

The problems start when companies don't have high profit margins then the focus moves to operating costs and then its clear "those" costs are very high in Ireland. Wages, Food, Travel, accomodation, Utilites, are way to High in Ireland and that is why Dell had not option but to move out. Low corporation tax is of little good when there are not big profits to tax

We as a nation are to blame as we drove them to high with excess wage increases, easy credit and a lack of leadership (by all parties) Now that the chickens have come home to roost its time to clean their sh*t from the birdhouse.

Alcatel

sold wrote: »

Define "high operating costs". The fact is that the bottom line of a companies balance sheet in Ireland is a lot healthier than if they operated in other EU countries like Germany, Poland, Italy, France. we are a low cost economy. What did Google, Ebay, Paypal, Wyeth, Intel, boston scientic, Coca Cola, Pepsi, Pfizer, GSK, dTS, Medtronic, Merck, SAP, to name some setup they european distribution in Ireland? Answer because taking everything into account they make more money in Ireland than in any other EU country.

The problems start when companies don't have high profit margins then the focus moves to operating costs and then its clear "those" costs are very high in Ireland. Wages, Food, Travel, accomodation, Utilites, are way to High in Ireland and that is why Dell had not option but to move out. Low corporation tax is of little good when there are not big profits to tax

We as a nation are to blame as we drove them to high with excess wage increases, easy credit and a lack of leadership (by all parties) Now that the chickens have come home to roost its time to clean their sh*t from the birdhouse.

The companies you mention mostly focus on having high tech and corporate services jobs here, where the tax benefits far outweigh the labour costs, which are not as uncompetitive given the high speciality nature of the roles.

Look at the amount of small Irish businesses, the backbone of much employment, that have been forced to the wall or close enough to it. They are the victims of high costs. They don't get to do as PayPal or Google does and move large amounts of the overseas profits into Ireland to avail of our tax rates.

Bosshogg

Ok I've got one...
Go to sky.co.uk and select all the channels/packages. Get the HD add-on too but no installation/labour. It comes to about €75 euro when converted from Sterling.
Now go to SkyIreland.ie (or whatever it is) and get the exact same package and it will cost you €100. That's 33% more!

So I called the sales number and guess what?.. I was connected to a UK call center in Manchester I think where I got to speak to Donegal Dave. I asked him why does it cost so much more. Dave spluttered out some mumbojumbo about extra costs and eh eh eh eh the VAT is higher in the Republic and stuff like that.

So it's the same satellite in space broadcasting all over Europe. There's no staff in the republic. They even have the ads filtered for Ireland to make extra profits there. Are the extra costs of €25 euro per month to cover the price of the stamp to send out the little smart card?

HappyHarry

Bosshogg,

There seems to be quite a few people here that are not interested in the truth of the matter - I guess they have a vested interest or are plain stupid.

The same horse **** is trotted out about the extra expenses as if the rest of us didn't know that the VAT rate is different or the wages are higher, etc etc.

The OP was asking if Irish Retailers are over-exaggerating the 'high operating costs'. The answer is "In many cases YES".

There are without doubt Irish companies that offer good value considering their expenses. However there many of the big boys that are hiding behind the excuse of higher costs to justify they huge premiums they demand of Irish consumers.

Businesses will charge what the market will pay. At the end of the day is it the consumers that have driven the prices up, and it is only the consumer that can drive them back down.

Seek value, reward Irish retails that provide it. If you can't find any, buy online or buy abroad.

Bosshogg wrote: »

Ok I've got one...
Go to sky.co.uk and select all the channels/packages. Get the HD add-on too but no installation/labour. It comes to about €75 euro when converted from Sterling.
Now go to SkyIreland.ie (or whatever it is) and get the exact same package and it will cost you €100. That's 33% more!

So I called the sales number and guess what?.. I was connected to a UK call center in Manchester I think where I got to speak to Donegal Dave. I asked him why does it cost so much more. Dave spluttered out some mumbojumbo about extra costs and eh eh eh eh the VAT is higher in the Republic and stuff like that.

So it's the same satellite in space broadcasting all over Europe. There's no staff in the republic. They even have the ads filtered for Ireland to make extra profits there. Are the extra costs of €25 euro per month to cover the price of the stamp to send out the little smart card?

mcaul

/\/ollog wrote: »

This problem would be solved if they published their proffit/losses like every other company.

99% of retailers accounts are available for anyone to view on the CRO website. Just key in company name and pay a small fee and full account details will be emailed to you.

It may shock you to find that most retailers have made losses over the past 2 years.

A quicker way of looking at the trade is to look at the number of empty retail units which are not being let even at much reduced rents.

mcaul

sold wrote: »

Why did Google, Ebay, Paypal, Wyeth, Intel, boston scientic, Coca Cola, Pepsi, Pfizer, GSK, dTS, Medtronic, Merck, SAP, to name some setup they european distribution in Ireland? Answer because taking everything into account they make more money in Ireland than in any other EU country. .

In many of these companies, wages & lease costs are a minute percentage of the selling price of their goods.

In retail rents represents approx. 10% - 20% of turnover (depending on the type of goods sold) and wages represent a similar level.

In the restaurant / fast food sector, wages represent 30% - 35% of the turnover.

3DataModem

sold wrote: »

What did Google, Ebay, Paypal, Wyeth, Intel, boston scientic, Coca Cola, Pepsi, Pfizer, GSK, dTS, Medtronic, Merck, SAP, to name some setup they european distribution in Ireland?

They (generally) negotiated zero effective corporation tax (or in some cases, less than zero).

AJ STYLES

yes you must factor in the fact that ireland is a peripheral country, small population, in the euro and other factors. i'd say british think they are being ripped off by stores there. and the reason tesco make better profits(per pop. i imagine) here i would say is because britain have a wider selection to choose from.

Alcatel

mcaul wrote: »

In many of these companies, wages & lease costs are a minute percentage of the selling price of their goods.

In retail rents represents approx. 10% - 20% of turnover (depending on the type of goods sold) and wages represent a similar level.

In the restaurant / fast food sector, wages represent 30% - 35% of the turnover.

The more services you bring into Ireland, the more of your global operation you can get taxed here at 12.5% versus the double or more you'd pay elsewhere. You can also avail of tax credits on research and development etc etc etc.

It has done Ireland well - our housing bubble only started because we had money in our pockets to bubble with, mainly delivered by these multinationals.

But comparing them to an Irish retailer or local business is chalk and cheese.