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Top Irish grocer slashes prices to match N.Ireland

Top Irish grocer slashes prices to match N.Ireland

Ireland's biggest supermarket chain slashed prices at stores along the border with Northern Ireland on Tuesday in a surprise initiative to stem the year-long flow of shoppers into the British territory next door.
Ireland's government and business leaders have been pleading in vain for citizens to buy their goods in the Republic of Ireland, where a range of factors _ including a strong euro, a sales tax rate of 21.5 percent, and weak domestic competition _ have made goods much cheaper in neighboring Northern Ireland, which as part of the United Kingdom uses the pound.
Lost sales at home are exacerbating Ireland's surging budget deficit and threatening retail jobs all along the Irish side of the border. Economists say the flight of shoppers has highlighted how, amid deepening recession, Ireland would be competing better if it was joined to the weak currency of its major trading partner, Britain, and not the euro.
Over the weekend, Tesco _ the British grocery giant that is No. 1 in the Irish Republic as well _ shut its nine stores in the counties bordering Northern Ireland. On Tuesday, they reopened with much lower prices on goods.
Much of the new stock was imported directly from the United Kingdom, including Northern Ireland, rather than bought through Irish suppliers, who in the new strategy will be frozen out.
Tesco Ireland chief executive Tony Keohane said euro prices on 12,500 goods had been cut an average of 22 percent to compete with Tesco outlets offering the same goods in weaker British pounds less than 15 miles (25 kms) away. Northern Ireland's border shopping centers have put up record high British sales figures for the past year as the pound slumped and Britain cut its sales tax to 15 percent.
"We've got to stem the tide across the border. We've got to become cheaper," Keohane said.
Irish shoppers enthusiastically reported savings of more than 50 percent versus prices last week on some goods, such as orange juice and cooking oil.
But Irish food producers responded nervously. Tesco said its price-slashing initiative required purchasing and importing goods directly from British and other foreign producers.
"We'll be buying from international suppliers, mainly in the UK. We will be cutting out the middle person in that equation and passing the benefit on to consumers," said Keohane, who added that Irish distributors "are not manufacturing anything in this state."
Ireland's farmers and food producers are already feeling threatened by the rapid growth of two German discount grocers, Aldi and Lidl, which are thriving amid Ireland's economic crisis. Aldi and Lidl chiefly stock goods from the European continent at much lower prices than Irish norms.
Padraig Walshe, president of the Irish Farmers Association, said Tesco was "opening up a whole new pipeline for imports into the country. Our fear would be that more and more produce will be sourced from abroad."
Keohane said Tesco planned eventually to extend its new pricing and supply system throughout the Republic of Ireland. But for now the chain will keep offering a more Irish mix of goods at higher prices at dozens of stores in Dublin, which is a 45-minute drive from the nearest border store.


Updated : 2021-07-26 09:15 GMT+08:00