Secretive retail chains refusing to publish their profit figures

Nothing is more revealing about the profitability of retailers in Ireland than their refusal to publish profit figures.

Nothing is more revealing about the profitability of retailers in Ireland than their refusal to publish profit figures.

Dunnes Stores is a private company - and a secretive one at that - and so doesn't have to publish accounts.

Lidl doesn't talk to the media, let alone publish Irish profit figures. Musgrave, owners of SuperValu and Centra, publish wholesale accounts, but not the profit of the chains it operates. Tesco lumps the accounts of its Irish subsidiary in with other countries in its "international" division.

That leaves us with the assessments of the retailers themselves, who constantly strive to present a picture on profits that is reassuring for shareholders, but won't scandalise hard-pressed customers.

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Whatever about their profits, the goods the food stores sell are on average 25 per cent dearer than the EU average, a Eurostat survey showed earlier this month.

Meanwhile, a recent Fine Gael survey claimed that while shoppers paid €31.31 for a basket of basic foodstuffs, just €13.07 of this went to the farmer, a mark-up of 139 per cent.

Retailers point to higher costs as the main factor behind higher prices. Tesco says its supplier costs in Ireland are 9 per cent higher than in the UK. Operating costs are on average 20 per cent higher, as are labour costs, and transport and distribution costs are 28 per cent higher.

Retail Ireland, in an angry response to Fine Gael's survey, accused the party of ignoring the costs incurred after a product leaves the farm gate, when processors and retailers add value to a product.

The Groceries Order bans below cost invoicing by suppliers, so its abolition theoretically allowed retailers to pass on bulk savings on purchases to their customers.

The bigger the retailer, the greater the economies of scale and the greater the savings it should be able to pass on to the consumer. There was a widespread expectation of a price war after it finally went in April 2006. However, apart from claims by Tesco that it had cut the price of 10,000 food items, there was no price war and, for all intents and purposes, it was business as usual in the retail trade. Opinions about the abolition are mixed. Inflation has taken off over the past 18 months, so it is difficult to say with certainty what the effect has been.

The Competition Authority, which had long campaigned on the issue and monitors the monthly inflation figures, points out that food prices are rising more slowly than non-food prices, and the prices of the items that were covered by the Groceries Orders are rising even more slowly than items that weren't controlled by the order (such as fresh meat, fish, poultry, fruit and vegetables).

Currently, inflation stands at 4.9 per cent, while food inflation is about half this level. Since its abolition, items covered by the order have risen by just 1 per cent, according to the Competition Authority.

The arrival of discounters such as Lidl and Aldi has provided a cheaper alternative to more established retailers. However, most shoppers find the discounters can fulfil only part of their shopping needs because of their limited product ranges and the absence of many familiar brands.

Researchers say consumers are doing more "mix and match" shopping - doing an occasional big shop for non-perishables in Lidl, say, while also visiting their traditional supermarket regularly and also buying choice perishables in bijou stores (farmers' markets, for example, or organic butchers).

Ann Fitzgerald of the National Consumer Agency is one of those who believes the only way prices are going to come down is through the arrival of a new entrant from overseas.

"There are major difficulties in relation to planning and property and land for any overseas player coming to Ireland," says Fitzgerald. But industry insiders say the only realistic way these problems could be circumvented would be for the entrant to buy Dunnes Stores.