Grocery survey shows bigger price gap — but gap to discounts shrinks

The price gap on a basket of groceries between the three big supermarkets is widening and the gap between their prices and Aldi and Lidl is narrowing, the latest price survey from the National Consumer Agency shows.

When comparing a basket of branded goods from Dunnes Stores, Superquinn and Tesco, the difference between the cheapest and dearest basket was €3.60 (1.2 per cent ). The cost of this basket was virtually identical in Dunnes Stores (€292.48 ) and Superquinn (€292.49 ). The cost of the basket in Tesco was €296.08.

A total of 37 out of 83 goods (45 per cent ) had identical prices across all three stores. The percentage of identically priced goods is declining. In the August 2008 Survey the percentage was 56 per cent and in June 2008 it was 71 per cent.

Ann Fitzgerald, chief executive of the National Consumer Agency said that for the first time we are seeing the gap in the branded market widen while own brand prices are narrowing. “Our survey suggests that the response of the multiples to the challenge from discount chains such as Aldi/Lidl has resulted in strong focus on "own brand" as a product category for all retailers, while a more aggressive approach on branded goods means we are seeing less price matching".

"This sharper focus on price competition reflects what consumer market research is telling us about how shopping habits have changed, with price now being the principal consideration in choice of main grocery shop, versus convenience a year ago."

She went on to say that despite the positive trend towards price competition between grocery retailers, it is important to highlight that over the period of our surveys, the aggregate cost of a basket of goods has increased. Retailers are changing their marketing techniques. In the past year we've seen an increase in the range of special offers by the multiples, but we would prefer to see sustained price cuts and we would urge caution among consumers, as special offers may not always deliver the best value."

"The gap of 1.2 per cent is the biggest variation we have seen between the multiples since we began carrying out the surveys in 2007 and suggests some repositioning in the market," said Ann Fitzgerald. "We're also seeing a drop in the number of branded goods with identical pricing. We believe that this is evidence of growing competition among the multiples, as they begin to compete not just with the discount retailers but aggressively between themselves."

Examining the period from December 2007 to January 2009, aggregate prices in separate baskets for Tesco, Dunnes, and Superquinn all recorded an increase. Tesco recorded the largest increase (4.9 per cent ), Superquinn (2.8 per cent ) the smallest increase. Dunnes recorded an increase of 3.5 per cent.

When Supervalu are included, a basket of 64 goods was cheapest in Dunnes Stores (€189.03 ) and dearest in Supervalu Dublin South (€194.24 ). The difference between cheapest and dearest is €5.21 (2.8 per cent ). Again the gap between cheapest and dearest is widening compared to August 2008 when returns showed a variation of 1.6 per cent across a basket of 64 items.

On own brand goods, the gap between Dunnes and Tesco and the discounters, Aldi and Lidl, has narrowed significantly. On a basket of 28 common items, Lidl (€35.01 ) are the cheapest with Dunnes Stores (€42.20 ) being the most expensive. This is a variation between cheapest and dearest of €7.19 (20.5 per cent ) down from 35.9 per cent on a basket of 34 items in August 2008.

The gap between Dunnes and Tesco has decreased between August and January. On a basket of 36 own brand items Tesco at (€53.65 ) was the cheaper with Dunnes Stores at €55.07. This represents a variation of €1.42 (2.6 per cent ) down from a variance of 6.2 per cent in the August 2008 survey.

On a basket of 49 items common between Aldi (€69.54 ) and Lidl, there was a difference of 0.1 per cent or four cents. This was compared to a difference of €2.27 or 3.2 per cent on a basket of 50 items in August 2008.

Over the period December 2007 to January 2009 separate baskets for Aldi, Lidl, Dunnes, and Tesco all became more expensive. Tesco's basket recorded the largest increase at 9.3 per cent, Dunnes the smallest increase at 4.1 per cent. Aldi recorded an increase of 4.2 per cent and Lidl an increase of 4.7 per cent.



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