Tesco price cuts not what they seem?

Tesco recently announced 1,000 price cuts in Ireland but what they didn’t say was that they had increased thousands of prices in the two months before the price reduction campaign was announced.
The price of almost 8,000 lines had actually gone up in January and February according to independent price analysis data, which tracks the online price of thousands of products sold by Tesco Ireland.

According to the Irish Times, for example, “Flahavan’s Progress Oatlets cost €1.95 at the end of last year. The price increased to €2.05 in the middle of January and then fell to €1.99 as part of the promotion.” This product now costs 2% more than it did the beginning of the year despite being included in the price cut campaign.
There are several other similar examples listed in today’s Irish Times.

Consumers Association of Ireland chief executive Dermott Jewell accused the large supermarkets of using “smoke and mirrors” to confuse consumers.

Own Label now accounts for over one third of sales at Tesco

Tesco Ireland has announced that own label sales jumped above one third of total sales for the first time last year.

Own label share of total sales increased from 32.5% to 35% in Tesco’s Irish stores in the year to February 28 2010.

The announcement came as Tesco revealed that sales at their Irish operation fell by 7.5% despite volume growth. Tesco Ireland chief executive Tony Keohane explained that “a major price reduction programme introduced last May resulted in almost 10% transaction growth and 15% volume growth by the end of the year”.

Tesco Ireland employs over 13000 people in 119 stores, depots and offices across Ireland, however over the past 2 years have reduced the value of good bought directly from Irish distributors.

Tesco put 100,000 jobs at risk in Ireland

Tesco will be the cause of adding vast numbers of Irish workers to the Dole Queues according to Economist Jim Power.

Tesco have started a process by which Irish producers and distributors are being cast aside in favour of cheaper british goods. The practice by Tesco puts pressure on the two Irish supermarket operators (Dunnes and Musgrave-Supervalu) to follow the lead as they find it increasingly difficult to compete with the Tesco offering. According to Mr. Power, such a move would put 100,000 jobs in the agri-food sector in jeopardy.

So far, Dunnes and Musgrave have resisited such a move (and favour keeping the jobs in Ireland) but as competitive pressures mount they may be forced to consider the option. Supporting Irish jobs is only sustainable for Dunnes and Musgrave if consumers vote with their shopping trolleys and abandon Tesco in favour of Supervalu and Dunnes Stores.

100,000 jobs would be a killer blow for the Irish economy and one it would be unlikely to recover from quickly