Tesco cut out ROI middle man

mike65

About time, importers/distributors have been taking the piss here for decades - Easons anyone?. Hopefully this move will allow some significant price cutting.

abouttobebanned

Fancy explaining what you're talking about? Not all of us were up at the crack of dawn trawling through newspapers and websites...

d'Oracle

abouttobebanned wrote: »

Fancy explaining what you're talking about? Not all of us were up at the crack of dawn trawling through newspapers and websites...

This happened yesterday......

Xterminator

i believe the jist of it is, tesco are being slated for the price difference between uk on roi.

so their plan is to buy from uk distributors, and ship to ireland, and cut out the irish distributors.

that way they reckon the can pass on economies of up to 30%.

good for irish shoppers, bad for irish distributors.

I wholeheartedly endorse this plan.

bobcar61

I'm not up to date with the news either.Would you care to elaborate?

eggerb

They were talking about this in October as well: http://archives.tcm.ie/businesspost/2008/10/26/story37060.asp

Nody

Xterminator wrote: »

so their plan is to buy from uk distributors, and ship to ireland, and cut out the irish distributors.

Except of course that any company delivering to both countries would be stupid to agree to this.

Xterminator wrote: »

that way they reckon the can pass on economies of up to 30%.

Yea, if the consumer sees even half the savings from it I'll be impressed (not that we got any noticable way to conclude it either way).

Nody

This is what I googled:

Irish time wrote:

TESCO IRELAND is transferring international supplier purchasing to its British parent in a move that may increase pressure on Irish firms.

Revenues at the grocery retailer rose 5.2 per cent to €3.15 billion for the year to the end of February, the company said yesterday, although if the impact of 16 new stores is stripped out, like-for-like sales were down 4.2 per cent.

Tony Keohane, chief executive of Tesco Ireland, described 2008 as “challenging” and said the switch to international buying was a response to weak consumer demand and a rise in cross-Border shopping.

He said that the move would result in cheaper prices on certain product lines.

The company is also seeking to transfer contracts with international suppliers from a euro basis to sterling.

“International suppliers treat every country differently. We are asking them to treat us as they treat our nearest neighbour,” Mr Keohane said.

While the move does not directly impact on Irish-based companies, Mr Keohane said Irish suppliers will have to respond to internationally sourced products that may be cheaper.

“If they compete with the international products, there will be no decision on our side. If customers decide to buy a competing cheaper line, then that is a different issue.”

He said the company expects to spend €650 million with Irish suppliers this year.

Farm groups, North and South, accused the group of driving farmers out of business in their drive for even bigger profits at the expense of food producers.

President of the Irish Farmers’ Association Pádraig Walshe said staple food items were being abused by supermarkets as loss leaders, and he called for regulation of the retail sector before it destroys Irish farming.

The Ulster Farmers’ Union said Tesco’s record profits showed it had the power to address many of the problems facing the farming industry.

Tesco estimates 4 per cent of the grocery market has moved to the North over the last 12 months.

Mr Keohane said the company does not recoup sales lost from the Republic because the retailer does not have outlets in the main Border towns.

An internal Tesco briefing document prepared for suppliers said consumers were responding to the price differential in the North, and like-for-like sales in its stores in the Republic were “well below expectations”.

Despite falling demand, Tesco Ireland said sales of clothing rose 45 per cent last year while sales of core grocery, meat, fish and bakery products also increased.

Two replacement stores are being planned at Douglas, Cork and Ballinasloe, Co Galway this year, with Mr Keohane saying that the economic slowdown means an unspecified number of Tesco Express outlets would be the limit of its expansion.

Staff at Douglas have voted for industrial action after the company proposed changes in conditions.

In the North, the group has plans to expand three existing outlets located at Knocknagoney, Newtownbreda and Carrickfergus into Extra stores, which it said could create hundreds of retail and temporary construction jobs.

Tesco Ireland is the largest retailer in the State, with 116 stores and 15 petrol stations. It employs 13,500 people.

As usual, it did not provide profit data for its Irish division. Tesco Ireland profit data is included as part of data on the group’s international business arm.

Meanwhile, international sales rose 14 per cent at constant exchange rates.

Tesco Group posted a record 10 per cent rise in underlying annual profit to £3.128 billion (€3.54 billion) in the 53 weeks to the end of February, and a 15 per cent rise in sales to £59.4 billion.

MKMaguire

Remember : "Tesco ... every Lidl helps"

BendiBus

Nody wrote: »

Except of course that any company delivering to both countries would be stupid to agree to this.

They would be even stupider to pick a fight with Tesco.

Nody

BendiBus wrote: »

They would be even stupider to pick a fight with Tesco.

It will depend on the company. Tesco should have no major issue to try bully a small company but try to take on Coca Cola or Nestle and see how well that goes.

I don't work for any of the involved companies but I do know chains with the size of Tesco trying and being told flat out no including when they threatend to stop selling the products in their stores. For the supplier of that size it simply comes down to simple math of what will make them most money in the long term, nothing else.

sweetie

so I guess this means job losses for some of these Irish distributors?
I'd rather pick and choose the stuff I need in there at the prices I
believe are fair than see more jobs going.

darc

mike65 wrote: »

About time, importers/distributors have been taking the piss here for decades - Easons anyone?. Hopefully this move will allow some significant price cutting.

Why do you mention Easons?

On magazines, the current rate until September is fixed at approx. €1.13 to £1 stg.
Easons do have a distribution charge of 10% (quite fair & reasonable) and there is 13.5% VAT on magazines here.

Example £2 cover price x 1.13 (exchange) = 2.26 x 10% (distribution) = 2.49 x 1.135 (VAT) = 2.83. Price of £2 mag in Tesco yesterday = €2.83

On Books where there is no VAT in UK / Ireland, the current rate seems to be about €1.13 to £1 for recently published books.

Can't see any savings here and I've found that books & mags are one o the few things that ahve come down to UK levels.

ch750536

Nody wrote: »

... but try to take on Coca Cola or Nestle and see how well that goes.

Tesco wins, no debate.

Shelflife

Its a PR stunt by tescos, they are so big that they can dictate prices to suppliers and do so, they are so big that they can dictate to regions what type of crops to grow, they are bigger then many countries and in the uk resorted to buying up suitable property just to keep the opposition out.

they blatently steamroll planning authourities in the uk with veiled threats of long appeals which could bankrupt the councils.

they put suppliers under pressure by demanding crazy deals after tying them into exclusive contracts.

tesco have being creaming it for years, its just a PR stunt.

ejmaztec

Shelflife wrote: »

Its a PR stunt by tescos, they are so big that they can dictate prices to suppliers and do so, they are so big that they can dictate to regions what type of crops to grow, they are bigger then many countries and in the uk resorted to buying up suitable property just to keep the opposition out.

they blatently steamroll planning authourities in the uk with veiled threats of long appeals which could bankrupt the councils.

they put suppliers under pressure by demanding crazy deals after tying them into exclusive contracts.

tesco have being creaming it for years, its just a PR stunt.

I remember seeing a programme a few years ago about a family business tied to Sainsbury and providing them with fresh vegetables. They had an arrangement going back 25 years, but due to an unforeseen mishap with a lettuce crop, Sainsbury pulled the plug, and the business, almost completely relying on Sainsbury, folded.

I think that most large operators are ruthless no-holds-barred feckers.