CONSUMERS ARE set to reap the benefits of a grocery price war as Lidl yesterday became the first retailer to respond to Tesco's announcement of price reductions earlier this week.
The German discounter said it was cutting prices across a wide range of fresh and packaged food from today. It stressed the price cuts would be available in all its Irish stores, in contrast to Tesco's regional approach.
Meanwhile, industry sources say Dunnes Stores is likely to respond shortly to Tesco's move with its own price cuts. "It's not a question of whether Dunnes will respond, but when and how. They can't afford to stand idly by," said one source.
This week's price-cutting in the grocery market has prompted renewed speculation that Dunnes, which is in private Irish hands, could be sold off to an overseas multinational. However, the most likely suitor, UK-based retail giant Asda, repeated earlier denials that it was in talks with Dunnes.
"Asda does not have plans to enter the Republic of Ireland market at present, despite rumours to the contrary," a spokeswoman told The Irish Times. Asda, which is owned by the world's biggest retailer, Walmart, has benefited greatly from the growth of cross-Border shopping, as it has a substantial presence in Northern Ireland.
Tesco, the largest Irish retail chain, announced on Tuesday it was cutting 12,500 prices in 11 of its stores near the Border as part of a strategy to stem the flow of shoppers going North for cheaper prices. It has promised to roll out the lower prices to the rest of its stores, but has yet to say when this will happen.
Lidl yesterday committed itself to uniform pricing in all its stores and claimed the reductions were being introduced without shifting business overseas.
Tesco is funding its price cuts from savings achieved by buying brands directly from the UK instead of through Irish distributors. A Lidl spokeswoman said it was constantly extending its range of Irish-sourced products and would welcome proposals from suppliers with spare capacity as a result of its rival's change in distribution policies.
Superquinn, which is widely perceived to be under pressure from increased competition and a shrinking market, declined to comment this week on Tesco's announcement. The other German discounter, Aldi, said it continuously reviewed its prices.
Tesco said yesterday customer response to its announcement had been excellent. A spokesman rejected criticism from suppliers over the amount of floor-space devoted to Irish products.
