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Price Difference between North and South

Thursday, 5 November 2009

Last week, once again the government called on us to do our patriotic duty and shop here rather than across the border. This is of course the ideal scenario but when it comes to some stores the price difference is so large that we can't resist heading North to get a bargain

We have five examples of products that have such a price difference and some of them are being sold by the same British store North and South. Tina has contacted the companies to se how they can justify charging such exorbitant prices. Tina will tell us what comments we got from each company and also explains how these companies can possibly charge such prices.

It is estimated there will be a 25% increase in shoppers heading North this year and 40% of retail trade is done from the October bank holiday until Christmas, so we are heading into the biggest shopping season of all.

Tina Leonard, our consumer expert

Are goods more expensive here compared to NI?

In most cases, yes they are. At the beginning of the year the National Consumer Agency's supermarket price survey showed a differential of 30% between grocery prices North and South.

In grocery prices, however, prices have come down so now the difference is less, but they are still dearer in the Republic.

Many people were heading North to get better value, so that, combined with the official figures on price differences, lead Tesco to introduce it's 'Change for Good' campaign in May. This was later rolled out nationwide with the consequence that all other supermarkets followed suit. So at least that is, for now, headed in the right direction. One for consumer power!

Can they charge more?

Yes, we live in a fee market economy so they can charge what they want, as long as someone will pay it! Price regulation only exists in certain circumstances, such as ESB tariffs and taxi charges.

Here are five examples where there is a huge price difference between the exact same product in the North of Ireland and in the South of Ireland. We asked each company involved how they could justify charging such a huge price to the consumers in the Republic in comparison to in Northern Ireland.

Karen Millen Price Difference
All over sequin dress
€325 in Republic Ireland
£250/€279 in Northern Ireland
Price Difference €46

Warehouse Clothing Store
Longer line drape front jacket
€208.00 in Republic Ireland
£160/€179 in Northern Ireland
Price Difference €29

Argos price difference
Sony 52in Full HD Digital LCD TV
€3339.99 in Republic Ireland
£1899.99/€2121 in Northern Ireland
Price Difference €1219

Tesco Price Difference
Jacobs Creek Spk Chardonnay Pinot Noir 75cl
€13.99 in Republic Ireland
£8.88/€9.91 in Northern Ireland
Price Difference €4.08

Easons Price Difference
Vogue Magazine
€5.81 in Republic Ireland
£3.90 / €4.35 in Northern Ireland
Price Difference €1.46

Why are they more expensive here?

Let's look at the variables: It is true that VAT, rent, wages, rates, insurance etc are more expensive here than in the North. So, you would expect a 5% - 8% difference in end price if you take these into account.

<For example, minimum wage ROI €8.65; minimum wage UK £5.80
VAT ROI 21.5% (Food and kids clothes exempt), VAT UK 15% until 31st Dec 09 then back to 17.5%.>

But the end price also includes a profit margin, and that will depend on what price the retailer thinks the market will bear with a bit of greed added in for good measure.

The fact is that many prices are much greater than 5% more. What Irish consumers are saying by shopping in the North is "we can't bear these prices any longer". Retailers must listen if they want to keep their business open.

Is it the case that retailers are making greater profit from us?

We reckon so, especially during the boom years of the Celtic Tiger. However, it is difficult to prove. Big retailers tend not to publish accounts that isolate the Irish market so we've no idea, i.e. Tesco, M&S etc.

They also blame the distributers costs, and the distributers blame the producers (witness the Oireachtas committee hearing on supermarket prices earlier in the year). So the accusations go around in circles and the truth remains hidden.

Can buying Irish and local help save Irish jobs?

If you buy Irish products and support local producers you will be helping their business to grow and this has a positive knock-on effect for the country.

Look out for the Guaranteed Irish symbol and the new symbol Buy Irish Foods to know what products are Irish.

If we only buy Irish and don't shop in the North at all, there may well be a short term benefit but the fact that we're an overpriced economy won't change, so it's like hiding your head in the sand to avoid the real issue.

As demand decreases retailers need to reduce prices to win their customers back. Big retailers can absorb these costs. Small retailers and producers who have not saved enough from the good times for a rainy day fund, unfortunately may not.

However, we live in an open market economy so consumer choice should drive competition and keen prices. Remember we are part of the European borderless Market of 27 countries and 500 million people. We are free to buy wherever we want and get the best value, price and service.

This means Ireland has to be competitive on price and this means that all aspects that go into creating a price have to be tackled not just the consumer element.

What can you do?

Consumer can either a) not buy something because the price is to high or b) complain to the shop in question about the high price.