Changing consumer habits are forcing the grocery sector to undertake a significant shift, according to a retail and marketing expert.

Yesterday Tesco UK announced plans to cut 4,500 jobs as part of a restructuring of its Metro outlets - though it will not impact its operations here. 

It said the cuts were being made to account for the way shoppers are now using the store type, compared to what was envisioned when it debuted in the 1990s.

"When I was a child my mother did shopping once a week - there wasn't really a top-up shop, because budgets didn't allow for that," said Damien McLoughlin, Professor of Marketing at UCD Smurfit School.
"Consumers don't shop like that anymore, they want to shop on a regular basis, they don't really have plans."

He said that shoppers today regularly use food services like Uber Eats and Just Eat in place of home-cooked meals. What they do stock their fridges with comes from small, regular visits to local shops. 

As a result the Tesco Metro format - which he compares to the typical Supervalu here - is proving to be the wrong size with the wrong offering.

Mr McLoughlin said the Tesco cuts also come at the end of its three year turnaround plan, as it may have been the last of the big problems it faced in its business model.

He said it, like all other retailers, will also be looking to pull efficiencies out of its supply chain as competitive pressures squeeze margins more and more.

"The only place you can find efficiencies or improve profitability now is in the supply chain," he said. "You can't find it in the market - the consumer is not willing to pay any more."

Figures from Kantar suggest the Irish grocery market is in a relatively healthy state - with sales continuing to grow, stiff competition amongst the 'big three' of Dunnes, Tesco and Supervalu.

However Mr McLoughlin said those rising sales are coming as a result of price cuts - as retailers cut costs in order to boost market share.

"Dunnes Stores is driving the market here right now with basically 20% discounts in vouchers," he said.

Discounters Aldi and Lidl are continuing to put pressure from below too, which is having knock-on effects on the whole market.

On the consumer side Mr McLoughlin said Ireland's love affair with brands is dying.

On the business side, he said discounters had introduced significant supply chain efficiencies. 

"The vegetables you buy in Aldi or Lidl today were grown in Wexford yesterday, picked last night and you're having them for dinner tonight," he said.

Grocers, like any other retailer, are also facing pressure from online - though so far Ireland has not been impacted as much as other businesses.

This was because the incumbents had not fully bought in to the concept, Mr McLoughlin said, as doing so would require a major rethink of their operations.

"People have held off in terms of online grocery shopping because the big supermarkets haven't gotten behind it," he said. "Their balance sheets are basically supported by the value of their sites - if they're to really commit themselves to online it means they've got to write-down the value of the stores on their balance sheets.

"As soon as retailers start to commit themselves to online grocery shopping I think we'll very quickly move towards 25-30%."