COPY OF INITIAL POST AT THE END FOR CONTEXT.
COMMENT:
If indeed there is an appetite to deal with below cost selling then perhaps price regulation is the way forward.
I think we used to have it for fuel (in terms of a maximum retail price) and I’m pretty sure it still exists for tobacco (in terms of minimum retail price).
Government sets a price below which a product cannot be sold on health grounds – end of?
REPLY:
Minimum/pricing will not really work I am afraid although it could be a something at the very lower end of the market maybe.
It is the below cost selling of major brands by the multiples, in order to attract shoppers in, that is the problem .
So minimum pricing... lets say wine : € 5 ..beer: 80 cent .... spirits: € 15 ..this will not be any help to us ? and I don't see them going any higher than this as there are lesser known brands that sell at these prices and are not below cost.
What do you think?
COMMENT:
Appreciate your argument and agree completely – if one were seeking to prevent below cost retailing it wouldn’t be practical to simply have a generic minimum retail price for say a can of beer or a bottle of wine – one would require individual prices to be set for all products and sizes offered and that would be costly and difficult to maintain and verify.
I’m actually not convinced that there’s an appetite for change but if there were it seems that the achievable goal might be simpler, easier solution around minimum pricing based on alcoholic content and to wrap it around public health.
E.g. as a matter of public health policy it isn't desirable that a standard (say 500ml) measure/strength of beer/cider/perry be made available for consumption at less than €… (regardless of cost), that a standard (say 70cl) measure of wine could not be made available for consumption at less than €…
REPLY:
Yes agree, but does that not still leaves us with the same problem as I don't believe the Government will go much above those prices I mentioned, no matter what the method of calculation.The big brands will still be able to be discounted either way , driving customers out of our shops and into the mults.
TO BE CONTINUED....
All ideas welcome! Email info@noffla.ie or post a comment here.
COPY OF INITIAL POST BELOW FOR CONTEXT.
The problem with trying to end below cost selling is coming up with an mechanism that will actually work.
A mechanism banning sales below total duty and vat will not work as on a €7 euro btl of wine this only comes to €3.20.
A mechanism banning sales below invoice price will just mean that the large multinational supermarkets can merely invoice the Irish division at a low price to ensure that they are not breaking the law by selling below cost.
Tesco plc is a global grocery and general merchandising retailer headquartered in Great Britain . It is the fourth-largest retailer in the world measured by revenues and the second-largest measured by profits (after Wal-Mart). It has stores in 14 countries across Asia,Europe and North America and is the grocery market leader in the UK (where it has a market share of around 30%), the Republic of Ireland,Malaysia and Thailand
If we could find a solution that is actually legal under E.U. law there is an appetite to deal with the matter.
TO BE CONTINUED....
All ideas welcome! Email info@noffla.ie or post a comment here.
COPY OF INITIAL POST BELOW FOR CONTEXT.
A mechanism banning sales below total duty and vat will not work as on a €7 euro btl of wine this only comes to €3.20.
A mechanism banning sales below invoice price will just mean that the large multinational supermarkets can merely invoice the Irish division at a low price to ensure that they are not breaking the law by selling below cost.
Alcohol is used as a driver of footfall to increase the multiples market share of Grocery.
Supermarkets are competing against each other, using alcohol ,to increase their individual share of this market
Tesco plc is a global grocery and general merchandising retailer headquartered in Great Britain . It is the fourth-largest retailer in the world measured by revenues and the second-largest measured by profits (after Wal-Mart). It has stores in 14 countries across Asia,Europe and North America and is the grocery market leader in the UK (where it has a market share of around 30%), the Republic of Ireland,Malaysia and Thailand
Reward offered!
It is impossible to beat Tesco at their own game. Get out of the race and concentrate on offering things that lumbering giant Tesco will never be able to do: selection and customer service.
ReplyDeleteYou will always have to charge more than Tesco for any given product, so either let them have it and use the free shelf-space for something that will bring customers in, or else justify your premium by giving customers a better experience than they get in the supermarket. You have an agility to do that, Tesco does not.
And drop the public health policy bit. Alcohol consumption in Ireland has been decreasing steadily since 2001. The abolition of the Groceries Order had no effect on it. It did not make things worse. By calling for new alcohol legislation on health grounds you're agreeing with those who want to severely reduce access to alcohol altogether: the same ones who forced you to close your doors at 10pm.
The health argument is not a friend of your business.
Agree and thanks for your input. It is difficult for Independent off licences in many parts of the country to compete against multiples selling main stream branded products below cost. Often this is what their customers want to purchase.Sales of niche wines and micro brewery beers just wont pay the overheads and neither will selling below cost.Meanwhile alcohol is being used by the multiples to drive other types of sales in order to gain market share and this is very disheartning.
ReplyDeleteI understand. But every business needs to adapt to the market, and when competing on price is not an option (and it never will be with Tesco, however the law is changed) you need to find something else.
ReplyDeleteIt doesn't have to niche wines or micro brewery beers or ultra-premium whiskeys. How about glassware? Flowers? Chocolates? Cigars? Coffee? I've seen all of these in Irish off licences. One even does cheese.
The best off licences I know are the ones who engage with their customers. They hold tasting events and they promote themselves and their stock, vigorously, through the social media. They build a community of customers (like me) who keep coming back and spending money, and buying things that perhaps we hadn't thought of buying when we went in. Some of them do home delivery too.
Off licences that are just sitting there passively waiting for the customer to come in and buy stuff should not be surprised that their customer is getting it in Tesco with the milk.
Beer Nut you are spot on with your comments. Keep them coming. Can you elaborate a bit on the benefits of social media as a sales tool for the unconverted ...allowing for those around the country with no broadband coverage!
ReplyDeleteOfficially (and I know IrelandOffline refute this) 99% of Ireland has broadband coverage. Forfás figures from end 2009 have broadband in 54% of Irish households, a bit lower than the EU average, but not by much. My point is that for a business to decide "ah, sure none of my customers use Facebook or Twitter" is a huge mistake. 50% of Irish people are on Facebook. 50%! Why you wouldn't be putting a display in a free virtual shop window like that is beyond me. If you don't know how, then that's where, I think, maybe you should ask your representative organisation to arrange help for you.
ReplyDeleteBack in the real world there are outlets like the local paper and your own front window to advertise events, tastings, new stock, limited editions and other stuff that will help get people through your door. Make these regular and constantly changing, and you're more likely to get people into the habit of visiting your shop.
Yes, it's all effort, and hassle, and might even cost a bit of money. But I think at this stage it's an investment as necessary for survival as a fridge or a credit card machine.