Price is still not right

WHILE THE sometimes ridiculous differential between euro and sterling prices in retail outlets operating in the Republic and the UK have frequently attracted the anger of readers over the last several years, the volume of complaints increased significantly as the new year dawned and the two currencies almost converged, writes Conor Pope

With some stores in Northern Ireland offering one-for-one in the run-up to Christmas, even the most arithmetically challenged consumer was able to work out instantly that the numbers on the price tags did not tally with the realities on the foreign exchange markets.

Readers queued up to complain to Pricewatch last week about what they saw as greedy profiteering, and few stores were spared their wrath. One man happened upon a four-pack of socks selling in Dunnes Stores with price tag of €4. It looked like a fair price until he noticed that they cost just £2 (€2.13) in the sterling zone. "Is that a record?" he asked.

Hardly - it is not even that unusual. Another reader sent in price tags from Dunnes that priced "authentic classic Chinos" at €30 or £15 and a jacket at £14 or €25. "I'm sick of the current Dunnes promo, 'we're Irish'," he fumed.

Another reader found a coat in Marks Spencer with a sterling price of £99 (€127.79). At the till he was told the price was €150. When he complained to a manager, he was told that, as the coat had been bought by MS some months earlier, it had to be sold at the rate at which it was bought. The manager was unable to tell him when the rate had last been as low as 0.66p, which was what it would have to have been for the euro price to be justified.

The biggest retailer operating in both the Republic and the UK is Tesco. Its currency conversion has also seemed to be at odds with reality in recent days. It is selling shirts in the Republic with a euro price of €30 and a sterling price of £20, while Gillette razors which cost £2.92 (€3.12) in the UK cost a fairly hefty €6.36 in Tesco in Dublin.

Next, H&M, Debenhams, Argos and Top Shop were also in the dock for failing to pass on exchange rate savings to shoppers in the Republic, while online retailer play.com was found to be selling some game consoles to its customers in the Republic for over 100 per cent more than they cost British shoppers.

Pricewatch has been contacting stores on behalf of our readers about out-of-synch exchange rates for years in an effort to find out why euro shoppers are being routinely penalised, and the answer from stores is almost always the same. The problem is attributed to higher overheads in the Republic, we are assured.

It has always been difficult to challenge such claims because costs are undeniably higher south of the border and many companies are less than upfront when it comes to how much profit they are making in this jurisdiction.

IT SHOULD NOT be so difficult to challenge them in the future any more thanks to a Forfás study which was published with little fanfare just before Christmas. The report, commissioned by the Department of Enterprise after a survey by the National Consumer Agency (NCA) in June, found that selected branded grocery goods were up to 30 per cent more expensive in the South than the North. It makes for interesting reading.

It shows that while overheads are undeniably higher in the Republic, the difference should only add around 6 per cent to the prices here and not the additional 30 to 50 per cent consumers are usually asked to pay.

The study looked into the comparative cost of operating a retail businesses in Ireland, Northern Ireland, the UK and the Netherlands and showed that, while operating costs for retailers in Dublin were, on average, 25 per cent higher than in Belfast, these operating costs accounted for just 20 to 25 per cent of the final cost of products. It found that the cost of buying goods for resale was by far the biggest cost faced by retailers in the Republic, amounting to up to 80 per cent of their total costs.

"While we accept that the cost environment in Ireland is a contributory factor to higher retail prices, it does not explain North-South price differences of the magnitude that continue to exist," the Tánaiste and enterprise minister Mary Coughlan said when the report was published.

Although the euro weakened against sterling last week, it remains much stronger than most of the dual-priced tickets indicate. Last week Pricewatch once again contacted a number of stores operating in both the Republic and in the UK to find out when, or if, Irish shoppers could expect to reap the benefits of weaker sterling.

Marks Spencer claimed the store was "competitively priced within the Republic of Ireland". In a statement the retailer said that when it set its prices "we, like any other business, have to take into consideration factors specific only to the Irish market such as higher rental, operational and employment costs. It is therefore misleading to compare Irish prices to those in the UK."

WE THEN SENT the company relevant passages from the Forfás report indicating just what the impact of higher rental, operational and employment costs should have on the final price but it declined to comment further.

For its part, Debenhams confined itself to a terse one-line statement in which it said it had operations "in over 20 countries around the world and its pricing structures vary to reflect the changing costs". Tesco Ireland was more expansive and claimed to be "committed to passing the exchange rate benefits to customers". The company told Pricewatch that its clothing was purchased "many months in advance and is subject to the exchange rates at that time; this in turn is reflected in the pricing. It said it would "reintroduce our 10 per cent sterling discount on all clothing. This sterling discount will of course be reviewed in light of the current exchange rate position."

One cross-border retail group which has at least acknowledged the sterling differential is Mosaic, the parent company of Oasis and Warehouse. It introduced a 10 per cent exchange rate saving before Christmas. A spokeswoman said it had expected its rivals on the high street to follow suit and expressed the belief that if they had, consumers would have seen significant benefits. The spokeswoman said that the feedback had been positive, particularly with shoppers in Oasis which has an older clientele than Warehouse.