Friday 14 August 2009

Cross-Border Shopping, Threats and Opportunities?

Recent market data suggests that the trend of cross-border shopping from the Republic to Northern Ireland may be abating, but will this trend carry over to the supply/wholesale sector? Irish retail analyst, John Ruddy, reports.

As the only EU territory with a land border with the UK, the Republic of Ireland has long been accustomed to the impact of changing exchange rates. Even before Ireland converted to the Euro, there has been an established trend of crossing the border to get the best value, with shoppers from both sides taking advantage of the geographic proximity to buy consumer goods at lower prices.

As has been widely reported, however, this stream has moved from a trickle to a torrent in the past 18 months. The combination of a weak sterling (against the Euro) and a sudden economic downturn has led to a huge upturn in shoppers from the Republic travelling North to Asda and Sainsbury’s, with the big two NI retailers at one stage commanding almost 3% of the ROI grocery market.

What was once seen as an inexorable rise, however, is now beginning to tail off. This is a result of exchange rate shifts (the Euro is 8% weaker relative to sterling than it was in August 2008, making Asda/Sainsbury’s prices still attractive, but not quite as attractive as before), but primarily because of a heavy bout of price competition between the retailers in the Republic.

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