Tesco buy all nine Shoprite supermarkets- Monopoly?

[Roger Mexico]

16 minutes ago, monasqueen said:

Has anyone tried doing the comparison in prices between Lake Road and, say, Onchan village Shoprite?

Onchan now has a large range of Tesco branded products, which seemed to me to be fairly consistently more expensive.

They seem to be aiming for (at least) Tesco Express pricing for all of the original Shoprite stores.

I'm not sure a comparison would be meaningful.  At the moment Tesco will still be running Shoprite's old systems in the unconverted shops and presumably be having to enter the prices separately.  So there is a lot of scope for mistakes and one-offs.  For what it's worth Tesco brand items in Castletown pre-conversion tended to be the same as Lake Road, but there were clearly a few where an Express premium had been added.

[woolley]

4 minutes ago, Roger Mexico said:

I'm not sure a comparison would be meaningful.  At the moment Tesco will still be running Shoprite's old systems in the unconverted shops and presumably be having to enter the prices separately.  So there is a lot of scope for mistakes and one-offs.  For what it's worth Tesco brand items in Castletown pre-conversion tended to be the same as Lake Road, but there were clearly a few where an Express premium had been added.

Same in Victoria Road before it shut. Far more expensive than Lake Road.

They must have done lots of modelling to place the prices. They know what Shoprite was turning over in each store, they know the shipping costs. They must have anticipated the loss of trade from Lake Road to the other stores and the extent of it. To be honest, it always felt like we were getting a free ride at UK prices. I know very well the cost of shipping stuff here, and it is obvious that things will change. The exact impact of it is yet to be seen, I'm sure.

[CrazyDave]

32 minutes ago, IOM said:

No idea to be honest about Wick or Kirkwall . You should be able to do the comparison if you set up a Tesco account with an address on one of these islands . 
 

Basically the online shop is driven from your home address . It will pick the items available from the nearest picking store ( in this case it’s currently Lake Road ) . The idea is you will only be able to obtain items that are sold in that store  and then it picks the prices from that store if that makes sense . 

It takes two seconds to change the store you are looking at. It then reprices everything on your virtual Shopping list, meaning you can compare prices for any store in the Uk in seconds.

[Kopek]

Wow! I never knew that shopping could be such an intense actuarial experience!

I just pop around to the Coop  on the terrace. I walk slowly so that it doesn't cost me any shoe leather!

[Andy Onchan]

28 minutes ago, woolley said:

Same in Victoria Road before it shut. Far more expensive than Lake Road.

They must have done lots of modelling to place the prices. They know what Shoprite was turning over in each store, they know the shipping costs. They must have anticipated the loss of trade from Lake Road to the other stores and the extent of it. To be honest, it always felt like we were getting a free ride at UK prices. I know very well the cost of shipping stuff here, and it is obvious that things will change. The exact impact of it is yet to be seen, I'm sure.

All prices in all stores will rise to the near equivalent of the Express model within the 18 months I reckon.

[CallMeCurious]

4 hours ago, IOM said:

Yes you are right there is not much competition. The point is Tesco were allowed to make the acquisition because there was no legislation in place to stop them having such a large share of the market . This would never be allowed across the CMA ( Competition and Markets authority) would never allow it because they would be concerned about consumer harm . 

They are cheaper than Shoprite and they had too had 10 stores+ (Chester Street until recently plus those Winerite stores) so that consumer harm was fine because...?

So how many and which stores and jobs do you propose that Tesco get rid off? (or would not have been able to buy from Shoprite) if they had been prevented by the monopolies rules? 1, 4, or 8?

Should that apply to Clear the chemist who run 3 stores in Ramsey and block out any direct competition?

For example I bought one off-the-shelf item for £3.49 from Clear and saw the same item on the Tesco shelf at £2.60 a 34% markup. Is that not price gougiing? These are the same people telling us to go to chemists for minor complaints.

Even if Shoprite could have gotten Aldi or Lidl interested in taking some of the remaining small stores (the ones to be rebranded as Tesco Express I believe) would that have been viable enough for them to setup warehouses and a transport network to account for relying on the fragility of the ferries?  

Or should the government have bought out Shoprite stores and then auctioned them off? Or run them at 'arms-length' with DoE/DEFA running "Manx Supermarkets" like the Meat Plant, Laxey Flour Mills etc.

You'll also note that Co-op supplies goods to smaller convenience stores, should that be subject to the same scrutiny?

What about the brewery? Isn't that a virtual monopoly?

Don't get me wrong I'm not a huge fan of Tesco and I'd like to see serious competition but not without a well thought out, viable and sustainable plan. Simply cutting your nose off to spite your face because our government were asleep at the wheel isn't a plan. 

[CrazyDave]

25 minutes ago, CallMeCurious said:

competition?

For example I bought one off-the-shelf item for £3.49 from Clear and saw the same item on the Tesco shelf at £2.60 a 34% markup. Is that not price gougiing? These are the same people telling us to go to chemists for minor complaints.

No

It will be a combination of buying power, and maybe running a product as a loss leader.

[Roger Mexico]

4 hours ago, IOM said:

Yes you are right there is not much competition. The point is Tesco were allowed to make the acquisition because there was no legislation in place to stop them having such a large share of the market . This would never be allowed across the CMA ( Competition and Markets authority) would never allow it because they would be concerned about consumer harm . 

Technically you're wrong because there was indeed legislation in the Competition Act 2021, it just hadn't been brought into effect or the required secondary legislation designed (they only got round to even launching the consultation in December).   Of course when it comes to potentially offending the powerful or doing something that looks like hard work (and these are things that often go together) IOMG is always very good at delay.

With regard to competition regulation, it's worth saying that the usual British way of dealing with this is not to make things worse, rather than trying to break up existing cartels (as used to happen in the US).  

[emesde]

Of course Tesco will make a profit on sales ,but the margins in retail grocery are very tight. The investment Tesco have made /are making in the Island is very substantial and I believe they are probably the only operator that would be able or want to do this.

The CMA in UK  reported on the market place  for 2023 to show the financial reality of the grocery market 

"The CMA points out that operating profits in the retail grocery sector during 2022-23 were down 41.5% on the previous year and that average operating margins in the sector fell from 3.2% to1.8%,"

[mad_manx]

3 hours ago, Andy Onchan said:

All prices in all stores will rise to the near equivalent of the Express model within the 18 months I reckon.

Isn't KFC and McDonalds sold  at higher rates  in the IOM anyway. I don't think many people complain about this 

 

Our 'poundshop' has been £1.20  😉

While I hope we do not end up with a 20% mark up , a 10% or so  premium for transport is inevitable from what I can see 

Edited March 4 by mad_manx

[IOM]

1 hour ago, CallMeCurious said:

They are cheaper than Shoprite and they had too had 10 stores+ (Chester Street until recently plus those Winerite stores) so that consumer harm was fine because...?

 

There has been no consumer harm because up until now there were two major competitors Tesco Lake Road and Shoprite . Tesco Lake Road sold at the same price as the U.K. as I assume they swallowed the freight costs in their overall corporate P and L whereas it doesn’t appear to anymore instead the customer pays . I have no idea what will happen in the future but what we do now know is a lot of Lake Road prices have been inflated and that’s likely because there is less competition. But it’s very early to see how it will all fall only time will tell . My point is people should not assume Tesco are the cheapest in town or the great saviours it’s worth shopping around . 
 

And if you look at Jersey you will see it has a lot of competition. 

[IOM]

8 minutes ago, mad_manx said:

Isn't KFC and McDonalds sold  at higher rates  in the IOM anyway. I don't think many people complain about this 

 

Our 'poundshop' has been £1.20  😉

While I hope we do not end up with a 20% mark up , a 10% or so  premium for transport is inevitable from what I can see 

Agreed but not many people ( if any ) have KFC or McDonald’s every day of the week . Food grocery retail impacts every single one of us everyday . And agreed pound shop is £1.20 it would not surprise me if food ends up in that zone in the future but as you say let’s hope not ! 

[CallMeCurious]

3 hours ago, CrazyDave said:

No

It will be a combination of buying power, and maybe running a product as a loss leader.

Hardly a loss leader it was medicine not a staple like eggs, bread or milk. So yes it is a rip off.

 

[CallMeCurious]

3 hours ago, IOM said:

Agreed but not many people ( if any ) have KFC or McDonald’s every day of the week . Food grocery retail impacts every single one of us everyday . And agreed pound shop is £1.20 it would not surprise me if food ends up in that zone in the future but as you say let’s hope not ! 

On average, everything we buy on island will always be more expensive than the UK as the majority of it is shipped in. It's highly unlikely any franchise would subsidise the IOM customers from UK profits long term after an initial setting up period. 

[CallMeCurious]

3 hours ago, IOM said:

There has been no consumer harm because up until now there were two major competitors Tesco Lake Road and Shoprite . Tesco Lake Road sold at the same price as the U.K. as I assume they swallowed the freight costs in their overall corporate P and L whereas it doesn’t appear to anymore instead the customer pays . I have no idea what will happen in the future but what we do now know is a lot of Lake Road prices have been inflated and that’s likely because there is less competition. But it’s very early to see how it will all fall only time will tell . My point is people should not assume Tesco are the cheapest in town or the great saviours it’s worth shopping around . 
 

And if you look at Jersey you will see it has a lot of competition. 

What I am saying is Shoprite had the same monopoly 10 stores vs 1 Tesco and took full advantage of it. Our government were fine with that. We still have 6 or 8 co-ops, Spar shops, independents and M&S, so there is competition. Has anyone done a price comparison there?

Seems logical that Tesco would put up the price in all the stores now and begin to recoup the costs of 9 store refits plus whatever they'll be paying to Shoprite.