By contributor Sean Carey
Almost the first thing I noticed as I entered the one-way system in Youghal, a seaside town at the mouth of the River Blackwater in East Cork, was a huge banner draped over a high stone wall at the rear entrance of the local Supervalu supermarket. It was advertising the merits of the “Real Rewards”, a loyalty scheme which gives customers points that can be used on future purchases.
The next day I needed to buy some provisions for the family holiday. So I paid a visit, using the front entrance of Supervalu in the main high street area of the town. In the foyer of the shop was a picture of current owner, Ken Brookes. His family had first opened a grocery shop in another part of the town in 1888. All sorts of price cuts on products which were available within the store were flagged up at the entrance.
I recalled that this upfront advertising explicitly emphasizing “price” wasn’t there on my last visit to Youghal three years ago.
When I got to the checkout, a young Irish woman asked whether I had my “Real Rewards” loyalty card with me. “I’m on holiday so unfortunately I’m not going to be here for long enough to make it worthwhile either for Supervalu or for me,” I replied. “That’s fine,” she smiled as she took my credit card.
In case anyone, including recently arrived tourists like me, didn’t get the message, the Irish television broadcaster, RTE, was also running a series of commercials on its various channels. In the ad a friendly Irishman with a banner behind him proclaiming “Permanent Price Cuts” walks towards the camera, and declares: “There’s no need to go anywhere else.”
“Anywhere else”, of course, refers to Tesco, the UK’s largest supermarket group and the third-largest in the world (after Wal-Mart and Carrefour). Tesco established a significant presence in the Irish Republic in 1997 and then expanded greatly especially after 2000, taking advantage of the economic boom which ran until the so-called “Celtic Tiger” imploded in 2008.
Unlike some of its U.K. competitors like Asda, Sainsbury’s, Safeway (now Morrisons) and Marks & Spencer, Tesco was quick to spot the potential profits in tapping into the new and fast-expanding middle class to be found on the other side of the Irish Sea. This social group was growing because people who would have traditionally left Ireland to seek opportunities in other parts of the globe, especially English-speaking countries like the UK, US, Canada and Australia, no longer needed to migrate because well-paid jobs, often available with US and other foreign hi-tech companies, were in plentiful supply.
The big question for Tesco given the size of investment that would be required was: would its entry into the Irish market be sufficiently scalable to be profitable or not?
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