I thank the committee for inviting the Musgrave Group to contribute to this important debate. I am accompanied by Mr. Donal Horgan, who represents SuperValu and Centra in the Republic, and Ms Edel Clancy, our communications director.
Our business is about partnering food retailers who own their own stores. As such, we are not a food retailer and we do not submit planning applications on our own behalf. However, together with our retailers we have a keen interest in ensuring the existence of an effective planning system that brings choice and value to Irish consumers. In these extremely challenging times, when our shoppers are struggling with their weekly food budgets and demanding value, we will speak to the fact that rather than inhibiting competition or leading to higher food prices, these guidelines support communities and ensure that town centres thrive. They also support jobs and consumer choice.
As legislators, members of the committee will appreciate that the issue involves more than commerce. The real issue is the kind of Ireland we desire. Over our long history, we have brought together a network of entrepreneurs who collectively with Musgrave employ 35,000 people in this country.
We have also set up our business model in Northern Ireland and Great Britain and we now support a network of some 2,000 stores in the United Kingdom. With this experience we are able to see at first hand the contrast in the planning regimes of the two countries.
Today, we make three points that underline the importance of retaining the retail planning guidelines in Ireland. First, the guidelines are not a barrier to new entrants nor do they inhibit competition. Second, bigger stores do not mean cheaper food prices, rather they simply concentrate all retail activity in larger stores. Third, out-of-town retailing does not create net new jobs. In fact, it leads to job losses as businesses in town centres are forced to close.
Since 2001, the Irish grocery market has seen a rapid expansion with a 50% increase in retail space to the end of 2006. Over this period major retailers such Tesco, Dunnes and Aldi increased their store numbers by 61% and the symbol retailers such as SuperValu, Spar and Londis by 66%. This has led to increased choice for consumers with most people having access to over a dozen stores within a ten minute drive. The guidelines have facilitated the development of a highly competitive and diverse marketplace.
The Competition Authority would like to see the removal of the cap on grocery retail space as it believes that large-space retailers will bring reduced prices to the consumer. The authority does not present any research to support this. Its argument is based on the assumption that greater shelf space will be dedicated to food, thereby creating increased choice and competition.
Our experience is that larger stores do not provide greater shelf space for food, but more space for non-food. Research from IGD, the leading authority on international grocery and retail trends, demonstrates that larger formats dedicate up to 30% of their space to non-food such as books, DVDs, electrical products, toys and household items.
The location of these stores is of paramount importance. If placed out of town they pull business from the town centre and eventually lead to the closure of smaller food and non-food stores, thus reducing competition and choice.
Surely it is important for the maintenance of vibrant communities in Ireland that we bring shops to people rather than people to shops. In the UK, the average consumer travels 893 miles annually to shop for food. The impact on the consumer and the environment is significant.
Last week many members of the committee saw the impact of the planning free-for-all on Ballyclare where the town centre was badly affected by the development of out-of-town retailing and superstores. Ballyclare underlines the critical importance of the sequential test so that development happens in town centres first.
Proponents for changing the planning regulations not only argue that larger stores reduce prices but that they also create jobs. The facts state otherwise. The UK National Retail Planning Forum carried out an examination of the impact on local employment of the opening of 96 superstores throughout England and Wales. The forum concluded that each superstore opening resulted in an average net loss of employment of 276 full-time equivalents.
This research was replicated by IGD which also found that new superstores mean fewer employment opportunities. In its research, IGD found that during a two-year period following the opening of 93 superstores there was a net job loss in food retailing alone of 270 jobs. The actual job losses were undoubtedly far greater since the study did not include non-food retail.
The impact is also more severe in rural areas where retailing is often the largest employer. In Ireland, we must remember that independent retailers are based in the community and they source the majority of their services locally. Take local retailers out of the equation and what happens to the local insurance broker, solicitor, painter, etc.? Local retailers are part of the fabric of local communities; superstores are not.
Vibrant town centres are important, not just for business and the economy. They are also the heart of living communities. Do we really want nothing in town centres but pubs, bookies and fast-food joints, as has happened in so many UK towns?
The retail planning guidelines are an example of where we in Ireland have got planning right. I would urge the Deputies and Senators not to take a risk with Irish jobs or risk the future of Irish communities. The retail planning guidelines need to be retained to preserve jobs in vibrant communities as well as real long-term choice for Irish consumers. The positive benefits from good planning are immense. The negative consequences of poor planning can last for generations and are very difficult, if not impossible, to undo. I thank the members of the committee for the opportunity to present at this important time.