JOINT COMMITTEE ON ENVIRONMENT AND LOCAL GOVERNMENT díospóireacht -
Wednesday, 16 Feb 2005

Retail Planning Guidelines: Presentations.

Chairman

I welcome representatives of RGDATA and the Irish Hardware and Building Materials Association. I understand that our colleagues in the Joint Committee on Enterprise and Small Business have considered this issue recently and remind members and witnesses that today's meeting will consider the planning aspects of the retail planning guidelines.

Before the presentations, may I draw attention to the fact that members of this committee have absolute privilege, but that the same privilege does not apply to witnesses appearing before the committee. Members are also reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official by name or in such a way as to make him or her identifiable.

I propose to take the two presentations together, beginning with Ms Tara Buckley from RGDATA and then a question and answer session will follow.

Ms Tara Buckley

I am delighted to come before the committee to speak on this issue of importance to the members of RGDATA. RGDATA is a representative association for Ireland's independent family owned grocers who operate more than 4,000 stores in suburbs, towns, and villages throughout the country. On a national level the independent sector serves 40% of the country's grocery needs and RGDATA members operate independently under their own name or as members of symbol groups.

My members play a key role in the social, economic and community life of Irish towns and villages and have been the true generators of urban renewal in many areas in the past 15 years. The grocery shop is of critical importance to the health, vitality and viability of a town or village. The independent retail sector provides employment for 40,000 people and independent retailers have invested more than €800 million in new stores and upgrading existing shops in recent years. As about 75% of the goods sold by independent grocers are produced and sourced in Ireland, a thriving independent retail sector has a major impact on many other sectors of the economy. Local shops provide a focus for community activity. much needed services and employment and often give local suppliers their first break. International research has shown that money spent in local shops can be worth up to seven times more to a local community than money spent in international stores. Ireland can be proud that almost every town, village and community throughout the State has at least one world class grocery outlet operated by local people for local people and providing competition, service and choice. This is equally important given our displaced population and the emphasis we place on quality community life. Considered retailed strategies and well planned and sustainable retail development are essential to maintain our current retail landscape, which offers consumers convenience, choice, service and value and brings the shops to the people instead of the people to the shops.

We do not have to look very far to see the effect of unsustainable retail development. In Britain, 42% of villages do not have shops. There is nothing in the Minister's recent changes to prevent a grocery store locating beside a durable goods superstore. The combined impact of these two development would be to fundamentally undermine local retail facilities with a catchment area of 20 to 50 miles.

RGDATA is seriously concerned with the changes that the Minister for the Environment, Heritage and Local Government, Deputy Roche, has introduced to the retail planning guidelines and in the manner in which the changes have been introduced. The Minister has sought to reassure us by stressing that the changes apply only to durable goods and that he has no intention of lifting the floor space caps as they apply to the grocery sector. While we welcome these assurances, RGDATA members remain concerned. Our concern is based on the fact that retail planning has two fundamental aspects, location and store size.

While the Minister is correct in stating that he has not altered store size limits as they apply to the retail grocery sector, the change he has introduced has fundamental implications for the location of stores. RGDATA's primary concern is that the lifting of the cap in gateway areas for retail warehouse outlets selling durable goods will lead to the development of retail parks around these superstores on sites outside the gateway towns. These retail parks which would have been unsuitable for grocery retail outlets under the old regime will inevitably attract conventional grocery outlets that are within the cap. Thus the Minister will have created the sort of out of town retail parks that have devastated town centres in the United Kingdom, France and the United States.

As the amended guidelines stand it is possible that the large units sanctioned by the Minister, Deputy Roche, will be surrounded by an accumulation of other retail facilities. This would not be the Minister's intention and if allowed it will have significant negative consequences. We ask this committee and the Minister to review and amend the revised retail planning guidelines, to ensure they will not inadvertently lead to the establishment of large scale out of town, or edge of town retail parks at the various gateways. This will have a devastating impact on the cities, towns and villages within a 50 mile radius of these designated gateways. RGDATA is also concerned at the manner in which this change has been implemented.

RGDATA has no issue with IKEA, but the Minister responsible for the environment and strategic planning should at least have considered whether IKEA would be prepared to operate in Ireland in the context of our current planning restrictions. As Ireland is an attractive market for IKEA, why can it not set up shop within the current guidelines? IKEA operates stores under the cap in France, Spain, New Zealand, Australia and a number of US states. In fact, IKEA has recently announced that it will introduce a new smaller store format in Germany and the United Kingdom to comply with local planning regulations in those countries.

The Minister has repeatedly made the point that unless the guidelines were amended to facilitate IKEA, it might locate in Northern Ireland. This, he claims would give us all the downsides without any of the benefits. RGDATA is not convinced that the Minister is right. IKEA wants to locate close to the main centre of population, but instead of one massive store, greater than the size of six Croke Parks, why not persuade IKEA to have three or four smaller stores in the gateway areas? As the UK authorities have managed to do this, why can we not do so? This would be more consistent with the national spatial strategy than the current approach adopted by the Minister. I hope that at this late stage, the committee will address these concerns. RGDATA deeply regrets that in spite all of the important work that was carried out in the preparation of the retail planning guidelines, including the considerable consultation process with international economic and competition advisers who had an input before the guidelines were introduced, the committee was not consulted about these amendments before the new guidelines took effect.

Changes that are introduced for all the wrong reasons and without due consideration will have serious and negative consequences for this country. RGDATA would like this committee to recognise that the changes introduced by the Minister will have serious and unintended consequences, in particular the risk of edge of town and out of town retail parks developing around these superstores. If a site in Ballymun was to become one of these major retail parks, it would have serious consequences for towns, villages and local retail centres in north Dublin and in counties Meath, Kildare and Louth. Given that the gateway towns and cities, include Athlone-Tullamore-Mullingar, Cork, Dublin, Dundalk, Galway, Letterkenny, Limerick-Shannon, Sligo and Waterford, there are few parts of the country that would not be affected by this change. RGDATA members hope the committee will ask the Minister to redraft the changes before the first planning application is made under this new regime, thus removing the possibility of major retail parks developing outside towns, villages and cities and devastating them.

Chairman

I now call on Mr. James Goulding, Mr. Tom O'Connor, and Ms Catherine Shiels of the Irish Hardware and Building Materials Association to address the committee.

Mr. Tom O’Connor

I am the president of the Irish Hardware and Building Materials Association and on behalf of my colleagues, Ms Catherine Shiels, the vice-president, and Mr. Jim Goulding, the secretary general, I thank the chairman and committee members for inviting us to appear before the committee.

Rather than reading the submission, which has been circulated in advance, I propose to summarise it. The Irish Hardware and Building Materials Association represents more than 800 outlets nationally, employing between them 25,000 thousand people in the hardware, DIY, building materials and allied trade at retail, wholesale and manufacturing levels. The retail planning guidelines were carefully constructed over four years by leading experts in the area. They set out in a measured, balanced and sustainable manner how retail development should be considered under the planning process. They have been an enormously positive force and facilitated rapid and widespread retail development since their introduction.

Implications and consequences of the changes to these guidelines go beyond any individual retailers or store sites. They introduce fundamental changes to our national planning rules. The retail warehouse cap has been of prime importance, providing certainty and clarity for retailers and developers at a national level and to local authorities which would otherwise seek the largest sized outlet possible to maximise development levies and rate yields. Consumers have benefited most from strong price competition in our sector. The consumer price index currently shows an inflation figure of -1.17% in the sector against a national figure of 2.3%. There is some rationale for the Minister lifting the cap to allow innovative new forms of retailing to benefit consumers and enhance choice and value. Following the existing format, operators would not give added value or benefit to consumers.

There have been many new entrants since 2001 including Harvey Norman, Halfords, Homestore + More and so on, with rapid development by existing participants. In our sector B&Q had existing stores and announced new outlets in Liffey Valley, Tallaght, Swords, Cork, Limerick, Galway and Sligo. Only this morning the committee may have read newspaper reports that B&Q will soon open in Athlone. Homebase has announced eight nationwide outlets and Irish retailers have also developed through the highlighted period, with many stores constructed or proposed for all of the gateway and hub towns. In the last year 26 hardware-DIY retail outlets were opened with 55 major proposals in the pipeline by last October.

The changes announced by the Minister are not minimal or tightly focused and will have widespread implications. Of the 71 submissions received by the Department, 48 were in favour of maintaining the floor space cap, 19 submissions desired to change the cap and four were neutral. Even allowing for vested interests on both sides the submissions received were in favour of retaining the cap.

The competition authority's position is focused narrowly on one element of the review. A leading firm of retail planning experts — Tyms and Partners — together with an Irish planning consultant, Mr. Jonathan Blackwell, prepared the original guidelines. Goodbody Economic Consultants, former chairman of the competition authority Mr. Patrick Lyons and the late planning expert Dr. Brian Meehan vetted them to assess their impact on consumers and competition. In contrast, no such external expertise was retained for the purpose of advising the Minister. The decision to change the guidelines was made against the advice of the planning officials in the Department. At the press conference for its launch the Minister said he had no idea how many retail stores would develop as a result.

An independent traffic assessment was not carried out. The only figures quoted were those prepared for IKEA stores in the UK. Our association has commissioned experts to review the planning and traffic aspects of these changes. The planners concluded these changes would facilitate more than a single giant retail warehouse in each urban renewal area, as there is no cap on the development of numerous such warehouses at one location. Instead of a tightly focused change local authorities would seek to maximise the potential retail development in IAP areas and permit the development of a number of retail warehouse units in excess of the retail floor space cap, with unintended consequences for north County Dublin, Meath, Kildare and Louth if the 100-acre site in Ballymun were realised in this way, for example.

There are five key findings in our consulting traffic engineer's report. First, using the TRICS measuring instrument used for IKEA in the UK, the proposed store in Ballymun would generate up to 11,000 extra car trips during peak times on Sunday; on Friday that figure would be 7,000; and on Saturday it would be 8,500. This development would have a significantly adverse effect on the M50 and Ballymun road system. Following the M50's upgrade the route would still operate beyond its capacity, with congestion resulting from the proposed development. It would hasten new tolls and charges on the M50.

It was concluded that the national road network under the national road development programme is not capable of coping with the traffic generated by these megastores both inside and outside the Dublin metropolitan area as well as in gateway hubs and their environs. Regional hub towns such as Killarney, Tralee, Wexford, Kilkenny, Carlow, Ennis, Ballina, Castlebar, Cavan, Westport and Monaghan would bear the brunt of these marketing draws. It has been suggested that these changes could be reviewed on an annual basis but errors in planning are difficult and costly to correct. It is a strange approach to public policy to introduce a fundamental change without being fully aware of its impact.

We ask this committee to ensure the Minister reviews the changes he has made to prevent clusters of megastores in IAP locations, to prevent these changes being used as a fig leaf for the up-sizing of existing retail operations and to prevent the development of megastores in gateway towns until their impacts can be assessed. I thank the committee for its time.

Chairman

I appreciate that members will want to make comments but if those comments can be kept short and a few of their questions taken together we will gain more from this meeting.

Deputy Gilmore

I welcome the delegation from RGDATA and IHBMA and their presentation. They have given us much material on this subject in the past. The review of the guidelines was known for some time and the phrase "the lifting of the retail floor space cap to allow innovative forms of retailing that would benefit consumers" is not a great surprise to the committee. If something had been done to facilitate this issue's driving force — IKEA — such as a new cap or something of that kind, it would not have surprised anyone or given rise to a great deal of grief. The problem was that the decision made by the Minister went far beyond what was necessary and its contents were overlooked in the discussions that ensued as a part of this process and the euphoria upon the realisation of IKEA's arrival.

I welcome the submissions which highlight what needs to be addressed. The decision has the potential to dramatically change retailing and planning in this country. If one makes the decision to allow retail warehouses in IAPs, every gateway, city or major conurbation, inevitably the pull will be to these points. Businesses will seek to move and become involved in retail warehouses. Such development will not, regardless of the way it is under-scored in the accompanying press statement, be confined to durable goods and so on. Once a retail park is established, demand will increase for grocery stores and so on.

It is only now the full realisation is beginning to percolate through that the Minister's decision is monstrous in terms of what will happen to retailing and planning. The two presentations have recommended that the decision be re-examined and that the Minister come at the issue from the other end. The IKEA matter is done and dusted. Only matters such as planning and location remain to be dealt with. That is another day's work. We must examine this issue from the point of view of what will be the consequences if the new retail planning guidelines are allowed to stand. I support this approach.

Deputy O’Dowd

I welcome the representatives from the Irish Hardware and Building Materials Association and RGDATA. I would like if they could clarify whether they favour the location of an IKEA store here. I am not clear on the analogy drawn by Ms Buckley. Did she mean she would prefer the store to be located north rather than south of the Border? I am not sure if that is the point being made.

I come from a Border county. During the run-up to Christmas thousands travelled North to Newry and other places to do their Christmas shopping, in particular, for alcohol, a popular product. Will the representatives accept that it would better to have people shopping in an IKEA store located in Dublin in an area like Ballymun which has a high rate of unemployment rather than north of the Border, thereby creating many jobs there? That is a fundamental issue. Consumers are entitled to choice. If IKEA has stores in more than 200 countries, including communist China, why cannot it locate a store in Christian Ireland? What is the problem?

In terms of what will be sold, I understand products bought at the store cannot be sold anywhere else. Currently, no hardware, building materials store or RGDATA shop sells the type of product being sold or likely to be sold by IKEA. IKEA products are unique and cannot be purchased elsewhere. I favour the consumer's right to purchase such products in the Twenty-six Counties. I cannot understand the sustainability of the argument made.

The point was made that local hardware or building material suppliers supply paint, masonry, nails, nuts and bolts and meet everyday needs. I do not believe people will go to an IKEA or other superstore to buy these products. Convenience is the priority of many in their purchasing decisions. People will travel to gateway towns for special one-off purchases. Perhaps the representatives will comment on this point.

I would like to address RGDATA's concerns. As I understand it — Ms Buckley may correct me if I am wrong — the growth in RGDATA business is in convenience stores in villages and smaller towns. Rather than seeking to set up stores on the outskirts of the gateways about which Ms Buckley is concerned, stores such as Tesco are moving into villages and small rural towns because that is where there is growth in RGDATA business. I understand and take on board the concerns expressed but I am not convinced by the argument made. Perhaps this point could be addressed also.

The key point is that people will buy locally in an RGDATA store because it remains open longer, is convenient and stocks the product they need. What is driving such purchases is not price but convenience. I genuinely believe RGDATA has nothing about which to worry. There has been massive retail investment in the heart of towns such as Kilkenny, Drogheda, Dundalk and Navan. If the retail planning guidelines are directing that stores be developed in the centre of a town or adjacent to a shopping centre it is because that is where the money is going. RGDATA is looking in rather than looking out. I would like to be persuaded by its argument but I am not.

Chairman

Will RGDATA expand on the position of its members in Border counties, given their proximity to Northern Ireland and, in particular, the two hub towns, Cavan and Monaghan, now under discussion?

Ms Buckley

I thank Deputies Gilmore and O'Dowd for their comments. RGDATA is looking out, not looking in. Those who welcomed the arrival of superstores in the United Kingdom in the 1980s are now ruing the day they did not look ahead to assess the impact they would have. Seven out of ten English villages now have no local shop. I am aware RGDATA members are considered to be doom and gloom individuals. However, the reality is we are looking at the experience in other countries that went down the superstore, out of town, retail park route ten or 20 years ago. They are now ruing the day they did so. We can learn from their experience by providing for good sustainable planning.

RGDATA has no bone to pick with IKEA. We welcome innovative retailers and new ideas for Irish consumers. We would not stand in the way of this. The point we are making is that in making this decision the Minister, possibly unintended, has created something which goes much further than bringing a new innovative retailer to Ireland. He has created a monster that will devastate the retail landscape.

Members rightly pointed out, in terms of Irish consumers shopping abroad or in the North, that the majority do so to buy alcohol. VAT rates on alcohol in Ireland are the highest in the European Union for spirits and the second highest on beer. One can see why people want to go to the North to buy alcohol.

There is great competition in the retail sector which I accept is thriving but it is thriving because retailers are competing when it comes to convenience and service. The reality is that if one wants community based living, one has to provide for good sustainable planning which is not developer or retailer-led. It should be led by those who sit down and work out a strategy for the future.

Those consulted in the long process of developing the retail planning guidelines included the former chairman of the Competition Authority, economists and retail planners from Europe. They came up with what was considered a state-of-the-art system which Ireland is following. It is paying off for Irish consumers in that we continue to have vibrant towns and villages. We are not trying to stand in the way of innovative retailers. We are all for them.

Deputy O’Dowd

Is it true that the growth in RGDATA business is in small rural towns and villages?

Ms Buckley

Good operators in every town and village are supported because people like to be able to walk to them. The Deputy should remember that many consumers still wish to do their grocery shopping on foot. We want to maintain a level playing field so that our town centres remain vibrant. These innovative retailers should be allowed in but should be obliged to comply with the rules that were established after long consultation with various expert bodies.

Deputy O’Dowd

I am sorry to repeat the question, but to be clear, is the growth in the convenience store sector concentrated in the small villages and towns, where there is no demand for the supermarkets that are of concern to RGDATA? Does Ms Buckley's association not see that as a good thing?

Ms Buckley

The Deputy should remember that our members operate in villages and towns in outlets ranging from convenience stores to family-owned supermarkets. The latter compete with the multiples for the full family shop, not merely for a couple of convenient items. Any impact on their business occurs nationwide, not just in small towns and villages. The operators had the confidence to invest in their businesses because they felt they had a level playing field which did not allow the kind of developments that take a town's business and sweep it outside. They would be very concerned if a change made by the Minister to facilitate IKEA ended up by creating superstore retail parks that were never envisaged. Other countries went down this road but ultimately, consumers do not want them and they devastate towns and villages.

Mr. O’Connor

The Irish Hardware and Building Materials Association welcomes IKEA, an innovative retail set-up, into the marketplace. However we would prefer if IKEA came with outlets that comply with the previous planning guidelines. We would also prefer if the outlets were spread around the country rather than establishing one large outlet, as is proposed in Ballymun. Such a development might attract other retailers to the same location, drawing customers from all over the country which in itself would have a major negative impact on retailing throughout Ireland. As a result, the consumer would actually lose out in the long run. The older retail planning guidelines have promoted the development of outlets. Earlier, I mentioned the phenomenal number of outlets that have opened in the hardware and DIY sectors over the last year and a half. The Deputies present will have seen this in their constituencies. The people in the industry did not just pocket their margins but reinvested and developed their businesses as the market grew. As our members have complied with the previous planning guidelines, the change will leave them at a serious disadvantage. They will be unable to build an extension to their stores or to move their outlets to a location near IKEA but will see their business move elsewhere.

I suggest that no one will go to IKEA in a bus as they will need a vehicle to take the big flat-pack home, which will create traffic problems. IKEA has shown, in the last couple of weeks since the minister made his decision, that it is capable of compliance. The latest outlet it considered was 3,000 sq. m., or half the old cap. I do not see why IKEA cannot be advised or persuaded to comply.

If the single outlet in Dublin proceeds, we will lose out. Consumers will lose out on choice, because the bigger players in the market will focus on what we call private, or own label business. One might go to a B & Q store which stocks several grades of a product, but they will all be the same brand. This happens throughout the UK. As sales and marketing director of True Temper Limited, I am very familiar with this. I have been selling all over Europe for 15 to 20 years and I have seen perfect models of the phenomenon. The situation differs from country to country and in some cases, the consumer is not gaining. The Dutch have excellent models, but the English do not. Over 1,000 retail outlets of this type were built in the last 20 years in the UK and the independent operators have gone. The employees of manufacturers and wholesalers are out of work because there is no longer a line of distribution. The large retailers go to low-cost countries to source their products and import them directly, so no extra employment is generated, and much of the employment they do provide is part-time.

Deputy Morgan

One of the witnesses stated that when the former Minister for the Environment, Heritage and Local Government, Deputy Dempsey, originally introduced the cap, he drew on the expertise of economists, the former chairman of the Competition Authority, and other specialists for advice. On this occasion, the Minister did not call on such experts for advice, nor did he take the advice of officials within his own department, which is some change. Will the witnesses think aloud as to why he might have done this? Do not be afraid to give us your opinions as I have an idea myself. I would like to hear the contributors' view.

Do the witnesses agree that what we seek is a level playing field? I have no problem with IKEA and its specialist, unique product. Is its unique product so good that it would sell just as well if IKEA operated within the guidelines the witnesses' members must accept? Is that reasonable? The witnesses may expand on the point if they desire. Is what we have seen here regarding bulk dry goods the thin end of the wedge? Are the witnesses concerned the guidelines may unravel? We have already been told by several Ministers that this will not happen. What assurances could be given to allay the concerns of the witnesses' members? What would be the impact of the development of a nest of superstores around Ballymun or elsewhere?

As to the question of whether the development goes to the North rather than the South, I look to the day when the writ of this establishment will cover the entire island and such problems no longer concern us. For the moment, I am delighted to see Irish people employed on either side of the Border. As many, if not more, people come south for their shopping as go north. Admittedly, one sees the queues at the weekend for the drop of booze. We will work on the Minister for Finance to alter that situation.

Chairman

The Senators have gone to vote in the Seanad but will return. What percentage of the witnesses' members do they envisage will be affected by the changes made, given that the relaxation only applies in areas subject to integrated area plans under the Urban Renewal Act 1998 and only to durable goods? RGDATA gave me a report on 1 March 2004, published by the New Economics Foundation, a British think-tank. The recommendations included the drawing up of clauses to encourage local purchasing and sourcing. Does the Irish Hardware and Building Materials Association see room for such protective measures within current plans and are there any measures that the association might suggest to benefit its members?

Mr. O’Connor

I would like to pass this question to Mr. James Goulding.

Mr. James Goulding

I will deal with some of the questions. Deputy O'Dowd asked "why not in Ireland", which is a direct and valid question that should be put to the company seeking to locate here. As we are not in direct competition with that company, the question of IKEA——

Deputy O’Dowd

Your members are not in competition.

Mr. Goulding

When I attended a meeting in Limerick, a woman from Ennis asked me why I was stopping IKEA from coming to Ennis. I replied that she should ask IKEA that question. Nobody has ever stopped any company coming to Ireland. The Irish Hardware and Building Materials Association is pro-competition as are the retail planning guidelines.

Speaking at the launch of the new IAP and afterwards, the Minister said that it is the responsibility of local authorities to create new IAPs under the existing conditions. The town clerk from Dundalk said that Dundalk Town Council would do everything necessary to facilitate large stores. There is no cap on the accumulation of these stores. They will create super-centres. Why should an individual have to drive to Ballymun via the M50, which is effectively a carpark, to shop when, under the existing guidelines, she could shop in Limerick? All our members are vulnerable.

We and everybody else played a part in the exhaustive research into and examination of the original guidelines. The Goodbody report concluded that there was no advantage to consumers to have retail outlets greater than 6,000 sq. m., that there was plentiful growth opportunities for outlets up to 6,000 sq. m. and that there was a possibility of a monopoly developing if outlets greater than 6,000 sq. m. developed, as has happened on other countries. Our president has referred to this. These will be the unintended consequences of the Minister's decision.

Our president has outlined three points that we would like to see addressed. These include the possible clustering of megastores in any location, the changes being used as a figleaf by those who are already within the retail planning guidelines but who have the marketing and stock exchange clout to build megastores and close smaller stores, as has happened in other countries, and the need to re-examine the effects on gateway towns, for example, Drogheda. Would we be happy if a national policy decision was made without consideration of its possible effects? Our only example of the impact of this policy is from overseas, where the consequences have been measured and are known by the Minister and his planners. Do we heed these consequences and act accordingly or do we let do we let our gateway towns take their chances without realising the implications of their actions?

Chairman

Ms Shiels, do you wish to say something?

Ms Catherine Shiels

I am head of one of the buying groups for independent builders providers and DIY stores nationwide. If some of these megastores are built in the gateway towns, they will affect the hub towns where the Government is trying to encourage growth. I have seven members within the hub towns and five have made considerable investments. Three have worked within the existing guidelines and have invested a considerable amount of money, for example, one member has invested €7 million. If we allow megastores double the size of the previous cap, his investment will be null and void. He is understandably very upset at this prospect. We have some members in the Border towns who will lose their customers on late nights on Saturdays and Sundays. This will devastate their towns and the fabric of their communities. Jobs would be displaced rather than increased.

Mr. O’Connor

If one takes the gateway towns and takes a radius of 50 km, which will probably be the catchment area for one of these large retail outlets, it means that only those of our members in west Donegal, west Mayo and west Kerry will be unaffected. Consumers will not travel to these retail outlets to buy only one item, they will also do their other shopping in that area. Therefore, retailers in the towns, particularly the hub towns from where these consumers will travel, will suffer. The existing system works well and the economy has benefited from it. There is no reason to interfere with something that is successful.

Deputy O’Dowd

In terms of the national spatial strategy, these gateway towns have been designated as growth centres. If we are to stop the traffic queues in Dublin, we need to develop the gateway and hub towns. Including gateway towns in the development of stores like IKEA should benefit the regions by keeping people in them. If it is sustainable to put one of these stores in a regional centre, that will bring in more business and more choice for consumers.

The builders providers in my area provide cement, blocks and various building materials. I cannot see customers travelling from, say, Drogheda to buy those things elsewhere because the current providers are local, convenient and offer a good service. I see no reason a hardware shop in Drogheda or Dundalk would worry about business in these specific items going to Dublin.

I accept the point made about the traditional hardware store vanishing, as has happened in Drogheda. Businesses change and what is available now is more specialised. Nevertheless, I do not understand the concerns expressed by the members of the delegation as I cannot envisage the association's members losing their core business. If I want to buy a bed, I will go to my local store in Drogheda rather than drive to IKEA. The association's members would be better off if they looked at the challenges and opportunities for their businesses.

Deputy Healy-Rae

I welcome the members of the delegation and thank them for their presentation. In the words of Mr. O'Connor, why interfere with a system that is familiar and working very well? I support the existing system and oppose these megastores because they will hurt existing operators. The countryside cannot survive without small stores. I am opposed to the development of megastores and support the argument made here today.

Deputy Moloney

I, too, welcome the representatives here today. While we have all read letters from various groups in support of the case being made, it has been worthwhile to hear it made firsthand. I support Deputy O'Dowd's point that consumers must have choice. Nevertheless, we should take up the delegations' suggestion to speak again with the Minister on this issue. The argument against the development of superstores is a serious one. I was taken by Mr. O'Connor's remarks regarding his involvement in Europe with developments that have and have not worked. It is through experience that we learn. I am concerned about the effect of such stores on those currently serving demand.

Motorways are a fact of life providing easy access to the city. I am concerned this policy could contradict the work done to attract investment to hubs and gateway towns. I do not think there is a demand for such stores. Even if there is and, recognising consumer choice, should we go down that road and forget our previous choice which was to provide sizeable stores to meet such demand? I favour that approach. The submissions made today have raised serious concerns in my mind. I intend to bring the issues raised to the Minister's attention in the hope that the matter will be re-examined.

Deputy Gilmore

I have two questions. The population of this island remains at less than six million. Has research been undertaken to determine how many stores would be likely to develop in a population of that size? The population in Ireland is the same as some of the major cities in France, the UK or United States.

If the amended retail planning guidelines stand and there is no cap in designated areas on the perimeters of gateway towns or cities or where there is no designated area and Galway County Council decides to designate an area on the Oranmore Road in which there is no cap, is it not the case that the demand for no cap will inevitably arise? For example, a business in Galway city subject to a cap may wish to expand but may not be permitted to do so because it is located on the Headford Road rather than on the Oranmore Road where there is no cap. Would it better to have no cap rather than having existing retail centres subject to a cap while new designated areas are not?

Ms Buckley

Such a planning free for all would be a disaster. We would not support going down that road. The point we are making is that planning is important. The impact of a planning decision ripples throughout all we do. It is important developments are well thought-out and well planned. That is the point we are bringing to the table today.

The Chairman asked about the impact of such development on RGDATA members. We are concerned about our retail landscape and the plans in that regard into the future. We raise these concerns because change could have a greater effect than was ever intended. The full implications of such developments have not been thought out. We are concerned about the manner in which the decision has been taken. We believe that consultation and thinking through impact is important.

RGDATA does not want protective measures. That is not the business we are in. We want — to use a well used phrase — a level playing field. We believe in well thought-out measures, particularly in the context of the environment and sustainability which are led by those who have a strategy in terms of how we should live and shop. One of the strategies embedded in current planning is the provision of shops and viable, vibrant town centres based on the type of community life here and the displacement of our population. Even though the population of Ireland is equal to that of Manchester or Birmingham we do not envisage the way forward as being the provision of one retail park in the middle of Ireland to which we would all travel to do our shopping. That is not what we envisage as the way forward. The committee has the power to examine strategic planning to ensure it is not developer or retailer-led but rather that it is led in the best interests of all consumers.

Mr. O’Connor

I would like to answer some of the questions raised by Deputy O'Dowd. We have no objection to the location of large retailers in gateway towns. We welcome them. However, in the interests of maintaining the current style of retailing such retailers should operate within the cap to which our members and others are working rather than destroy what already exists in the marketplace. We welcome new retailers to the towns; it is their size we are concerned about.

I beg to differ with the point that builders' merchants will not encounter competition from the multiples. I know for a fact that B&Q, Castorama, Bauhaus and other large companies throughout Europe view the growth area for their business as being within the builders' merchant sector. B&Q, which has its largest store in the UK, opens between 7.30 a.m. and 8 a.m. to facilitate tradesmen on route to their sites. These retailers are seeking to develop in that area.

Deputy O’Dowd

Perhaps Mr. O'Connor would send that information to the committee.

Mr. O’Connor

I will send it through the association. It is a fact that they are aiming to build that part of their business. B&Q stores have a garden centre located at one end and a builders merchant at the other end with everything else in between from tiles to carpets and plumbing materials and so on. Our members cannot specialise to that extent. There may be two or three retailers in a town selling the type of products being sold by one particular retail outlet.

Deputy O’Dowd

A new B&Q and Woodies Store are soon to locate in Drogheda. Drogheda is not a hub or gateway and there is no problem with this. However, the relevant point may be that these stores are of a particular size.

Mr. Goulding

That is the point. Those stores have been encouraged to invest in Drogheda as a result of retail planning guidelines. We abhor favourable treatment. The type of questions being asked today could have been answered if a proper review had been conducted before the decision was taken and the unintended consequences were known. The United States was mentioned. We are all aware of the doughnut effect whereby everything is located in super centres. The question was asked, how many such stores could be located in Ireland. Ballymun could accommodate five stores the size of IKEA. I doubt anybody would realistically suggest that would not have a marketing effect on the rest of the country. We are not speaking about the competitive effect or about prices, we are speaking about market effects.

Should the cap be abolished? It should not. Those operators who have developed within the cap structure obeyed the Government rules and have not put the proposition to it that if it does not abolish those rules they will not build another shop. They are now suffering because they are at a disadvantage. The cap should not be abolished because it is creating a pro-competitive market. The questions the Deputy asked should have been answered by a review.

Mr. O’Dowd

I accept what Mr. Goulding said which is an important point. To take the example of Drogheda and all the stores opening there, it is not a gateway or hub town and what is sustainable in that town is the volume of business in that area. In other words, if a retailer were to build a massive superstore outside that town there would not be the demand for such business. Superstores are being opened in gateway towns. Even though, in principle, a superstore may be opened in a gateway town that probably will not happen because the market share such stores would target would not be sustainable in many gateway towns.

Senator Brennan

I welcome the two delegations. Much has been said about the cap and how the retail planning guidelines have been operated to date. County development plans have been adopted at local level throughout the country. Retail planning guidelines were also adopted at local level but they had no legal status. They were obeyed and disobeyed by neighbouring local authorities. As a result, when each development plan came up for consideration, more land was zoned for retail outlets.

The national spatial strategy was mentioned and the location of a number of units throughout the country. Who sets the guidelines for the long-term sustainability of those units? To date local authorities have made their views in this regard known, but now the ground rules have been changed at national level? Is what is considered to be sustainable on a national level based on the national spatial strategy? I note that three outlets were indicated by the association in one of the reports. What recommendation will be made by the committee to the Minister responsible as to how such development can be controlled? What is considered sustainable on a national basis in terms of larger units?

Senator Coghlan

I recognise that people are upset because the rules have been changed after the game has commenced. There is a concern as to what will happen in regard to the associations' members who have abided by the retail planning guidelines since they were introduced in terms of their existing stores, new stores or sites they acquired. It is regrettable that the IKEA superstore proposed for Ballymun or for another site was not provided for at a moderate size. We are learning that this superstore is downsizing in other countries and it has a moderate store in Majorca and in other countries.

I agree with what Deputy Gilmore said and perhaps others expressed a similar view earlier. I can foresee the danger the associations have outlined if these locations are agreed. Does the representatives envisage that in these integrated plan areas there will be clusters of retail warehouses rather than one such retail warehouse? If that is the case, I accept RGDATA's point that there will be pressure on other outlets to drift into them.

We are all for choice for the customer but I would be concerned about hubs and provincial towns outside gateway towns if such clusters develop on the basis the association envisages. The representatives might confirm that is how they envisage such clusters developing. If that happens, some businesses in towns in Kerry such as Killarney and Tralee could be wiped out. Such retail outlets could have a detrimental effect on provincial towns and villages because consumers might not have the choice they now have if these outlets operate in such clusters in integrated plan areas because they will wipe out some businesses in hubs and other towns, which will result in less choice and less competition. I would like the representatives to confirm that it envisages such clusters of outlets will develop in integrated plan areas in gateway towns.

Chairman

I want to bring the discussion to a conclusion. I will call Ms Buckley first and then Mr. O'Connor.

Ms Buckley

We have concerns about the development of clusters. That is the reason we would like the amendment to be revisited and tightened up to ensure that, whatever about facilitating innovative new retailers, this type of structure will not develop in the future. The type of retailing we had agreed after a long consultation process was vibrant town centres, namely, bringing the shops to the people. We want to ensure we continue in that mode and do not go down the other route which numerous other countries have gone down and very much regretted because they have been left with ghost towns and villages in their wake. They have a different style of shopping, one that we decided we did not want, which was driving people out to out-of-town parks with superstores.

Mr. O’Connor

I welcome the contribution of Senator Brennan and the question he asked concerning the long-term sustainability of these units. I remind those of my vintage of the Gubay experience a number of years ago. It opened an outlet in Newbridge but it closed after a short period. We are currently experiencing a buoyant economy. What will happen if there is a downturn in it and how much longer will it remain buoyant? The building industry cannot keep growing at its current pace. It will catch up with demand and level off. If some of these retail outlets were allowed to develop at the size proposed, I foresee them eventually becoming white elephants. Such development needs to be considered in the context of the size of our population.

While we welcome the competition, we ask the Chairman and the committee to convey to the Minister responsible the three messages we have put across. We are concerned about the development of megastores in clusters. We do not need large retail outlets in gateway towns. If they can work, as they have done to date, and grow with the 6,000 sq. m. format, everybody would be happy with that. If such retailers were allowed to upsize on existing sites, they would create major problems and have a negative impact on existing players in the market. The gateway locations could have an impact on smaller towns. We could destroy the fabric of our retailing and of Irish society and could finish up with towns that will be decimated. I have seen such towns throughout America and Europe.

Some countries, France in particular, has put a stop to such development. It has said to superstores such as Castorama that it is only allowed to have 200 stores and if it wants to build a new store, it has to close an existing one or further develop it. In Ireland we are opening up this market. A member of the committee asked how many of such stores we could have. The maximum Ireland could have with its population is probably about 20 to 25. We are almost at that level now. To where are we going to move once we bring in the bigger stores on top of the existing stores? We will find ourselves in trouble.

On behalf of our association, I ask the Chairman to convey that message to the Minister. I thank him for his time and patience.

Chairman

I thank both organisations for their presentations. They have been most helpful in our deliberations on this issue. We will pursue the issue on an ongoing basis and we will raise the issues put forward with the Minister when he next comes before the committee. I thank the representatives for their contributions.

The joint committee went into private session at 3.50 p.m. and adjourned at 3.55 p.m. until 2.30 p.m. on Wednesday, 23 February 2005.