Aldi Stores Ireland Limited.
Retail Excellence Ireland.
Northern Ireland Independent Retail Trade Association.
Irish Pharmacy Union.
The Joint Committee met at 9.30 a.m.
|Deputy Chris Andrews,||Senator Ivor Callely,|
|Deputy Cyprian Brady,||Senator Brendan Ryan.|
|Deputy Dara Calleary,|
|Deputy Deirdre Clune,|
|Deputy Damien English,|
|Deputy Michael Fitzpatrick,|
|Deputy Arthur Morgan,|
|Deputy Mary Alexandra White,|
DEPUTY WILLIE PENROSE IN THE CHAIR.
Chairman: The first presentation is on planning guidelines for retail outlets. I welcome Mr. Denzell Balfour, property director, and Mr. Donald Mackay, managing director, Aldi Stores Ireland Limited, and thank them for their attendance. As we have a busy schedule, I ask them to be as brief as possible in summarising their submissions. They will have five minutes to make a presentation which will be followed by a discussion with members of the committee. I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I call on Mr. Denzell Balfour to make a presentation.
Mr. Denzell Balfour: Aldi welcomes the undertaking of the review of the retail planning guidelines and we are happy to become proactively involved at this initial stage of the review process. We do have some concerns regarding aspects of the existing retail planning guidelines, in particular the way they are interpreted differently by local authorities. These guidelines are very clear that the planning system should encourage competition and innovation but, notwithstanding this, we consider that discount retailers face more stringent limitations on size than other grocery retailers, thereby inhibiting competition.
It has been our experience that the planning system has acted as a barrier to competition in the convenience sector in the following ways. There are restrictions on the definition and size of discount food stores, restrictions on where discount food stores can locate, floor space projections and retail strategies and unnecessary delays resulting from objections and appeals.
In terms of the definition and size of discount food stores, the retail planning guidelines describe discount food stores as single level, self-service stores, normally between 1,000 sq. m and 1,500 sq. m of gross floor space. In 2001 discount food stores were a relatively new phenomenon in Ireland, but the changing nature of the discount food store should be recognised in line with the increasing popularity of this type of retailing. It should be acknowledged in the new guidelines that the average size of food stores has increased to up to 1,800 sq. m. The description set out is not intended to be prescriptive in terms of a threshold size for such developments; it is to be used by local authorities as a broad indication of the potential retail floor space to be provided by discount food stores. Notwithstanding this, a number of local authorities appear, in practice, to regard the 1,500 sq. m figure as being a binding upper limit. It should be clearly outlined in the guidelines that the revised figure of 1,800 sq. m gross should not be viewed as a cap on the size of discount food stores.
Regarding locations for discount food stores, while the retail planning guidelines acknowledge that discount food stores are acceptable in town, district and neighbourhood centres, it is considered that the range of land use zonings under which discount food stores are listed as permitted should be expanded. In a number of instances the development of discount food stores is inhibited by overly restrictive zoning matrices within development plans. In particular, it is considered that retail planning guidelines should continue to specifically recognise the role discount food stores can play in the redevelopment of previously industrial locations that have become obsolete. These locations often adjoin well established residential areas and, in many cases, have become derelict. The redevelopment of locations where discount food store use can provide a well designed neighbourhood retail facility may dramatically improve the physical appearance and environment of the immediate area. It is submitted that it should be specifically recognised in the guidelines that discount food stores can be appropriate on land zoned for industrial enterprise and residential purposes, particularly where they can serve a neighbourhood function.
On floor space projections and retail strategies, local authorities are required to produce development plans containing specific retail strategies. These retail strategies establish the optimal scale and location for retail development. However, local authorities often regard floor space projections as limits on the total amount of retail development they can permit, thereby restricting development. This issue was recognised in a recent report by the Competition Authority, which noted that, in practice, it seems local authorities and An Bord Pleanála place weight on projections of required future retail floor space contained in local authority development plans. The report goes on to acknowledge that an assessment by a local authority of the likely additional floor space required within its administrative area could be seen as determining how many entrants will be admitted to the retail trade in a particular area. The Goodbody report in 2000 highlighted this as a concern, stating that these assessments could be anti-competitive, tending to stifle innovation and contrary to the interests of consumers. It should be acknowledged in the retail planning guidelines that the floor space capacity figures set out in retail strategies should not be considered as upper limits, but merely as indicative of the scale of new floor space required to meet the needs of the existing and future population and expenditure in a particular area. These figures should be seen as minimums rather than maximums. The key criterion in the assessment of an application is the location of the new floor space. The quantum of floor space only becomes a critical consideration where new floor space is proposed outside of the defined retail core of the town.
I will now deal with third party appeals to planning applications. The uncertainty regarding planning permission can also raise the cost and delay the arrival of the new retail outlet. Given that the effect of third party appeals, especially by competitors, is primarily to delay the planning process and therefore raise the cost of entry, we would consider that the Competition Authority recommendation that further research be undertaken with a view to limiting grounds for appeals based on anti-competitive and commercial reasons should be adopted. It is submitted that the delays currently experienced in the planning system in Ireland inhibit competition in the retail sector, particularly due to the postponement of decision on appeals to An Bord Pleanála, which rarely achieves the target timeframe of 18 weeks and generally takes six to nine months to issue a decision on an appeal. In cases where An Bord Pleanála refuses planning permission for the development, the prolonged delays in making the decision further inhibit the development process and the time of delivery of new stores in Ireland.
Let me reiterate that it is considered that discount retailers face more stringent limitations on size than other grocery retailers, thereby inhibiting competition. It has been our experience that aspects of the planning system have acted as a barrier to competition in the convenience sector. It is submitted that the following amendment should be made to the retail planning guidelines in order to facilitate a more competitive retail environment: updating the description of the discount food store to reflect an average size of up to 1,800 sq. m, clarifying that the descriptive size set out in the guidelines should not be interpreted as a cap, specifically recognising the role of discount food stores to serve a neighbourhood function, acknowledging that floor space projections within retail strategiesshould not be interpreted as upper limits on the total amount of retail development that the planners can permit within their administrative areas, limitatinggrounds for vexatious third party appeals.
Chairman: I will call Deputies Dara Calleary, Deirdre Clune and Arthur Morgan in that order, but I appeal to them to be as brief and concise as Mr. Balfour.
Deputy Dara Calleary: Mr. Balfour is stating effectively that in his opinion our planning regulations are raising the cost of entry for discount food stores. How do planning regulations in Ireland compare with those in other countries in which the company operates? How does the average size of an outlet in Ireland compare with those in other countries? How many of their Irish outlets are in town centres and how many are outside the traditional town centres?
Mr. Donal Mackay: The best comparison can be made with our outlets in Australia, which came into operation one year after we started in Ireland. We found the planning process in Australia to be somewhat more progressive and we have 200 outlets there compared with 64 outlets in the Republic.
Deputy Dara Calleary: There is a difference in population.
Mr. Donal Mackay: That is the case, but our approach would not be different. We are dealing with the planning process in Australia in the same way as in Ireland with a similar resource, and this gives an indication of the difference in timescale.
Deputy Damien English: How do the figures for the number of stores that Aldi targeted to open in Australia compare with the figure it targeted for Ireland?
Mr. Donal Mackay: We approach it in a sequential fashion. We put the same amount of resource in and we target to open as many as we can as we go forward. The targets are not fixed. We deal with the planning process with the resources we have in the region, because the regional structures are very similar in each of our operations.
Deputy Dara Calleary: How many planning applications for Aldi stores have been turned down?
Mr. Donal Mackay: I could not give an exact figure, but I could follow up by providing the information to the joint committee later.
Deputy Deirdre Clune: In his submission Mr. Balfour used the word “neighbourhood” a great deal. The thrust of his recommendations are that the size for retail discount stores would be 1,800 sq. m, which should not be viewed as a cap. That, to me, is contrary to developing neighbourhoods. If a planning authority is developing a development or local area plan to keep communities intact and to develop neighbourhoods, it would restrict the size of discount retailers and have more of them rather than increase the size and therefore draw in a larger community. I ask Mr. Balfour to address that issue.
He referred to rezoning disused industrial units across the country. Has he come across much of that? Is it an obstacle or would it open barriers? He might indicate whether such rezoning is widespread across the country because I have come across such an issue.
Deputy Arthur Morgan: My question is similar, if Deputy Clune does not mind me interrupting. What size of store would Mr. Balfour regard as optimal and should store size relate to the size of the local population in the urban setting concerned?
Mr. Denzell Balfour: The standard store that we would construct is currently approximately 1,600 sq. m and we would see that as fulfilling a neighbourhood function. We have examples throughout the country where it does fulfil a neighbourhood function. It provides a limited range of products. It would not provide a complete range of products and customers would come there for the majority of their shopping, and then can use other facilities within the neighbourhood area. With providing a 1,600 sq. m store, other businesses come into the neighbourhood such as pharmacies and launderettes. Therefore, the store provides a sort of centre for the local neighbourhood and reduces commuting times, etc.
Deputy Deirdre Clune: What difference would an 1,800 sq. m store make?
Mr. Denzell Balfour: The bones of our submission was that currently the retail guidelines provide for stores of between 1,000 sq. m and 1,500 sq. m. However, it has been interpreted by local authority development plans in some circumstances as an ultimate cap on the size of the retail premises when the bones of the guidelines state it is approximate and should be seen as a guidance rather than a cap. What we are saying is that if they take into account 1,800 sq. m, then that will allow for the complete size of the discount food store to be built — at present, we are looking at stores of 1,600 sq. m.
On the industrial zoning of land, particularly in Dublin, a number of our stores have been successfully built on industrial zoned land and similarly, there are examples where stores have been refused permission on industrial zoned land. Given the way that the city has developed, many of those industrial areas have become engulfed by residential developments.
Mr. Donald Mackay: If I could expand on the point about the store size, our standard store size is for a net retail floor space of 1,125 sq. m. The reason for the 1,800 sq. m is that in some instances when we cannot build our standard store, or we are offered a leasehold opportunity, we have some examples where those stores, not the net floor space but the total floor space, are as large as 1,800 sq. m. The reason we state 1,800 sq. m is that it is a catch-all.
However, we believe that the 1,125 sq. m net floor space is the right size in every location irrespective of the population. When we gauge that we should open in a town or city, we will build a 1,125 sq. m store. We would not look to build larger than that. That is what we want to build. If the population would justify more units, then we would build additional stores. However, we believe the store with 1,125 sq. m net floor space serves a neighbourhood function.
Deputy Damien English: Is Mr. Mackay stating Aldi is prevented from building the 1,125 sq. m store in some places?
Mr. Donald Mackay: We have been because the 1,125 sq. m has been interpreted as a cap. Because the 1,125 sq. m relates to net floor space, the gross floor space is over 1,500 sq. m with warehousing and ancillary services, and there are several examples of where we have not achieved it.
Deputy Damien English: Is Mr. Mackay stating that Aldi would like to be able to build stores with gross floor space of 1,800 sq. m, including warehousing, etc., which is still a good bit less than the maximum size permitted to other stores?
Mr. Donald Mackay: Yes.
Deputy Damien English: Mr. Mackay mentioned industrial sites and gives the impression in this document that Aldi would be willing to use industrial buildings, but that is not the case. However, I understand it to mean that Aldi would use industrial zoned lands and have its own standard build. Is that correct? There is a big difference in using existing empty buildings and using unused land.
Mr. Donald Mackay: Typically we would demolish any existing building on the site, principally brownfield derelict sites as opposed to greenfield industrial zoned sites.
Deputy Damien English: It is repeatedly said that Aldi has only a limited number of products irrespective of the size of the store. What is the difference in the range of products in the smaller stores in comparison with the larger stores the company has built?
Chairman: Is that pricing?
Deputy Damien English: No, it is not pricing but the number of products. The point was that Aldi would stock a greater choice of products if it had a larger store. Are we talking about 200 more products? What is the number?
Mr. Donald Mackay: We have not submitted that we would stock more products.
Deputy Damien English: That is what was said.
Mr. Denzell Balfour: No, I said that for consumers we would not stock the complete array of products they would purchase in a weekly shop. We would stock the majority of those products, but they would have to complement that shopping elsewhere.
Deputy Damien English: Would Aldi stock all those products in a larger store?
Mr. Donald Mackay: We will stock a standard range in our standard stores. We will target a 1,125 sq. m area and we will have the same range in every store. When we have a smaller footprint, either because we are forced to or because we have taken a leasehold building where it is different from the 1,125 sq. m, we will endeavour to stock the same range. There is no change in range.
Deputy Damien English: That answers my question.
Deputy Dara Calleary: How many stores has Aldi opened in 2008 and 2007 and how many does it plan to open in 2009?
Mr. Donald Mackay: We opened 12 in 2007, ten in 2008 and we are targeting 14 to 16 in 2009.
Deputy Dara Calleary: Aldi is growing steadily in the country.
Mr. Donald Mackay: Yes.
Deputy Dara Calleary: That does not suggest discrimination against Aldi in terms of the planning laws.
Mr. Donald Mackay: No, nor are we suggesting there is discrimination.
Deputy Dara Calleary: Aldi suggests there is discrimination against the discount store model.
Mr. Donald Mackay: We have been asked to make a submission as to whether there is anything within the planning guidelines that we would observe as being unusual. We are happy to work within the guidelines and we are expanding within the guidelines as currently laid down. We are working comfortably within the guidelines but when we look at them in detail they contain some anomalies. We have observed those anomalies. We are perfectly happy to continue as we are. We have four property directors working on acquiring and developing store sites. We intend to build a second distribution centre in Mitchelstown, County Cork, and develop out of Naas in County Kildare and Mitchelstown. We will not change what we are doing but will continue at the pace we are operating. If these changes were to be made and these barriers were to be removed, it is possible that we could expand to a greater degree.
Deputy Chris Andrews: What is the average number of employees per store, given that it is probably a template that is replicated around the country? In terms of buying local Irish produce, what is Aldi’s policy on that issue?
Mr. Donald Mackay: We have an average of 15 employees per store. More than 40% of the groceries we sell in our stores are sourced in the Republic of Ireland from local suppliers.
Chairman: How can we be assured that it is 40%? Is it locally sourced produce? When Aldi moves into Mitchelstown, an area which has a high level of agricultural activities, does it buy locally from those people? Has it producer groups that it deals it? How does Aldi source those products? When applying for planning permission, would Aldi make a commitment to source locally produced goods, which is important in the context of agriculture and local enterprises?
Mr. Donald Mackay: The 40% to which I refer is sourced from suppliers based in the Republic of Ireland. We do not source store by store because buying is a central function. Individual suppliers of fruit or vegetables source from around the country but we do not deliver direct to our stores. Instead, we operate a central distribution network from where we distribute goods in our own vehicles to our stores, so in that sense local sourcing is not carried out by each store. We have not, however, decentralised the buying function but have a buying team which is Irish and located in Naas.
Deputy Damien English: The presentation referred to delays in planning, which many people have mentioned to me. We are looking at how local, as well as national, government operates because it is unacceptable for there to be unnecessary delays on the part of planners or An Bord Pleanála in building stores people need. I and many of my colleagues feel very strongly about this issue
Chairman: I thank the witnesses from Aldi for their concise submission. We have the benefit of their earlier submission but wanted them to expand on the issues. I welcome the fact that they kept to the five minutes allotted because we have a very busy day and there may be other interruptions over which we have no control. The witnesses may know where they will be at the end of the day but we do not. Their contribution was very informative and useful to the committee’s deliberations. Members asked a number of searching questions and I thank the witnesses for being so forthright in answering them. We will see them again tomorrow when we will discuss prices. We nearly strayed into discussing prices today but stuck to the issue of planning.
Mr. Donald Mackay: I thank the Chairman for inviting us.
Chairman: The next presentation will be made by representatives from ADM Londis plc. I welcome Mr. Peter Foley and thank him for his attendance. We have a very busy schedule, so I ask him to be as brief as possible in summarising his submission. We will allow five minutes for his presentation, which will be followed by a discussion with members of the committee. I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
Mr. Peter Foley: I thank the Chairman, Deputies and Senators. I am commercial director of ADM Londis. I thank the committee for inviting ADM Londis to make a submission on the committee’s review of planning guidelines for new retail outlets in Ireland.
ADM Londis plc operates and supplies the Londis franchise in Ireland. We employ almost 8,000 staff in over 370 independent stores nationwide and, perhaps uniquely, our franchise is owned by independent retailers across 26 counties. The group has operated successfully in Ireland since 1954 and for over 54 years has established a reputation for superior customer service and excellent value for money. As a key operator in the Irish retail market, it is in our interest that the Irish retail market represents a thriving local market economy that best serves the needs of Irish consumers. It is evident that there is already significant competition in the Irish market; one need only pick up a national newspaper to see the range of competition in the market.
A recent report by the Competition Authority concludes that the planning guidelines, as they currently apply, combine to limit competition between grocery retailers and also between brands. The authority arrived at the rather blinkered view that these factors combine to limit consumer choice and value for money and ADM Londis has difficulty with these conclusions. The Competition Authority has assumed that the current cap on retail size has a negative effect on pricing in the sector and stymies competition for consumers. The key issue we have addressed in our submission is whether the effect of the retail planning guidelines, as they currently stand, is to hurt the consumer by undermining competition in the sector. We would argue that the existing retail environment in Ireland represents a dynamic, value-led offering to the consumer. The retail planning guidelines, as they stand, accommodate environmentally sound developments and a diversity of offerings within the Irish retail market in an equitable and sustainable manner.
Chairman: I thank Mr. Foley for his succinct presentation.
Deputy Cyprian Brady: As a general question, would Mr. Foley accept that, given the nature of demographics in Ireland and our population structure from major cities to mid-size towns to small villages, there must be some control of the size of retail outlets? If these controls did not exist there would be a race to the bottom and small, less competitive groups would be kicked out of the market. Would Mr. Foley accept that?
Mr. Peter Foley: The Deputy has put his finger on it. Ireland is unique, as is the manner in which its population is dispersed. We have small communities and medium and large towns; there is a uniqueness to our community ethos, the importance of the local shop in the community and so on. As the Deputy said, a race to the bottom could involve the adoption of retail planning guidelines similar to those in other countries that would suck the lifeblood from small town Ireland.
Senator Brendan Ryan: In Mr. Foley’s submitted paper, rather than the presentation, ADM Londis comes out strongly against the Competition Authority’s position on the removal of the cap. Can Mr. Foley expand on this position? Is the cap at an appropriate level at the moment or could it be lowered further?
Mr. Peter Foley: The Competition Authority has a blinkered view that there is not enough competition in Ireland. We argue that there is adequate competition. As I mentioned, the daily newspapers show the range of competition that exists. There is no evidence of retailers making excessive profits in Ireland and we cannot support a suggestion that the cap be lifted. The lifting of the cap would result in large, out of town retail businesses harming independent retailers in Ireland.
Deputy Damien English: Part of our ultimate decision may be to retain the planning guidelines and focus on town centre shopping. I accept that many of the delegates’ clients may not be in town centres. What can we do to improve the town centre shopping experience? Some people are happy to drive to and park at a shopping centre and do their shopping under one roof, while many realise the benefits of sustaining town centres. Have the delegates identified the three main areas that we must improve to make shopping a better experience?
Mr. Peter Foley: There are Londis stores in almost every large Irish village and town. I would mention simple things such as ease of parking, ease of access, making it easier for independent retailers to do business in terms of regulations such as those for waste disposal, the level of commercial rates and so on. Independent small retail businesses are being stymied significantly by the level of regulation. From where we stand, the view is that the small retailer, who in many cases is a one man band, is subject to the same level of regulation as large multiples. The amount of form filling and the costs imposed on businesses are significant.
Deputy Damien English: Is the issue the cost of parking or the convenience of finding a parking spot?
Mr. Peter Foley: It is probably a bit of both. It depends on the location and varies by location.
Deputy Dara Calleary: In his submission, Mr. Foley seems to suggest that if the cap on size is removed or increased, there will be an invasion of international retailers which will close down every small shop in the country, similar to the experience in medium-sized towns in the United States. Does Mr. Foley have evidence that the international conglomerates such as Wal-Mart, Sainsburys and so on are interested in the Irish market?
Mr. Peter Foley: One only needs to look at the UK market to see evidence of the high street that has become a ghost street. In the United Kingdom where they had unfettered planning legislation, many small stores and independent retailers failed to survive. With the disappearance of the lifeblood of retail trade, many villages and small towns have become ghost towns.
Deputy Dara Calleary: If the planning cap is removed, does Mr. Foley have evidence to support his claim of an invasion of operators?
Mr. Peter Foley: It opens the door to that possibility, but I do not have evidence of what planning applications are ready. If we open the door, we are saying effectively that we are happy to allow it to happen.
Deputy Michael Fitzpatrick: Will Mr. Foley comment on the variance in the planning regulations in the different county council areas? What is the average size of a Londis store and the average size of the community which a Londis store would service? Most of the Londis outlets are family-run businesses. In his submission, Mr. Foley mentioned a figure of 800 staff. Is that the number of staff employed by ADM Londis or the number employed in the retail outlets?
Mr. Peter Foley: We have 8,000 staff that serve in our 350 retail outlets. In many cases it ranges from five or six employees in a small store in a neighbourhood community to the medium-sized food market-supermarket that exists in a number of small towns which employ more staff. The key element is that the store is owned and managed by a locally-based independent retailer.
Deputy Michael Fitzpatrick: Will Mr. Foley comment on the purchase of goods and employment in local stores?
Mr. Peter Foley: Without exception, the local retailer decides on hiring staff. The stores are community based and focused on the needs of the community. The stores would be involved in things that do not come up on the radar such as sponsorship of a local GAA club, the local drama society, etc. This would be lost to the local community if the structure that is in place was changed.
Deputy Michael Fitzpatrick: Will Mr. Foley comment on central purchasing?
Mr. Peter Foley: My day job in ADM Londis is buying. ADM Londis has very strong loyalty to the Irish supply chain, such as Irish fruit and vegetable suppliers and the brand owners that exist in Ireland supply and deliver to all our stores. We are extremely loyal to Irish suppliers at local level for such products as local cheeses and bread.
Deputy Arthur Morgan: I must declare an interest, because I am a director of a family business which supplies some of the outlets involved.
On the cap size on floor space, is there any difference? For example, Mr. Foley’s stores are located in many large villages, small towns and bigger towns. Is there any merit in considering a bigger cap in bigger towns and even cities in order to generate volume in those high population areas?
Mr. Peter Foley: No. Of the major cities, in Dublin, for example, I suggest there are adequate out of town retail solutions — three or four — scattered around the M50. In Cork, the position is similar. In Limerick, there is plenty of access and choice for consumers to go out of town to access international chains.
Deputy Arthur Morgan: On economy of scale, we all know that there is merit in economy of scale in a bigger store. How would Mr. Foley respond to that? How does he offset such economy of scale that must be difficult to generate?
Mr. Peter Foley: It is a challenge. It goes back to our proposition in every neighbourhood. We offer a locally-owned business, we strive to deliver value and we believe that the shopping experience in ADM Londis stores everyday delivers value and choice for our consumers. It is a challenge when we are up against international multiples. We would argue that despite that challenge, there is adequate competition in place.
Deputy Deirdre Clune: On a similar theme, Mr. Foley has a network across the country in small towns and big cities. We all know the Londis name and where it is. On that experience and the information he would have from that network, should there be a cap on the size of stores, not for out of town retailers but for local shops in neighbourhoods and communities? Does he have any opinion on that? One of the submissions made to the committee was that the cap size in local neighbourhoods should be increased.
Mr. Peter Foley: That is probably a good suggestion. The ability to carry it off and deliver it is probably a challenge. I would suggest to the committee that the fundamental aspect it needs to consider is what type of local environment one wants at a parish or community level. Whether one wants local shops is the question the committee needs to face and decide upon.
Deputy Deirdre Clune: Does Mr. Foley think there should not be a cap on the size of a local store?
Mr. Peter Foley: We suggest there is adequate competition in place and we are not looking for further restrictions. We experienced the abolition of the groceries order a couple of years ago, which it was suggested would dramatically changed the marketplace. It did not. We are ready to compete toe to toe with the large multiples and we are prepared to continue to do that, but lifting the cap will tilt the balance unfairly in favour of the multinationals.
Deputy Dara Calleary: Aside from the cap issue, the submissions of some of those who have made presentations to the committee expressed enormous frustration with the current planning system, how it is run and delays. What has been the experience of ADM Londis?
Mr. Peter Foley: At a local level, many of our stores have invested and made applications for planning. I suppose one of the frustrations would be the length of the process and the different decision-making processes in each planning area, and perhaps a little streamlining in that area might help.
Deputy Cyprian Brady: If Mr. Foley could recommend suggestions on planning, what would they be?
Mr. Peter Foley: The main matter would be the existing cap, which we would say should not be removed.
Chairman: Should it be reduced? What is the average size of the Londis outlets in Ireland, the average size of the catchment area served and the average population of catchment area? I think Mr. Foley stated ADM Londis had 360 stores.
Mr. Peter Foley: We have 370.
Chairman: How many stores did ADM Londis put in place in 2007 and 2008 and what plans has it for 2009 and 2010?
Mr. Peter Foley: The Londis group has grown and we have added 20 to 25 stores over the past number of years. Typically, there is a degree of churn where we would lose some stores and gain others.
Chairman: What is the net gain?
Mr. Peter Foley: Our plans would be to continue to grow and sustain independent retailing stores. Our stores would be community-based neighbourhood stores throughout Dublin and the larger towns in every county. We would be a key part of the community in competing with the local multiple.
Chairman: What is the mechanism for sourcing produce? Does ADM Londis have central acquisition?
Mr. Peter Foley: We have a certain amount of central distribution but now all our fruit and vegetable deliveries come directly from the supplier. We would have a policy of supporting Irish suppliers wherever possible.
Chairman: What percentage of Irish produce would be in the store?
Mr. Peter Foley: It would be fair to say that virtually all our produce is sourced from the Irish market, either directly from local suppliers or the supply chain based in Ireland. We do not have a situation similar to that of competitors who have already announced they will source the product off the island. We support the Irish supply chain.
Chairman: What is the average number of full-time employees and part-time employees?
Mr. Peter Foley: We have 8,000 staff across 370 stores. That is a combination of full-time and part-time staff, depending on the working hours in each local store.
Senator Brendan Ryan: Are there examples of towns with several Londis stores? Could a particular owner operate a number of Londis stores and in that way limit competition?
Mr. Peter Foley: No, a handful of retailers may own four or five stores but that would be very modest. Within each town, just one Londis store tends to have the franchise. That is typical of most towns and villages where one franchise operates. For historical reasons, it is rare for the same franchise to operate in the same town.
Chairman: Deputy Cyprian Brady asked if the cap should be reduced. I think what he was trying to get at was that town X with a population of say, 1,000, would cap Y in towns Z and M. Has Mr. Foley any view on that issue?
Mr. Peter Foley: That comes back to my core challenge of what the committee wants in every town or village. If one believes in the importance of the local retailer, that would push one in the direction of moving down the cap.
Chairman: I declare a interest. We have a local shop in a rural area. I put that on the record in case there is any confusion.
Deputy Arthur Morgan: Mr. Foley knows the mess we are in at present. One of the biggest difficulties is the lack of competitiveness. Ireland was significantly more competitive four or five years ago. What would Mr. Foley say to those who claim they would have a much better range in a bigger store, that prices would be significantly cheaper, as in the massive mega stores? It is a compelling argument.
Mr. Peter Foley: I invite members to visit any convenience store, not just the ADM Londis stores, where I suggest the customer experience is as good as it gets. In terms of range, convenience, the hot or deli counter, what is on offer is as good as anything one will get in Europe.
Deputy Dara Calleary: Mr. Foley expressed faith in the Irish supply chain a couple of minutes ago. Some people have identified that in their submissions, ahead of tomorrow’s hearings, as being one of the factors for the higher price differential. In his submission, Mr. Foley appears to say that the higher price differential is all due to costs. Is Mr. Foley satisfied that there is no issue with price differentials in the supply of the Irish grocery market?
Mr. Peter Foley: I do not attribute the present difficulties entirely to cost but costs are a significant factor. The cost of doing business for independent retailers in Ireland is too high.
Deputy Dara Calleary: What does Mr. Foley think of the Forfás argument?
Mr. Peter Foley: Forfás has underestimated the differential. Its figure is 5% or 6% but the cost of doing business in the Republic of Ireland is significantly higher than in other countries, due to the level of regulation. On prices, there are difficulties with brand owners in Ireland. If we buy from a brand owner in Ireland it is difficult to unlock the same value as can retailers in the UK.
Deputy Dara Calleary: Is Londis challenging that?
Mr. Peter Foley: Yes. Brand owners blame the exchange rate but that is not sustainable.
Senator Brendan Ryan: Which part of the Forfás argument is wrong? It says our operating costs are approximately 30% higher than in the North but the fact that operating costs only account for some 20% or 25% of the total indicates that the figure of between 5% and 6% is correct.
Mr. Peter Foley: It depends on what the 100% equates to. Something significant has happened to the currency in the past five or six months and the impact relative to the UK has not been fully passed on, though there is evidence it is starting to happen. It is very clear that the cost of doing business in Ireland is a real challenge in comparison to Northern Ireland and the rest of the UK.
Deputy Dara Calleary: Therefore, Mr. Foley is saying the Competition Authority and Forfás are wrong, as is every independent State-backed agency which produces a report suggesting the price differential is greater than it should be. Can Mr. Foley give us independent figures which we can compare to those of Forfás and the Competition Authority?
Mr. Peter Foley: Today’s discussion relates to planning guidelines and I am not sure the Competition Authority has made any significant observations on Forfás. I can only convey the experiences of our members in trying to source product at this moment using the Irish supply chain.
Deputy Damien English: The problem with the Forfás report is that it states the costs of retailers to be 30% higher but forgets the fact that suppliers’ costs are also 30% higher, leading to a compounding of costs which has not been properly discussed. It is unfair for the Minister and others to avoid going into the details of those costs.
Does Mr. Foley’s organisation buy through distributors or wholesalers? Are there problems in that regard? If there are, Mr. Foley should tell us and provide evidence so that we can bring about changes. We have heard about such problems but no one has actually shown us what is happening. If there are problems we can focus on them rather than on other costs. Do smaller retailers feel larger multiples let them down in the area of price competition, by matching each other’s prices? They have increased competition among themselves in the past few weeks but what about prior to that?
Mr. Peter Foley: Our members, the independent retailers, feel there is significant competition. For example, the daily newspapers, particularly the large multiples, are currently highlighting their prices relative to others. That is the arena in which we are battling.
Deputy Damien English: What about wholesalers?
Mr. Peter Foley: ADM Londis is a wholesaler and buys from many hundreds of brand owners and direct suppliers. I am sure there is evidence of particular distributors and brand owners making higher profits relative to the UK market. I suspect they will point to the cost of doing business in Ireland and to the number of jobs they sustain.
Deputy Damien English: Is Mr. Foley or any of his members able to give us proof that there is a problem with wholesalers looking for greater margins?
Mr. Peter Foley: There was evidence in the Sunday Business Post last week relating to Pampers. It was found that Pampers are available to retailers in Northern Ireland at a price half of that paid by retailers in the Republic of Ireland. As wholesalers, we are not making an excessive margin on that product and this is something that could be examined.
Deputy Deirdre Clune: With regard to planning issues and the impact on the local community, does Londis have any local multiplier figures for us? Are there guidelines on the value of shops like Londis to local communities?
Mr. Peter Foley: If one takes a typical independent retailer like Londis, a small community store will employ between ten and 15 people. That is direct employment for people living within a mile of the store. In terms of providing a service to the 1,000 to 2,000 people living in the locality, the shop will take deliveries from the local milkman and bread man and the retailer will invest in local community sponsorship.
Chairman: I thank Mr. Foley and the members for keeping to the deadline. We must run this committee regimentally, due to time constraints. We strayed a little outside our remit and I thank Mr. Foley for answering questions in that respect, though he may not have been prepared. Mr. Foley will not be here tomorrow and some of the members wished to have him address some of the issues.
We thank Mr. Foley for assisting us and for being forthright and frank. The inquisition on some points was quite strong. We must ask some hard questions to try to reach a decision. We will prepare a report for deliberation and we will forward to Mr. Foley a copy of our final recommendations, which will also be given to the relevant Minister.
Chairman: The next group represents Retail Excellence Ireland. Our former colleague, Ms Liz O’Donnell, is in the Visitors Gallery and is very welcome. It is 10.29 a.m so Retail Excellence Ireland has already excelled in its punctuality.
We have already received a submission from Retail Excellence Ireland and the witnesses have five minutes to present a summary. The group is represented here by Mr. David Fitzsimons, CEO, and Mr. Kevin Jephson, director of Ardkeen Quality Foodstore in Waterford. I welcome the witnesses and thank them for attending. We have a busy schedule and I must ask them to keep their summary to five minutes. It will be followed by a discussion with members. There will be some fairly searching questions but I have no doubt the witnesses will be capable of answering them.
Before we begin, I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses. We explain this to everyone who appears before a committee although I am sure the former Deputy, Ms Liz O’Donnell, has already explained it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. Is Mr. Fitzsimons to make the presentation?
Mr. David Fitzsimons: We shall share our time, if we may.
Chairman: I will allow the witnesses three minutes and two minutes of speaking time, respectively.
Mr. David Fitzsimons: Mr. Kevin Jephson is an independent retailer in Waterford, a county in trouble, and he employs 130 people there. He is also a board member and designate chairman of Retail Excellence Ireland. He will be chairman for 2010 and 2011.
Retail Excellence Ireland received many calls from members of the media in recent months and they wished to know who we are. In 1995 the then CEO of the South Dublin Chamber of Commerce and I established a company called Crest, which was set up to help independent retailers in the county. The Square, Tallaght, the biggest shopping centre, had just been built and a number of retailers were scared. Our organisation grew from that. The Deputy from Mayo, on my left, would understand fully how it grew through the chambers of commerce of Ireland and the chamber structure round the country. In 1998, we decided to pull it back and form a national organisation. Thankfully, in 1999 the then Tánaiste and Minister for Enterprise, Trade and Employment established a company called SkillsNET Limited and we have received funding from that organisation since, which we found to be highly beneficial. Today we are an organisation with 580 company members and about 8,000 stores. We have the luxury of having mainly independent and medium sized stores. We do not have anyone behind us who is funding us. We are not backed by suppliers, manufacturers or by big grocery chains. We are a fairly honest organisation and I believe we are also fundamentally behind the truth being brought to the market, including the Sunday Business Post article of 1 February.
We are here to discuss retail planning. Our members find themselves in a very grave position. There is much misinformation in the marketplace and the Tánaiste has not been very giving to the industry in recent times. The NCA report last week claimed there is a 51% differential in prices between the Republic and Northern Ireland. That is untrue. The analysis was of just 14 UK stores and I am not here to apologise for their bad behaviour. The average independent retailer is on the verge of collapse. The biggest retailer in the country with 120 leases has stopped paying rent this week. Two national companies are on the verge of examinership, one of which has postponed it until this week and is sitting down with some landlords with a view to doing some business. This goes right down to the small independent retailer.
I had a pint last Thursday evening with three retailers in Ennis, County Clare and two of their businesses will fail this week. The big news stories such as what is happening to Superquinn stores, the Chartbursters and so on hit the press, but it is the trickle that is not getting into the public domain. We are predicting 40,000 job losses this quarter. This sounds excessive, but it is true. It is the reality caused by many issues, the perfect storm for Irish retailers. The legislators must act very soon to stem the tide.
There are two central issues of our submission on retail planning. First, we believe the retention of the cap is a good thing for retail and for consumers in Ireland. Second, the review gives us an opportunity to bring some better practice to retail planning, which in the past number of years has lost its way. May I hand over to my colleague Mr. Kevin Jephson?
Mr. Kevin Jephson: I am a director of Ardkeen Quality Foodstore in Waterford and a member of the board of Retail Excellence Ireland.
In regard to the retail planning guidelines, we believe that the review that is under way should retain the cap. If recent events have taught us anything, it is that a little regulation is a good thing. We believe that retail formats need to be regulated. The Competition Authority has triggered the review. Its premise for doing so is a little mysterious and it has to do with discounter competition. The evidence is that there is plenty of competition from discounters. In the past few months, the discounters have done very well. Their format is slightly smaller but it is working very well for them. I do not want to attack the Competition Authority but it has been wrong about the groceries order and I think it is wrong about the need for larger format retail stores. We were promised all sorts of benefits from the removal of the groceries order, a benefit of €500 per consumer per year. That did not happen. What happened is that emergency legislation was required to prevent the selling of alcohol below cost.
The removal of the cap could potentially lead to a rush among local authorities to be the ones to grant permission for one of these massive out-of-town developments which would be purely motivated by the rate income. Things like that have happened. It would not be good.
There are statistics on what has happened in the UK, which is the nearest example, with large out-of-town developments. The demise of the UK high street is well documented. It is something I hope no one would like to see here. What we need is strong indigenous Irish retail competing toe to toe with whatever other entrants there are in the market. That is what we want to generate vibrancy.
The UK example is what we do not want. They have done some research, which we highlighted in our submission, which refers to money spent in a local grocery outlet. The research reckons £10 spent in a local grocery outlet was worth £24 to the local economy, but the same £10 spent in a major brand multiple was only worth £14. It confirms the old adage that one’s £20 is in London before one gets back to the car. That is the way it goes.
These large out-of-town developments do not constitute good planning. They are car-based in that one needs a car to get to them. This excludes those who do not have cars and there is already a selection of socio-economic groups going to such places. The end result will be that large developments which can only be accessed by car will divide communities. They will drive a wedge between communities. It is not good in that regard.
There is another reason the cap is not a good idea. At present, there is plenty of competition but this need not necessarily provide global retailers with exactly what they want. They are well capable of coming here and doing business on our terms with good planning. We do not want to leave ourselves wide open to a situation where a large multiple will set up a large store, generate substantial turnover and do very well because of predatory pricing. This will lead to the failure of local indigenous retailers, whereby the large multiple will have the market to itself. That in itself is anti-competitive. These are reasons for retaining the cap.
Deputy Damien English: Mr. Jephson reflected what we came across last week when we visited certain towns in the North.
His main argument against increasing the cap would be the experience of out-of-town large retail outlets. Would he still be against increasing the cap where a development was in the centre of a town?
The summary of the written submission mentioned four or five areas the delegation sought to discuss. It mentioned better enforcement of use clauses. Would Mr. Fitzsimons clarify that problem?
The other issue raised was the need to ensure greater equity in car parking charges across all retail formats. I presume this means that if there is an edge-of-town or out-of-town retailer with large numbers of car parking spaces, it should be charged to subsidise local authority car parking spaces. I want to confirm that this is what was meant. That was also discussed last week and there is merit in the idea.
Mr. David Fitzsimons: There is probably a perceived inequity between the high street and the retail park that has grown over time. On the use clause, there has been a willingness among local planners to allow comparison fashion stores, grocery and pharmacy outlets to open in big box units. Each of those are constituents of our members. However, as a strategic-thinking organisation, we believe that will have the net effect of providing retailers with a low-cost option out of town and will suck the very heart out of the high street. One will be left with the peripheral or bipolar-type high street with businesses which cannot go out of town such as coffee shops, bookies and charity stores, which is the case in the UK.
Most retail park and out-of-town shopping centres provide free car parking. Prior to Christmas we conducted a study on car parking charges nationwide which we still have to disseminate to every county councillor in the country. There is a massive divergence in car parking fees in every town, private car park and shopping centre in the country. There is a need for strategic thought on parking charges and the alternatives in local markets. At the moment we are making consumers’ minds up for them too easily and the local high street retailer is at a major disadvantage.
Deputy Deirdre Clune: What about the cap?
Mr. Kevin Jephson: It is a question of scale. We did not discuss it in our submission but a cap exists because too big a development will suck up the turnover from surrounding areas and lead to a lack of choice of retail formats. We do not have a city big enough to accommodate one massive outlet in its centre.
Deputy Deirdre Clune: Superquinn is a member of the organisation. I am sure Superquinn and other stores would have an opinion on the size of retail outlets in neighbourhoods, cities and towns.
Mr. David Fitzsimons: We consulted with all of our members, via e-mail, prior to the making of our submission. We tend to get more of a reaction from small independent jewellers, pharmacies and grocery stores than from the big guys who are well able to look after themselves. Most of the bigger organisations are involved with us because we are an excellent organisation. We are a learning organisation, we travel the world and can open doors for them into wholefoods or Saks Fifth Avenue, Harvey Nichols or Selfridges. The advocacy or representation service, led by former Deputy Liz O’Donnell, is new to us and has arisen out of desperation. We took the decision seriously and find ourselves with a different day job at the moment as a result.
Deputy Deirdre Clune: The question arises because discount stores are recommending an increase and are not happy that there is a limit on floor space in urban centres. A submission was made to that effect this morning and I asked if Mr. Fitzsimons had an opinion.
Mr. David Fitzsimons: Ireland is a very small country of 4 million people and scale worries us in that regard. I look forward to seeing the effects of the opening of IKEA. I spent some time over a couple of glasses of wine with the person responsible for a similar development in Ethiopia. Our members in homeware and furniture in Dublin and beyond are scared. They already have the perfect storm in the shape of a reduction in sales of between 50% and 70% and much of their business going up North. In addition, every one of their headline business costs, such as wages, is going through the roof. Our minimum wage costs are now the second highest in Europe. In an example of very poor behaviour, landlords around the country are falsely inflating rent at review time.
I look forward to highlighting tomorrow some of the inaccuracies in the Forfás report in the way it draws parallels with the honourable German store up the road and rents being paid on Grafton Street, which are not like for like. Scale has to be questioned.
Deputy Deirdre Clune: Scale will form an important part of the retail planning guidelines, in towns and outside them.
Deputy Damien English: In some of the towns we visited last week the view was expressed that, in the absence of caps, the best of a variety of bad options is to have larger stores in the middle of town, so that at least people are not sucked out. A large-scale store will have a major impact regardless of whether it is in the centre of town or a mile outside.
Mr. David Fitzsimons: Where market share goes to any one operator in any one market, a bit like with energy at the moment, bad practice will creep in.
Senator Brendan Ryan: The delegates are obviously strongly in favour of the retention of the cap in retail planning guidelines. What do they think of a possible mechanism within the guidelines allowing for one-off developments, such as IKEA, in which somebody might make a particularly strong case?
Mr. David Fitzsimons: As Mr. Jephson said, if there are rules they should be for everyone. I do not think Ireland Inc. should modify the rules to suit indigenous or international retailers. We need to agree on a playing field in Ireland because it is a small market and we should let everyone get on with their business. Organisations like ours are pro-competition and support employment standards in the retail sector. We aim to assist players in being the best and, thankfully, the Tánaiste has made the proactive move of opening the doors of Enterprise Ireland to our members. On 10 February, 20 Irish retailers will meet Enterprise Ireland to discuss their international growth. This is a good news story for Ireland. The rules should be defined and people should be allowed to play fair and get on with business.
Deputy Chris Andrews: Rent, rates and parking charges will be higher in town centres and there will also be significant parking restrictions there. In effect, this will equate to higher prices. Given the needs of consumers, is there a way to ensure that prices in town centres are not significantly different from those out of town? Car ownership is below the European average, so inevitably people will be willing to drive further for better prices. Socially, it is important that we have vibrant towns but consumers do not agree with this. How can we ensure better prices, given restrictions relating to rates, rent and parking?
Mr. Kevin Jephson: The Government has put a great deal of money into urban renewal and city centre regeneration. We could rush to develop out of town locations and lose the vibrancy of towns. This would be anti-competitive because it would result in one big out of town centre that offers no choice. The discounters have been ingenious in developing successful chains around the country without having massive footprint stores. They have improved competition in this regard. To claim we need a huge out of town centre to improve competition is not true. There is competition currently, although we could always do with more. In terms of footprint, we could sacrifice much by being dictated to about a massive out of town centre; we could lose vibrant town centres and end up worse off.
Deputy Arthur Morgan: Would the witnesses put any social value on planning guidelines or are they purely commercial? It was suggested that large, out of town retail centres are car-dependent. Surely the answer is to provide a shuttle bus. The people we met last week made quite a robust presentation and suggested that the restrictions mentioned are crazy in modern Ireland and suited only to backwoods people. They said the approach should be market driven and that this would sort things out. They felt that those retailers who survive will survive and those who do not can be replaced.
Chairman: I knew Deputy Morgan would play devil’s advocate.
Deputy Arthur Morgan: I am a fundamental believer in the market.
Mr. Kevin Jephson: Of course there is a social aspect to good planning — that is the point. The market needs sound regulation and guidance, as the financial events of the past six months have shown. There is a strong social aspect to planning and I thank the Deputy for the question.
Mr. David Fitzsimons: Regarding the building of transport infrastructure to the field that will now be the site of the new out-of-town shopping development, we have transport infrastructure on every high street in the country; therefore, why build another high street? Why not hold what we have and cherish it? We will see major difficulties in the retail sector in the next four years. Should we be here in four years time and if 60% of high street shops are still there, we will have done well.
Chairman: Does Mr. Fitzsimons believe retailers who transfer to out-of-town locations have a duty to contribute to the prevention of urban decay and urban sprawl and the cost of fossil fuel based transport?
Mr. David Fitzsimons: Out-of-town retail is a format that suits big box providers such as electrical retailers, for whom it is a fact of life, not a choice they have made. If those retailers were here, they would be heckling at that call because they are over-taxed. Some are looking at an 80% increase in rates in south Dublin, in Liffey Valley and such places. As mentioned, their wage costs have gone though the roof, while rent is incredibly high, in excess of €1 million per site in some places in Dublin. I went to a doctor in the Blackrock Clinic yesterday and in the course of our conversation I told him I would be appearing before a joint committee of the Oireachtas. He pays €140,000 per annum to sit in the Blackrock Clinic but I replied that if he had a small shop in the Frascati Centre, he would be paying more than that in rent and that he had it good. Retailers are paying through the nose. We have JLCs which ensure we have different rules in every sector and region. We have one rate of VAT for a croissant with chocolate versus a croissant without chocolate, a hot drink versus a cold drink and a sandwich eaten on the premises versus a takeaway sandwich. Mr. Brody Sweeney, one of the most innovative entrepreneurs in the country, is on his knees and cannot run his business owing to this over-regulation. I hope we do not see a new tax. It is unbelievably bad for retailers at present. It is unfortunate that we did not have the national closure that was due to happen last week; it will happen in the next couple of weeks.
Chairman: I thank the delegates for their contributions and engaging with the members of the joint committee. The committee will prepare a report that will be submitted to the relevant Departments. Obviously, each organisation will receive a copy as a token of our appreciation for the quality and excellence of the detailed written submissions received. We thank the delegates for their punctuality and look forward to the continuation of the discussion.
Sitting suspended at 10.55 a.m. and resumed at 11.25 a.m.
Chairman: I welcome the representatives of RGDATA: Ms Tara Buckley, director general; Mr. Jerry Barnes, consultant town planner; and Mr. Terry Durney, consultant town planner, and thank them for their attendance. As we have a very busy schedule, I ask them to be as brief as possible in summarising their submission. We have allowed each party five minutes for its summary which will be followed by a discussion with members of the committee. We have had a fruitful morning and want to continue on those lines. I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
Ms Tara Buckley: RGDATA is the representative body for independent retail grocers in Ireland. Formed in 1942, its members operate over 4,000 family-owned grocery shops in the State. Our main aim is to provide representation and support for independent grocers. Our members trade in every city, town and village. Their hallmark is that their supermarkets, convenience and forecourt stores are locally owned and run, employ local staff and source as many goods as possible from local markets. Some of them are affiliated to symbol groups, while others are non-aligned. They employ approximately 80,000 people. We hold about 40% of the retail grocery market. Each day about 3.2 million customer transactions take place in shops affiliated to RGDATA. Our members are strong supporters of their local communities and have a key stake in the creation and maintenance of vibrant local communities.
Retail planning is a very important issue for RGDATA. Independent retailers believe our villages, towns and cities should be developed in a way that benefits the people who live and work in them, not property developers or global retailers. Sustainable strategic retail development is about supporting and renewing urban communities, not just for this generation but for our children and grandchildren also. Strategic planning ensures people who live in a community have easy access to shops, services and amenities, which can dramatically enhance the quality of their lives. We believe in vibrant, diversified and localised retail development. We want to reverse the decline of town centres and encourage investment in traditional shopping areas, high streets and town centres. We want small villages and rural communities to have access to a local shop. As such, RGDATA is a strong supporter of the retail planning guidelines. We believe that, by and large, the guidelines introduced in 2000 and revised in 2005 have ensured we have a sustainable and vibrant retail planning system which encourages development but in a sustainable and planned way.
We have gone into the background to the retail planning guidelines in our written submission, on which I will not dwell now. We believe the guidelines have been central to ensuring Ireland has a plan led approach to retailing. They have facilitated a significant amount of retail development, including the development of some large-scale stores. Most importantly, we believe they have not hindered competition, reduced choice or damaged consumer interest.
Last year RGDATA commissioned McCabe Durney and Barnes Consulting to assess the retail planning guidelines and determine their impact. A summary of its findings is included in the written submission and I would like to highlight four points. First, it found that shopping centre accommodation had more than trebled in the past five years; that retail warehouse accommodation had increased by over 400%; that current planning permissions for stores would see a further 40% increase in retail space if they were to go ahead, given local economic conditions; that there were a significant number of new stores, new formats and new retailers since the introduction of the guidelines. It also found — we think this is very important — that An Bord Pleanála had never refused permission for retail development on the basis of the likely impact of the proposed development on existing retailers. It also noted that An Bord Pleanála had never taken a decision to refuse permission for a store on the grounds of competitive impacts. Instead applications had been refused on planning grounds such as non-compliance with county and local development plans, traffic impact, zoning, distance from the town centre and design.
We believe the retail planning guidelines have made a positive contribution to planning in Ireland but that there are some areas that may need to be addressed. There is a need for a consistent approach to town centre and edge of and out-of-town planning. There is evidence that the approach taken by local authorities to town centre parking charges penalises both shops and shoppers. This issue should be addressed.
There is a need for greater information on the extent of retail provision in Ireland and for a proper national database on shops and shopping. We are often criticised for a failure to implement best practices and constantly playing catch-up with developments in business. We believe in retail planning — this is something about which we can be justifiably proud — that as a country we have properly provided for an appropriate planning regime that takes account of all stakeholders’ interests.
I refer to the Competition Authority’s study which has made some recommendations about changes to the retail planning guidelines. However, the authority does not appear to understand the planning system and has failed to comprehend a basic premise of planning, that it is about controlling activity for the common good. Some of the recommendation made by it are incorrect and should not form the basis of a serious consideration of policy. For example, it has claimed the retail planning guidelines limit competition, but it fails to deal adequately with the extensive growth in the number, format and identity of retailers operating since 2001. It states the planning system limits competition between grocery retailers. A planning system of its nature involves restrictions on development; the question is: when are the restrictions reasonable and necessary and when do they support the common good?
The Competition Authority claims the retail planning guidelines discriminate against discount retailers. Given the rapid growth of discounters in the market since 2000, it is hard to see how this contention can be upheld. It is also important to note that no application for a discounter has ever been rejected by a local authority or An Bord Pleanála on the basis of scale. The authority states decisions on scale should be made by local authorities without reference to national guidelines. All of the evidence in the period prior to the introduction of the retail planning guidelines and in relation to development since 2000 suggests local authorities which frequently compete for rates and development require national guidelines to ensure the scale of development encouraged or facilitated is not disproportionate to the impact it will have on adjoining counties and local boundaries.
The Competition Authority also claims local and consumer interests are not taken into account in the planning regime. RGDATA believes this is an appalling slur on the hundreds of councils which give serious and detailed consideration to the retail strategies and development plans for their area. The authority also wants to restrict access to third party appeals in the planning system. This is an undemocratic suggestion and should be resisted. It is suggested local business people do not have a right to make their views known or have an input of their perspectives to decisions that affect the environment in which they operate. They have as much right and entitlement to make their views known to their local authority, An Bord Pleanála or the Competition Authority as any other stakeholder in the community. It is up to the local authority or An Bord Pleanála to balance these views and reach a decision in the common good. That is not something the authority, one of the least accountable bodies in the State, should seek to restrict.
The retail planning regime has been a success. It has ensured large-scale development but on a sustainable basis. It has ensured consumer choice and facilitated the development of a diverse market for consumers who do have a choice from a selection of retailers. In this context, it is important that the views of the Competition Authority are taken into account but they should not be the determining factor in assessing the effectiveness of the guidelines. The planning system involves the control of development. It is a question for the Government and the Houses to determine whether that control is in the common interest. As far as the retail planning guidelines are concerned, RGDATA believes they do deliver the right level of control with resulting benefits for consumers generally. This is an Irish success story which we should be prepared to applaud.
Deputy Deirdre Clune: Are there discrepancies in the approach taken by local authorities in granting planning permission for retail premises in town centres and neighbourhood community developments?
Ms Tara Buckley: We have noted during the years that there are different approaches. Our concerns centre on local authorities competing with each other for new retail developments because they are keen on securing a rates gain. Some decisions were not in the best interests of the retail environment or local communities but were taken more out of a concern for a rates gain for the local authority. Our other concern which my colleague, Mr. Terry Durney, will address is the difference in attitude towards and the conditions for out-of-town greenfield sites and town centres which discriminates against town centre redevelopment.
Deputy Deirdre Clune: Would RGDATA prefer if retail planning was a matter for overall guidelines rather than leaving a decision to individual local authorities?
Ms Tara Buckley: It is very important that there is an overriding national plan because decisions need to be taken based on the needs of the country as a whole in order that we have sustainable and strategic development.
Deputy Dara Calleary: On that specific point, RGDATA comments on the Competition Authority slurring individual councillors. Surely individual councillors have a better idea of what is needed in their area? National guidelines may be completely irrelevant in specific areas.
Ms Tara Buckley: No. We need national guidelines to ensure sustainable development across the country. If it were left to local areas, unfortunately, we could end up with disjointed development. Therefore, we need to ensure local authorities have national guidelines to ensure we end up with sustainable development that is environmentally friendly, with good transport links, and which is good for the consumers who live in the communities affected.
Deputy Damien English: I agree that there must be a national plan because some councils are impoverished and in their need to attract rates could allow a large-scale development. They know it could go to another county. It is evident that people in towns in the South close to the Border would rather see increased caps on building and instead do business in the North. There is an issue in this regard and a national plan with local input is needed. If local authorities wish to make a case for something at variance with the national plan, they should be able to approach the Minister with a detailed explanation. This should be allowed under well specified conditions. On the same issue, should we consider a sliding scale guideline? Certain towns with certain populations could see an increase in the cap with others experiencing a decrease. Are the delegates happy with this the way it is?
Regarding town centre developments, it is evident that many consumers are happier to visit out-of-town retail units; it may be quicker and more efficient. A great effort is needed to encourage people to stay in town centres and support local business. Which two or three key areas need improvement? The delegates identified parking, particularly surface parking, as an issue. Do consumers dislike using multi-storey car parks or is surface parking easier? Should parking charges be imposed on parking spaces in out-of-town retail units belonging to the large multiples? Should we have a national plan on the funding of local authorities for the provision of new car parking spaces in towns and villages? Many town councils do not have the funding to tackle the car parking issue and the issue falls to businesses in the form of rates. Should there be a national system that uses tax breaks?
The report mentions Enniscorthy and Sligo and I visited both towns on reading it. The delegates are correct that they exemplify how retail can be conducted properly and how town centre developments can be sustained. However, there have been delays in Sligo due to appeals in the planning process and so on. We must learn to fast-track the process to help deliver for consumers.
Ms Tara Buckley: From our perspective, we can accept that developers and retailers trying to develop in a town centre will usually face a more complicated situation than on a greenfield site. We should be honest about the fact that they will opt for the greenfield site if they get the opportunity. We agree on the point about the need for investment in town centres and their regeneration to make them attractive. A vibrant town centre will give many diverse retailers the opportunity to run shops and consumers will be able to shop around, as Ministers are keen to advise them to do. This creates competition and diversity and gives consumers choice and the opportunity to trade with different retailers. We do not favour having no cap on large out-of-town retail units because we consider this approach would be detrimental. Other countries have seen that such developments suck the life out of towns and villages and leave small villages without local shops. Countries that took this route, including France, and the United Kingdom, are now questioning the approach, as it has been disastrous for consumers, towns and villages and locally owned businesses. RGDATA contends that at times like this locally owned businesses, run by people living in the community, will get us through. We should not discriminate against them; they should have a level playing field and be allowed to compete with the biggest players in the world. All they want is a level playing field.
We agree that the issue of parking must be addressed, as free parking at retail units outside town is too attractive. We would support an initiative to examine the issue of town centre parking. We accept that some consumers dislike multi-storey car parks but believe towns that have taken that route find that people eventually use such facilities. They want parking adjacent to the retail zone in order that they can do their shopping and return to their cars. At the same time, it is very important that people without access to a car have shopping facilities. In terms of environmental sustainability and transport initiatives, it is important that we provide people with an alternative to using a car for shopping. People on bicycles and those who wish to walk should also be able to access shops with ease.
Deputy Arthur Morgan: We have seen a number of reports from official bodies such as Forfás that favour lifting the cap, or at least extending it substantially. Is RGDATA merely making arguments in favour of the cap simply to prolong the lives of its members? Nobody thought I was a free marketeer before today and my reputation has been destroyed.
Chairman: The Deputy is playing devil’s advocate.
Deputy Arthur Morgan: We are seeking to achieve the best for communities in the range and price of products and services available.
Ms Buckley alluded to competition between local authorities that may ensue without unified State-wide control. When I was a member of the local authority in County Louth, I faced a wagging finger on the issue of a substantial retail outlet outside Dundalk that would move North if we did not accept it. Would the best outcome be aligned regulation across the island, implemented separately in the North and here? This would at least end the cross-Border competition mentioned. I appreciate that the committee does not yet have jurisdiction in the North but I have an interest in this issue, as do my party colleagues.
Chairman: Those were searching questions.
Ms Tara Buckley: I am glad to hear the Deputy is a free marketeer.
Chairman: I would not bet on it.
Ms Tara Buckley: With regard to the cap on the size of stores in Dublin and outside, when the original research was done for the retail planning guidelines and various experts, including planners, environmentalists, economists, global retailers and local players, gave their views, it emerged that there were certain economies of scale and that once a store exceeded a given size economies of scale decreased. The argument relating to bigger stores does not make sense because stores of existing size are large enough to provide consumers with the choice they want. We believe making the cap on store sizes bigger would work against consumers. In reality, there is a large dispersed population; only Dublin and a couple of other urban centres have large populations. People are dispersed throughout towns and villages and need shops that are easy to access. They do not need very large shops a long distance away that must be reached by car. The cap, as it stands, benefits people, as it aids sustainable retail development.
On whether we should all have the same regulations, my colleagues from the Northern Ireland Independent Retail Trade Association, NIIRTA, who will speak after me say Northern Ireland needs good planning guidelines similar to ours. Representatives from other countries would say the same. In this instance we are ahead of the pack; therefore, we should encourage them to join us, rather than dilute our guidelines.
On competition between local councils, it is in our interest that there be competition but we must continue to examine what is in the overall best interest of communities. The existing guidelines provide for what is in the best interests of the people. The consultants’ report shows very clearly that our guidelines have not hindered competition or new entrants to the market. They have not hindered new formats in the market or price-driven formats. They are working very effectively and do not require drastic changes.
Deputy Arthur Morgan: I have a brief supplementary question. Ms. Buckley said economies of scale faded at a certain threshold. Does RGDATA have evidence to stand this up?
Mr. Jerry Barnes: Goodbody economic consultants undertook a study of this issue in 2000 which was presented to the Department of the Environment, Heritage and Local Government at the time. We can forward it to the Deputy.
Deputy Arthur Morgan: I thank Mr. Barnes.
Senator Brendan Ryan: This is the fourth submission this morning, following those of Aldi, Londis and Retail Excellence Ireland. None has called for the lifting of the cap which the Competition Authority has suggested is a barrier to competition. RGDATA has criticised the study as ill-informed and lacking in understanding of planning. Why does it think the Competition Authority got it so badly wrong? Did it consult RGDATA during preparation of the report?
Ms Tara Buckley: It consulted some independent retailers. We think it got it wrong because it looked at the issue within a box and only from an economic perspective. Planning is not something at which one should look from just one perspective. People sit in traffic jams every morning, stressed as they collect their children from crèches or try to get into work on time and this is because of bad planning. The best policy is one that is strategic, well planned and well thought out and our guidelines assist us in ensuring this. Our study has shown that we do not hinder competition. In the United Kingdom discounters found it very hard to get a foothold in the market. Because of our planning regime discounters were able to come and have a large number of stores built in a short period to get a foothold in the market. The system has facilitated competition and a diversity of shops. Countries without these guidelines have very large formats outside towns. I am sure members agree that policy has been a dismal failure, for consumers, competition and the economy. The system encourages the vibrancy of our town centres, giving consumers the opportunity to shop around. Therefore, any serious adjustment would be a mistake.
Deputy Mary Alexandra White: I apologise for being late — I was stuck in the snow. As a retailer who spent most of her adult life on the high street, in an academic institution or a town centre, my thoughts lean towards preserving the fabric of our towns and villages. I am not talking about storybook idylls but working towns and villages in which people can make money and the butcher, the baker and the candlestick maker can thrive. My own town of Borris, County Carlow is still a candle-producing town.
Does RGDATA believe retailers who locate out of town have a duty to contribute to the prevention of urban sprawl and community initiatives put forward by the towns from which they have sucked out all economic life?
Ms Tara Buckley: The consultants who accompany me today made proposals concerning out-of-town developments, taking into account what they did to town centres and the contribution they should make to the regeneration of town centres. A number of developers want to build outside or at the edge of towns, many of which have large vacant sites such as where the mart used to be. They are difficult and complex sites to develop but their regeneration would make a huge difference to our towns and villages. Everybody would have easy access to these developments and it would be good for competition and diversity. We agree that we should encourage new retail zones to locate in vacant sites in town centres to help revitalise them.
In the United Kingdom, when councils have insisted a development take place in a town and that it respect the architectural heritage of a town, some of the biggest players in the world have responded by putting up beautiful buildings which add to the attractiveness of the town and around which people are proud to walk. We would be in favour of initiatives to support this approach.
Deputy Cyprian Brady: I wish to follow up on a point made about parking by Deputy English. Dublin city centre is a bad example but local authorities use revenues raised from parking to invest in the regeneration of town centres. How does RGDATA suggest we achieve the right balance in that regard?
Mr. Terry Durney: It is a question of having a level playing field. There are opportunities to raise levies to fund car parks but people do not have to pay for out-of-town parking. Everybody should pay the same.
Senator Ivor Callely: I thank RGDATA for its presentation and Ms Buckley, whom I have known for a long time. When I was Chairman of the committee, I interacted on many occasions with RGDATA and always found its submissions to be correct and based on sound information.
The delegates said there was evidence that local authorities were inconsistent in their approach. I agree. Can RGDATA forward the evidence to me at a later stage? I concur with the points they made about the Competition Authority’s claims about the retail planning guidelines and they are worthy of further consideration.
Deputy Dara Calleary: Ms Buckley said there was a change in the debate in France and the United Kingdom. Is that coming from consumers or retailers? The report also cited Sligo as an example of great planning. Two years ago there was huge controversy in Sligo because a number of multiples were refused planning permission for developments in the town. One subsequently obtained permission and went ahead with the development. What does RGDATA state to the consumers of Sligo? They were very angry that they were being deprived of choice and value. The development by Treasury Holdings has since received the go-ahead but that is a completely separate matter.
Ms Tara Buckley: The towns which have adhered to the retail planning guidelines have some of the best retail offerings in the country. They have the best diversity of shops, some of the best prices and the most competitive environment. It can be painful to take difficult decisions and some councils pay any price to get a retailer to come to a town. However, towns that have allowed new retailers to build outside the existing retail zone end up with vacancies and dereliction on their main streets. The retail experience moves out of town and the town centre loses its heart and vibrancy. That is not in the best interests of a town. Smaller, locally-owned businesses on the high street are forced to close down as all their business moves out of town. These developments are usually owned and controlled by one retailer and competition is diminished.
Athlone is an example of a good development. It took some time to put together but it was right in the middle of the town centre and accessible to everybody. It has not sucked the life out of Athlone, although there are plenty of other examples where large developments have been allowed at a distance from the town centre and the latter has suffered as a result. We would not be in favour of changing the guidelines to allow for that type of development. We would say to consumers that when it is done properly they will enjoy it most and will derive most benefit from it and the town will thrive and survive as a result.
Chairman: I thank Ms Buckley. Senator Callely and Deputy Calleary raised particular issues. If there is any further information Ms Buckley wishes to furnish to the committee on the queries they raised I ask her to do so as quickly as possible to ensure it is taken into account in our overall deliberations. I thank the delegation for appearing before the committee and for an interesting exchange of views. I did not ask any question because my wife and I are involved in one of those small shops. Some of what Ms Buckley said is happening in reality.
We have had a useful exchange. I thank the delegation for its assistance in our deliberations. It is important that we hear all sides of this debate. We will prepare a report and will furnish the delegation with a copy in due course. Is the delegation coming back tomorrow?
Ms Tara Buckley: Yes.
Chairman: We look forward to the company of the delegation again tomorrow. I thank the delegation for its promptness and for adhering to the guidelines. We accept they are pretty onerous in terms of time.
Ms Tara Buckley: I thank the Chairman and members of the committee. We will furnish any additional information.
Chairman: I welcome the counterparts of RGDATA, the Northern Ireland Independent Retail Trade Association, Mr. Glyn Roberts, chief executive, whom we met during our travels to Belfast, Banbridge, Ballyclare. He assisted us during the course of our journeys and ensured we visited various places and made various personnel in the retail trade available for our discussion. We thank him and his colleagues for that assistance which we deeply appreciate. It certainly helped us in our deliberations that we had a physical presence in those areas. I am sure we will empathise with some of the points the delegation will make as a result. The delegation has heard the format already. We all have a busy schedule and we are trying to adhere to the time schedule. I invite Mr. Roberts to summarise his submission in five minutes, following which there will be a question and answer session. My colleagues are fairly inquisitive today.
Before commencing I draw attention to the fact that members of the committee have absolute privilege but that same privilege does not apply to witnesses appearing before the committee. I remind members of the long-standing parliamentary practice to the effect that they 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. Having issued that usual warning, which is for everybody, I invite Mr. Glyn Roberts to make his opening statement.
Mr. Glyn Roberts: I thank the Chairman. It was a pleasure to host members of the committee at Belfast, Ballyclare and Banbridge last week. I hope the committee finds the experiences of the traders there useful in terms of its inquiry.
I presented a short written summary to the committee’s inquiry and will touch on some of the main points in it. We are the sister organisation of RGDATA in Northern Ireland. We represent more than 1,000 independent retailers, mainly in the retail grocery sector, small grocery stores, butchers, bakers and one candlestick maker in Northern Ireland. Collectively they generate in excess of £1 billion every year to the Northern Ireland economy and employ more than 20,000 staff. Given that Northern Ireland is very much a small business economy, the independent retail sector is the biggest subsection. It is an essential part of our economy.
In the context of the committee’s inquiry, it is not, perhaps, for us to comment on issues inside the Republic but what we can do is give our experiences in terms of retail planning, or the lack of retail planning, in Northern Ireland during the past 15 years. Central to our core policy agenda is the publication of what is known as draft PPS5 which brings our retail planning policy into line with the rest of the UK. We have lobbied consistently for this for the past ten years and have been pushing direct rule at Ministers. We are now at a point where there is all-party support within the Northern Ireland Assembly for its publication. However, its publication is held back because of a judicial review brought by another developer. We hope that judicial review will be resolved very soon and that the publication of draft PPS5, which is different, does not contain a cap unlike the one in the Republic. Some of the questions we asked of your committee related to why we do not push for a cap. We want to get draft PPS5 published which will make it much focused on the big multiples investing in their town centres rather than on unsustainable out-of-town development.
Having said that, we are looking at towns such as Ballyclare, Ballycastle, Banbridge, Larne, Omagh, Derry, Ballinahinch and Newry, all of which are threatened by major new out-of-town super store developments. Our message is clear. We are not anti-multiple, anti-Tesco or ASDA but we are anti out-of-town super store developments. For us it is about location, location, location. The committee saw six examples of a multiple coming into a town centre in Ballyclare and Ballycastle. The ASDA in Ballyclare was great for the town. It increased the retail facility that Ballyclare had to offer. It also ensured that all the traders in the town were on a level playing field. One could do one’s shopping in ASDA, Woodsides or any other small retailer. The traders in Ballyclare welcomed the arrival of that store. It is unfortunate that Tesco wants to build an out-of-town store there which threatens all of that retail trade. The traders and the local council are united in their opposition, as are many in the local community. Banbridge faces the prospect of having the largest ever Tesco store on this island, a mile out of the town where there is a very good Tesco within the town centre. We are not anti-multiple but we are anti out-of-town super store developments. We want to see a level playing field. Ultimately it always gets back to what the consumer wants, that is, choice and a variety of retail offering within their town centres.
The committee will see from our presentation that a variety of research has been done in Westminster by an all-party group on small shops, the national retail planning forum, the new economics foundation, all of which show that out-of-town development by the big multiples results in a net loss of jobs. A study conducted in England and Wales by the national retail planning forum on over 90 different out-of-town stores showed that average net job loss was in the region of 270, not to mention the hundreds of small shops that could not compete with out-of-town stores and went to the wall. We commissioned research from the University of Ulster which showed very clearly that unless our retail planning policy is modernised and brought into line with the rest of the UK, never mind the system in the Republic, in the region of the 7,000 jobs and 700 to 800 small shops are at risk. Unfortunately, we already have examples of retail devastation in areas such as Antrim, as a result of out-of-town development. Despite the strong lobby of some of the traders within that town, the council prefers to promote a policy of out-of-town development by ASDA which is trying to locate a store at Junction One.
I draw the attention of the committee to the fact that it comes down to a choice for consumers in Northern |reland. If all these planning applications go ahead and the draft PPS5 is not published, many of our historic market towns in Northern Ireland, which came through the Troubles and provided an invaluable service to the community at a time of greater political stability and peace are threatened. Now that we have greater political stability and peace, their businesses are threatened because our retail planning system is biased towards the multiples. They are finding it very difficult to cope within that environment.
All we are seeking is a level playing field, whereby town centre investment by multiples is promoted first so that small and large retailers can provide customers with choice. It would be utter madness to remove the cap on out-of-town development in the Republic. This committee has witnessed the damage that has been done to Northern Ireland in that regard.
Deputy Damien English: Will Mr. Roberts forward the Welsh studies to which he referred?
Mr. Glyn Roberts: Yes.
Deputy Mary Alexandra White: We had the opportunity of touring Mr. Roberts’s area, for which we are very appreciative. In regard to the draft PPS5, which was promised many years ago, what is the excuse for the hold-up? We saw for ourselves the benefits brought to local shops in Ballyclare from ASDA locating to the town centre. This is a good model in my opinion. What problem is causing this important document to gather dust? What explanation is being given in Northern Ireland for holding it up for five years given its potential to reinvigorate the retail sector?
Mr. Glyn Roberts: First and foremost, it took a long time to get support from all parties in the Assembly because some political representatives took the rather naive view that any investment is positive, irrespective of whether it is sustainable. They get the quick fix of 500 jobs but do not consider the resulting displacement of indigenous jobs or the net reduction in employment.
Over the past nine years, we have worked to change that view and last September a vote was passed in the Assembly calling for the publication of draft PPS5 and a reduction in the level of out-of-town development. That being said, the Minister of the Environment, Sammy Wilson, has clearly stated that he wants to publish the document but is being held up by a judicial review brought by a developer. Some of this is tied up with the John Lewis application in Lisburn. It is another delay. We have had to cope with lobbying by big multiples and developers and it was a job to convince all the political parties in the Assembly. We have now achieved all-party support but getting to this stage was like pulling hens’ teeth.
We have made good progress in changing the culture and there is now a recognition among the parties that maintaining and investing in our town centres is sound policy. The Minister for Social Development, Margaret Richie, is leading efforts to reinvest in our town centres to ensure they are the engines of economic change in the North but she cannot achieve this aim unless retailers become part of the process. Our only delay is the traditional view on planning but we hope that issue will be resolved presently.
Deputy Chris Andrews: Instinctively, I would oppose the out-of-town hoovers to which the Chairman referred. This Government has made a considerable investment in urban renewal and regeneration schemes across the country. Everybody we have spoken to believes in the importance of maintaining the fabric of towns and villages. The difficulty that arises, however, is the higher cost of doing business in towns and villages. Particularly in the current climate, people have become more price sensitive and consumers are ignoring everything we say.
If the guidelines remain unchanged, how would Mr. Richie reduce the cost of doing business in towns and villages? That appears to be the nub of the issue. We can provide greater choice and anybody who goes abroad can visit nice villages with small shops but the bottom line is the money in one’s pocket. If that means people have to drive out of town, they will do so. The same people who are shopping in the North will seek sponsorship from their local business for their schools and community clubs. How can higher costs in towns and villages be addressed?
Mr. Glyn Roberts: Many of our members are competitive with the big multiples in terms of their costs and the services they provide to the community. Our members use 100% local meat and poultry. That was clearly demonstrated during the pork crisis when I visited a shop which had removed all its pork products. The same could not be said of several of the multiples. People want to know from whence their meat and poultry comes.
Deputy Chris Andrews: They are not prepared to pay more.
Mr. Glyn Roberts: Quite often they are not paying much more. The Northern Ireland economy is not seeing significant benefits from shoppers from the South coming North because they are going to Tesco, Sainsbury, etc., and the profits are being sent to corporate offices in the south of England. These multiples do not have the same commitment to using local suppliers, although I admit they have improved in recent years.
Deputy Chris Andrews: The ASDAs and Tescos.
Mr. Glyn Roberts: They do not reinvest in the community in the same way as many small businesses and retailers. Given that choice is at the heart of the consumer strategy, it would be fundamentally wrong if we arrived at a system in which all we have is one big ugly box out of town which sells the same products at the same price and has a monopoly over the grocery sector rather than, as members of the committee witnessed in Banbridge and Ballyclare, a real diversity of retailers who offer variety and the opportunity of shopping around for the best price.
Our vision for town centres comprises the right combination of niche, independent and multiple retailers. That is what Belfast City Council and city centre management are trying to achieve. In the aftermath of all the damage done to the centre, they are desperately trying to persuade small independent retailers to return because they realise that tourists will not come to the city on a weekend shopping trip if its shops are the same as those in Glasgow, Edinburgh or Birmingham. They are doing their level best in areas such as Fountain Lane to attract independent and niche retailers back to the city centre.
We are constantly battling local authorities because they believe the propaganda they are given by big multiples regarding job creation. Sometimes they fail to get behind their small retailers and forget they are a vital part of the Northern Ireland economy and provide an important service to the community. I draw members’ attention to the following comment by Andrew Simms of the New Economics Foundation: “Clone stores have a triple whammy on communities: they bleed the local economy of money, destroy the social glue provided by real local shops that holds the community, and they steal the identity of our towns and cities.” Nobody wants to see that. The first approach should to be to promote town centres which offer diversity and choice to consumers and provide a level playing field for small and large retailers alike.
Deputy Chris Andrews: But it will not bring the price down. Clearly people like a shopping experience where there is choice but if the rents, rates and parking costs are higher, one just cannot compete.
Mr. Glyn Roberts: As RGDATA stated, no doubt car parking is also an issue in the North. We need good public transport as well for those who do not have access to a car. I would still come back to many of the businesses that we represent whose prices compare extremely well with those of the big multiples.
I would say that the issue is not black and white. Even within the North, multiples would have different prices in different stores. Our own consumer council made that point as well. Therefore, it is not an issue in terms of pricing where it is different North and South. One would get that also within the North, and within the UK as well.
This is not about taking cheap shots at the multiples. This is not trying to turn back the clock to the good old days of the corner shop and the family grocer. We recognise retail has changed. Consumers’ needs have changed. We are saying that surely we should have a level playing field for both small and big retailers which provides consumer choice and value for money for the consumer as well.
Many of our members provide that. They have a particular relationship with their communities whom they serve in terms of going that extra mile for their local customers. They are, as that quote states, “the social glue that holds communities together” in the same way as the post offices are. That is vitally important for us to get right, not even as an economic argument but also as a community argument. There is considerable work that Northern Ireland needs to do to rebuild shattered communities after a conflict of 40 years and we need to have all those ingredients together. Our members provide an invaluable role as a community service as well as the mainstay of the economy in the North.
Deputy Deirdre Clune: My question is similar. I thank Mr. Roberts for his presentation. Obviously he represents retail traders, as do RGDATA and many groups that are here before us this morning. The big question when looking at retail planning guidelines is whether the cap should be lifted. If lifted, it would facilitate out-of-town developments. The Competition Authority has recommended that it would. The Competition Authority has been before this committee on other issues but its focus is really on the consumer and it does not account of social and community development. Its consideration is completely from a consumer point of view. In its opinion, the best option for consumers in terms of prices and choice would be the lifting of the cap.
There is an argument on both sides. I accept the arguments Mr. Roberts makes. I can understand them and I would be sympathetic, and would use them myself. From a consumer point of view, nevertheless, the opinion of the Competition Authority is to lift the cap.
Mr. Glyn Roberts: From where we and RGDATA are coming on this issue, first and foremost it is about the consumer. The key element of any consumer study is choice. If the consumers do not have choice available with a diversity of different retailers where they can shop around and get the best bargain, and if we have a situation where the big multiples hold a monopoly where they control the prices, that is ultimately bad for the consumers.
I suppose putting the consumer first is an article of faith from where we are coming in this strategy. Our customers within our members’ stores value the local knowledge of those stores and that they will go the extra mile for those customers. The levels of customer service are far better in the independent retailers than in the multiples. Perhaps some of the multiples might dispute that, and of course I am biased, but my experience of this has been positive. It is about the consumer at the end of the day. If consumers do not have choice, then that is bad for them.
Deputy Deirdre Clune: Mr. Roberts used the term “level playing field”? What is a level playing field, from his viewpoint?
Mr. Glyn Roberts: We want to see a strategy putting the town centre first which tells the multiples that we want to see them setting up in Northern Ireland but to come in and invest in the towns that we have got rather than add alternative town centres. These big out-of-town developments have their own free car parking and roads network that suits them and the thrust of the big multiples is a one-stop-shop approach. One goes into the development and gets everything one needs under one roof so that one does not need to go anywhere else. However, where those big multiples are in a town centre location it is harder for them to get their own way because they must play their role within a broader retail network. They must work with other retailers for the benefit of the town.
When members of this committee visited Banbridge they saw clearly that people would still do a weekly or fortnightly shop in the Tesco in the town and then go a walking distance to others — the butchers, the bakers, etc. — where they would buy many goods as well. Likewise, in Ballyclare where, I understand, many people park in ASDA and then use the rest of the town. It does work. It is saying clearly to the big multiples that we want to see them come to Northern Ireland and play their role, but to please come and invest in our town centres. When they create alternative out-of-town sites it is bad for jobs, it is bad for communities and it is ultimately bad for consumer choices.
Deputy Cyprian Brady: I thank Mr. Roberts for his contribution. Will the draft PPS5 in any way go towards reversing the adverse effects and what has happened in some of the towns and cities in Northern Ireland? He cited Antrim as an example in his submission.
Mr. Glyn Roberts: It is hard to reverse some of the damage. Certainly, it would be hard to see that a number of the planning applications alive at present would succeed under the new draft PPS5. That is not to say that the new draft PPS5 would not stop some out-of-town development. The draft PPS5 heightens the wall but it does not stop the multiples getting over that wall. Part of it promotes a town centre first approach.
In Antrim, the town centre has lost many businesses and jobs in recent years. We are saying that, in particular, if the major out-of-town ASDA store proposed for Junction 1 goes there, it will be far harder to get any retail-led regeneration strategy in Antrim. We have stated clearly we want to work with the council. We will work with any of the multiples to do what we can to regenerate Antrim.
Quite often I am disappointed that the attitude of Antrim council is very much to give the multiples what they want. Unfortunately, they supported a vast Tesco store in Crumlin despite a petition of over 1,000 local residents and every trader in the town pointing out the damage this would do. The message was not that they were against Tesco coming but that the size and scale of the proposed store was huge and a smaller store would have been more appropriate to a small village like Crumlin. Despite all of those views, the council still pressed ahead in their support.
Obviously, one matter to point out is that our planning laws are slightly different in that our local councils have a statutory consultative role in terms of such big retail planning. Quite a good deal of these big retail developments are under what is known as Article 31 on which the environment Minister has the final say.
Deputy Cyprian Brady: Is there no compulsion to go by the guidelines?
Mr. Glyn Roberts: Quite often the difficulty is that Assembly members would stand up in the chamber at Stormont and state they support a town centre first approach, and supporting local shops, but 74 out of the 108 are local councillors as well — we still have the dual, even triple, mandate — and they would go back to local councils and say something different. Obviously, all politics is local. Even so, there is a bigger picture here.
At times, it is a matter of getting local authorities to see that bigger picture. I have presented to local authorities where local councillors have stated that the small shops and small businesses that we represent are in the way. For any elected representative to say that our members are in the way, that somebody who provides local jobs and local investment is in the way in 2009 because we have greater peace and political stability, is a tragedy. That view has changed. Regeneration of the Northern Ireland economy is now the focus of the Northern Ireland Assembly through its programme for Government. Our members can play a role in terms of supporting the start-up of new small businesses, which is what we are about. We want to work with all Ministers in the Northern Ireland Executive in ensuring retail remains a core part of our small business economy in the North. We must face the fact that there will not be significant foreign direct investment on either side of this island for the next three or four years. We must build the businesses we have in terms of ensuring they can expand and provide the jobs and investment we all want.
Deputy Dara Calleary: Perhaps Mr. Roberts will forward to the joint committee a note in respect of how the town centre manager operates, how it is funded and the job responsibilities and so on.
Mr. Glyn Roberts: I will do that and can perhaps touch on the issue now. Unfortunately, it is a declining network. I believe there are barely a dozen remaining in Northern Ireland. There is an Association of Town Centre Managers of which we are a member. Two or three managers have been made redundant in recent weeks. We are championing the whole concept of town centre partnerships. Ballymena is a good example and includes local councillors and retailers. I understand Tesco, the Department of Regional Development and the Department of the Environment are also involved. All of the key stakeholders required to make a town centre tick are involved. Belfast also operates an effective town centre partnership.
We take the view that councils should play a role in terms of funding town centre managers but should not be the sole funder as a degree of independence is required in town centre managers. Quite often when a council takes the view that a big out-of-town store is good, a town centre manager, who is always on the side of the traders, will take a different view. There is a clash. We have stated that we need consistent investment in town centre partnerships, of which Ballymena is a good example. We would like to see them rolled out across many of our market towns. Obviously, there will be challenges in terms of public administration in the North given the number of councils is being reduced from 26 to 11. There exists an opportunity to look afresh at this issue when the new structures are in place.
Deputy Michael Fitzpatrick: What is the average size of outlets in Northern Ireland and what would be the largest?
Mr. Glyn Roberts: It varies.
Deputy Michael Fitzpatrick: A rough figure will do.
Mr. Glyn Roberts: I do not have all the statistics to hand. Obviously, given that we have 1,000 members it is hard to collate that information. One would be hard pressed to find an outlet of more than 3,000 or 4,000 sq. ft. The maximum size may be upwards of 10,000 sq. ft. However, none comes to mind. For the most part our shops are of average size.
Chairman: There must be greater emphasis, in terms of North-South co-operation, on outlet size if we are to meet the objectives of ensuring the maximum number of retailers survive. To do this, uniformity in terms of outlet size, will be needed. We do not want retailers who are unable to obtain large outlets in say, Mullingar, being able to obtain them in Newry and so on and vice versa.
On jobs targets, what analysis has been undertaken in regard to jobs promised by large multiples versus those realised? Is employment in that context largely casual or full time?
Mr. Glyn Roberts: On the first question, Tesco has applied for permission to construct a 90,000 sq. ft. store on the Buncrana Road in Derry. In our view, this will not alone impact on Derry city but on Letterkenny. It is clear it is seeking to construct that store at that location because it would not obtain planning permission for that size of store on this side of the Border or in Donegal. The impact of this is an issue which the Minister for the Environment, Heritage and Local Government may perhaps need to raise via the North-South Ministerial Council. In this particular case, Derry city relies considerably on trade from within that natural hinterland and from Letterkenny.
For the most part, the volume of shoppers from the South are destination shoppers who shop in the big multiples such as ASDA in Strabane. They are filling up their cars and going away again. I spoke yesterday with traders in Strabane who see little impact in this regard. As a result of negative media coverage, in terms of Newry being grid-locked, many people from the North did not bother to go to Newry town to shop, as a result of which many traders lost out. There is nothing wrong with shoppers from the Republic coming North. It is not that long ago since many of our members who own forecourts suffered as a result of motorists going South to fill up their cars with fuel. That situation has changed. Currencies fluctuate. As one economist suggested, it is like swings and roundabouts. It is wrong for us to rely on this.
I accept that as a result of shoppers from the Republic going North, ASDA in Strabane has been able to expand. The impact of this on the Northern Ireland economy and on small traders is minimal. Reference was made to the net loss of jobs. The report to which I referred is in my submission which provides more details in terms of statistics in this regard. Much of its research is taken from the report of the All-party Small Shops Group, the National Economics Foundation and the National Retail Planning Forum, all of which are separate from us and are providing independent evidence which we can use.
As a result of disastrous planning policies in England and Wales, 42% of towns and villages in England no longer have a local shop. While England has tightened up its planning policies in recent years, a great deal of damage has been done. No one wants to see that happening in any part of this island. I would caution against multiples from this side of the Border — they are often the same multiples North and South — suggesting they could reduce prices for consumers here if they could obtain larger stores. That argument does not stand up. If they get larger stores they will simply stock electrical goods such as DVDs, CDs and clothes rather than expand their grocery element and so on. We have all seen the impact of this within Northern Ireland and the UK. An example is Woolworths which could not keep up with the multiples, which is fair enough, business is business. I would caution that when they present to the joint committee they will put forward this argument. As I understand it, Tesco stores in the Republic have grown considerably in recent years. At the end of the day, they do not appear to be doing too badly.
Deputy Damien English: Mr. Roberts referred to differences in planning guidelines. I understand his organisation is in the main concentrating on getting PPS5 published. Would he agree that the cap has worked well here?
Mr. Glyn Roberts: Yes.
Deputy Damien English: Will Mr. Roberts in the future actively encourage the introduction of a cap on his side of the Border? The loss to local businesses in the Border regions and to councils as a result of the construction of a large store can be considerable.
Mr. Roberts referred to a particular retail outlet which has applied to construct a 130,000 sq. ft. outlet in Banbridge. It is important to put on record that there already exists in that location a 30,000 sq. ft. Tesco outlet.
Mr. Glyn Roberts: Yes.
Deputy Damien English: There is a further 30,000 sq. ft. of space available. The same company in its presentation to the joint committee claimed it supports local retailing. Perhaps Mr. Roberts will comment on the impact of the construction of a 130,000 sq. ft. retail outlet on local retailing. What would be required, in terms of shoppers, to make that work?
Mr. Glyn Roberts: Our strategy is to get the draft PPS5 published. Once it is published, we will need to examine how we can build on that. If we were offered a cap tomorrow, obviously we would take it. However, we must build the case gradually. To answer Deputy English’s question, we put in the submission. One can visualise the 130,000 sq. ft. when one considers that if everyone who lives in Banbridge went to the new store on the same day, there would not even be a crush because they would each have approximately 4 sq. ft. in which to stand. That puts it into context. That type and size of store would affect every type of retailer across the board, from the electrical retailer to the insurance broker. What will be left in five or ten years when the town becomes a retail ghost town is taxi ranks, hot food bars and so forth. It then attracts anti-social elements. The heart of the town is ripped out.
Deputy Damien English: How many other towns could it affect? Is there research to show it has an effect within 20 miles, for example?
Mr. Glyn Roberts: Yes. There is no doubt that traders and communities in neighbouring villages around Banbridge would have concerns. Banbridge was actually a success story. The chamber of commerce in Banbridge, ourselves and many others in the local community campaigned against that store. We were successful in persuading the Department of Environment planning section and the environment Minister in Northern Ireland to initially reject it. There is now an appeal on that so we have a fight on our hands.
Let us be under no illusions. The community in Banbridge and the shoppers and consumers think it is tremendous that they have such a variety in the town. The Deputy was in the store of Mr. Joe Quail, one of our members, who is a farmer as well as running a very successful butcher shop. The Deputy saw the local preserves from local suppliers stocked in the store. Joe Quail has now opened a coffee shop. People value that type of store and do not wish to see it lost. The Tesco store in the town is large, at 30,000 sq. ft., and has planning permission for 60,000 sq. ft. Nobody in the Banbridge Chamber of Commerce has any objection to that store increasing in size. In fact, the chamber welcomes it. It wants to work with Tesco, as do we, and with ASDA and other big stores to see how we can arrive at a good solution for consumers and communities in the North.
However, there are big challenges. Aside from the size of the proposed store, there are many local authorities who would be delighted to have a high street like that in Banbridge. People come from across Northern Ireland to shop in Banbridge because of the diversity of the independent retailers there. That is tremendous and it is encouraged by Banbridge District Council. The council was supporting the out-of-town store until the DOE took its position. The views of councillors were starting to change but I considered it particularly disappointing that they did not realise what a tremendous asset they had within their town centre. I could not understand them even contemplating putting that at risk.
Chairman: We remember Mr. Joe Quail. He had a very extensive store and all his beef was supplied by the family farm. It was also noticeable that he knew everybody who came into the shop. He shook hands with them and knew their aunts and uncles. There was a great degree of intimacy with him knowing everybody, as indeed his father did too. I understand the family is there since the 1890s.
I thank Mr. Roberts for appearing before the committee and helping us with our deliberations. We are trying to carry out a significant investigation. We are dealing with planning issues today and will deal with price issues tomorrow. There was a little leeway in terms of having an extra few minutes so my colleagues could ascertain the current position with the store. Your contribution was informative and we had a good exchange of views. When we have formulated a report and our recommendations, we will send you a copy. Thank you for your generosity and for looking after us during our two-day visit to Belfast, Banbridge and other places last week.
Sitting suspended at 12.50 p.m and resumed at 2 p.m.
Chairman: We are a couple of minutes late and I apologise to the witnesses. I thank them for attending as I know they have a busy schedule. We also have a busy schedule and it is probably busier than expected due to events overnight. I ask the witnesses to be as brief as possible in summarising their submission. We have allotted five minutes for each submission but there will be an opportunity for questions afterwards.
I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I see the former Minister and Deputy, David Andrews, in the public Gallery. He is very welcome as an observer to the meeting.
I welcome Mr. Tony Keohane, chief executive of Tesco Ireland. He is accompanied by corporate affairs director, Mr. Dermot Breen.
Mr. Tony Keohane: I thank Deputies and Senators for the opportunity to address them. As a retailer we are committed to offering consumers quality products at the best prices with the widest choice. This is achieved through a range of store formats that are appropriate to the local communities we serve. They range from Extra stores to our main street Express stores like the one in Camden Street, not too far from here.
In total, Tesco Ireland operates 117 stores and our business has grown every year since 1997. We now employ 14,000 people directly in stores, offices and depots throughout the country, while an additional 14,000 people are indirectly employed to supply and support the business. We look after customers through 2 million shopping trips every week and we contribute more than €2.5 billion to the Irish economy annually. We also export more than €655 million of Irish food and drink to the Tesco Group every year.
Since we last appeared before this committee four years ago, we have opened more than 40 new stores in communities around Ireland. In the last 14 months alone we have created more than 1,500 new jobs. This has included more than 400 new jobs in Mayo, 200 new jobs in Louth, more than 180 new jobs in Kildare, 100 in Meath, 80 in Cavan and some 100 in Carlow.
We are the largest employer in some towns and many communities see a Tesco store as the best chance they may have to get an inward investment project that creates jobs, protects other jobs in the community and drives the development of the town. We are often approached by communities asking us to open in their area because people see it as good for competition, jobs and so forth. We listen to these consumers and communities and we see if we can invest in land and buildings in their areas by opening new stores.
Some members might have seen the Roscommon Herald of two weeks ago. It reported that a local councillor in Castlerea, along with housewives from the town, had gathered 1,200 signatures in a petition for a Tesco for the town. Towns like Abbeyfeale, Mitchelstown, New Ross, Youghal, Roscommon, Bailieborough, Nenagh, Cashel, Kilrush, Carrick-on-Shannon, Wexford and others that have been the recent beneficiaries of Tesco shops have all told us of the positive difference they have made. Prior to our arrival, people would travel 30 km or 40 km to do their weekly shop. A good store has the potential to regenerate a town, keeping shopping local, making a town sustainable and benefiting the environment by reducing travel distances.
I would like to share a testimonial with members which we received from Mitchelstown, County Cork, about the benefits Tesco has brought to that community. Tom Whelton of the Mitchelstown Forum said:
As Tom Whelton said so well in his words from Mitchelstown, new Tesco stores bring competition and choice. More importantly, new Tesco stores help people to shop locally. New stores localise shopping and reduce the leakage of consumers to other towns. They cut down on travel distances — and therefore carbon emissions — for weekly shopping.
In December 2008 we opened a new store in Cashel, County Tipperary. On opening the store, an exit survey of 1,000 customers highlighted the fact that, prior to the opening of the store, 60% of them had previously shopped in Clonmel, Tipperary or Thurles. More than 40% of them used to travel more than 32 km to complete their weekly shopping. With a new store on their doorstep, people in Cashel can shop locally and avoid travelling long distances for their weekly shopping. By investing in towns like Cashel, Mitchelstown, Bailieborough or Claremorris and providing the modern shopping facilities consumers need, we can localise shopping and help revive these towns as trading centres. At the same time, we can positively change current travel patterns and reduce the length and duration of car journeys.
Irish rural populations who use these stores depend almost wholly on private cars for shopping, particularly for food shopping. They use these supermarkets for weekly or fortnightly shopping where they are looking for maximum value. Our Express stores like those in Parnell Street or Camden Street in Dublin are also part of the equation but the diverse nature of the market in Ireland requires a mix of stores to meet different consumer and community needs.
Last autumn we opened our first eco store in Tramore, County Waterford. Designed to the highest environmental standards, it is a blueprint for the stores of the future. A timberframe store, it uses 45% less energy than a conventional supermarket of a similar size and will save 420 tonnes of carbon each year, the equivalent to the amount that 2,500 homes would produce in a single year. This is a significant signpost for our plan to reduce our carbon footprint, through which we can also help consumers reduce their carbon footprint.
It is with that background of new store openings that we have been invited to appear before the committee to give our views on the retail planning guidelines and their impact on our new store development. We develop our stores by looking at consumer needs, local demographics, site availability and land costs. Once we open, there is no town where we do not increase consumer choice and competition resulting in lower prices. We also bring benefits in facilitating recycling. We engage actively with local planners and communities to determine what will work best for the locality and we work within the planning regulations and structures.
It may come as a surprise to the committee, despite what others may say, that the majority of our existing stores, some 68%, are located in town centres, that is seven out of every ten of our stores. This is more than any of our competitors. In fact, 95% of our stores are either town-centre, edge-of-centre or out-of-centre, and not out-of-town as many believe.
We welcome the opportunity to continue to develop new stores in town centres and wherever we develop, we do so in consultation with the local planning authority. We would seek to continue to develop in town centres where sites can be found and provided it does not add to existing traffic congestion problems, both of which can be severe limitations. That is why there also needs to be scope for edge-of-centre and out-of-centre developments.
Without this scope, some communities and consumers will not benefit from retail investment and all the positives this brings, such as new competition for long-standing incumbents, consumer choice, lower prices and most especially in these challenging times, jobs. Proximity, accessibility and convenience for consumers are important factors to consider. Communities and the economy generally would benefit from resources being directed to improve the pace of planning decisions. However, with a reported slowdown in planning applications, this may well arise.
I urge the committee to reaffirm policies that foster and promote these outcomes. Any move towards further restriction on size or location in the guidelines will inhibit investment, job creation, consumer choice, and lower prices.
Consumers and communities would benefit from a refocusing of the existing guidelines which might allow for speedier decision making, more suitably zoned sites in and near towns, more weight given to the views of local professional planners, more recognition for the role of consumers in the process, and recognition of many planning objections for what they are — in many cases purely commercially and competitively driven.
I would now welcome any questions.
Chairman: I thank Mr. Keohane.
Deputy Dara Calleary: I welcome the Tesco presentation. If Mr. Keohane would furnish the committee with his definition of “town centre”, “edge-of-centre”, “out-of-centre” and “out-of-town”, it would be helpful to our deliberations. While 68% of Tesco stores are located in town centres, of the 40 new stores opened in recent years how many fall into the category of town centre, edge-of-centre or out-of-centre?
I do not have a difficulty with the operations of Tesco Ireland but I am concerned about its parent company in England and the way it would operate in an unfettered planning environment if we removed this cap. Last week we visited developments in Banbridge and we have also received a number of submissions from communities in England about the substantial impact of out-of-town shopping centres and clone stores. The New Economics Foundation states: “Clone stores have a triple whammy on communities: they bleed the local economy of money, destroy the social glue provided by real local shops that holds the community, and they steal the identity of our towns and cities.” That cannot be done here because of the cap. Does Mr. Keohane have a view on removing this specific cap or is he happy to operate within the current system?
Mr. Tony Keohane: We are here to speak about Tesco Ireland and Tesco’s operations in the Republic of Ireland. That is our area of accountability and responsibility. Our group recognises that Ireland is a different jurisdiction with dissimilar demographics and communities. We are happy to work with planning authorities to be directed to the most suitable sites in towns and communities.
Deputy Mary Alexandra White: I too welcome the representatives of Tesco. I take it the reference in their submission to “speedier decision making” means the planning process and appeals to An Bord Pleanála. How do they envisage such a process? The submission also states: “Recognition of many planning objections for what they are (in many cases purely commercially and competitively driven)”. This statement neglects the fact that many small retailers live over their shops in towns and villages, as well as ignoring the issue of sustainable development. Some people hold the ideological opinion that towns should be created around shopping centres and retail outlets located not on the edge of town but in town centres. A caveat is needed to the phrase “purely commercially and competitively driven” because some people object to Tesco stores on the grounds of sustainable development.
Other people are concerned about the degree to which farmers are suffering and the costs of importing food. I can visit Tesco stores to purchase beans which are imported from Kenya or asparagus from Peru. Our agricultural and horticultural centres could be growing these products and Tesco would gain greater consumer support by sourcing locally. This is particularly pertinent in the context of climate change and reducing food miles. Greater support could be offered to local and artisan food. Especially given the economic downturn, people are crying out for some way to work at home to produce goods that Tesco stores could sell. As someone with experience of the retail sector, I have heard anecdotal evidence of the difficulty of putting local produce on supermarket shelves and I would like to hear the representatives’ opinion on this.
Mr. Tony Keohane: We are massive supporters of Irish agriculture. Every year we facilitate the export of €655 million of Irish food and drink to our international businesses and we actively support the procurement and sale of Irish products. Last year we organised road shows in Galway, Limerick and Cork in order to seek out local producers and commit to stocking their products provided they meet the requirements. We are still actively pursuing that policy and, if members can assist us in identifying local producers, we would be more than happy to respond.
On the question of decision making, I was referring to it being absolutely clear that the democratic process allows people to submit objections, particularly if they live locally and feel our proposed development in some way impacts on them. As I stated earlier, we work very closely with the local authorities because we do not want to waste time and our money in pursuing something that is not suitable locally. We also must judge that whatever we bring, whether it be a small or a medium-sized shop, is fit for purpose in that community.
What I am looking for here would help the cost equation. It can take us up to seven years to get a store from initial site identification right through the planning process which is an incredibly long period of time. So much changes in those seven years that anything the committee could do to help us see that process speeded up without removing the democratic rights of people would be helpful.
There are many examples of planning objections by our competitors to slow the process up. There is no doubt about that. Tesco is at the receiving end of that more than anybody else. That is a fact.
Deputy Arthur Morgan: Mr. Keohane stated that the cap inhibits investment and lower prices. Could he explain that comment?
Mr. Tony Keohane: I did not say that.
Deputy Arthur Morgan: He did. He stated the cap inhibits investment.
Mr. Tony Keohane: No. I stated any further restrictions would inhibit investment.
Deputy Arthur Morgan: Does he consider the current cap to be restrictive?
Mr. Tony Keohane: No.
Deputy Arthur Morgan: Therefore, Mr. Keohane is happy to live within it.
In terms of development, what would be Tesco’s optimum store size in square metres? Many people have concerns, to which Deputy White alluded, about the environmental sustainability of developing out-of-centre stores. Would Mr. Keohane comment on that?
He stated that 14,000 people are employed by Tesco in the State. Can he indicate how many of those 14,000 positions are full time and part time?
I think Mr. Keohane corrected the comment that Tesco has the lowest prices in Ireland. Tesco has the lowest prices in this State, he might claim. There are a couple of stores near my home that are in Ireland but are not——
A Member: That is tomorrow’s discussion.
Deputy Arthur Morgan: We shall wait until tomorrow.
Chairman: In fairness, the gentlemen are here today to discuss planning guidelines.
Mr. Tony Keohane: On the optimum size, because we are multi-format, as I described earlier, our optimum size is what suits the local community and the local area. The optimum for one town is not the optimum for another. That is why we are quite reluctant to average things out because there is not an average Irish town, village or community. It is whatever we, obviously with the approval of the local authority, deem as appropriate for that location.
In terms of employment, I do not have a figure off the top of my head but we have 14,000 people employed. My guess would be a 60:40 ratio of full-time to part-time jobs, but I do not know what the number is.
Mr. Dermot Breen: Under law we are not permitted to discriminate between full-time and part-time workers. We must treat them in the same way under law.
To take up the point about the environmental sustainability of out-of-town stores, we have been showing that most or practically all of the stores we have opened in recent years, some of which are town centre, some of which are edge-of-centre, and just two or three out-of-centre, have had a major impact on sustaining towns. In all cases we moved into towns where anything up to 40% or 60% of consumers would leave the town, driving perhaps 30 miles to do their weekly shopping. With a store now in their locality, such as that in Cashel which is located just outside the town, it means people are travelling less than a mile to do their shopping instead of travelling 30 miles. That has kept shopping local within the Cashel area rather than Cashel consumers disappearing into Clonmel, Tipperary or elsewhere. That has had a major impact on the sustainability of Cashel as a district, area and town.
Deputy Cyprian Brady: I thank the gentlemen for their contribution. Perhaps they could give us an idea of the most important factors in Tesco deciding on a location. My own experience would be in the urban context of Dublin city and its surrounds. For instance, Clare Hall is located within a couple of miles of two other major shopping centres. While there is residential development taking place around it, much of it was prompted by the store. Is parking an issue? I am aware that a substantial number of parking places is provided at Clare Hall. What are the main factors in the location of a store in a particular area?
Mr. Tony Keohane: At Clare Hall specifically?
Deputy Cyprian Brady: No, in general.
Mr. Tony Keohane: As I stated, much depends on the community we are attempting to serve. We must consider what would be an appropriate store for it. What is most important to us, with regard to location, is consumer convenience and the consumer agenda at a particular location. That is absolutely critical. Also, we must take on board planning authority guidelines, but the single most important aspect for us is the consumer agenda and convenience in terms of whether people will shop at that location. We know from experience that consumers will vote with their feet. If we are not doing a good job and the store or site is not convenient, they will go somewhere else, as is their right.
Deputy Cyprian Brady: Is 24-hour shopping proving to be an attraction?
Mr. Tony Keohane: It is at some locations. While we have adjusted opening hours at some locations, 24-hour shopping is popular in particular localities. However, it is not suitable at all locations.
Deputy Cyprian Brady: Is the issue covered in the planning application?
Mr. Tony Keohane: No, it is more consumer driven. A retail store of reasonable size is a 24-hour operation with goods arriving at convenient times, thus avoiding traffic congestion at rush hour and so on. If there is consumer interest in moving to a 24-hour retail operation, that is not a huge step for us. Where it is convenient for customers, we generally provide it.
Deputy Damien English: My apologies for missing the start of the presentation. Most of the questions I wished to ask have been asked.
On store size, I get the impression from Mr. Keohane’s written submission and his comments that he believes a better price can be delivered by a larger store. Perhaps he will explain if that is the case.
Mr. Keohane referred to the optimum size of a store. What is the average size of Tesco stores throughout the Republic? I understand Mr. Keohane is representing Tesco Ireland. As part of our work, we have had discussions on this issue with our counterparts in the North. I understand Tesco has applied for permission to construct a 130,000 sq. ft. outlet in Banbridge which will impact on retailers along the Border. I am interested in Mr. Keohane’s comments on the matter. An outlet of 130,000 sq. ft. is not required to serve a local town with 20,000 people. There must be a bigger agenda involved. Perhaps Mr. Keohane will also comment on this matter. I am sure Tesco is in negotiations with its parent company in this regard, an issue on which he may also wish to comment. It is one we must factor into our discussions as regards guidelines in the Border region.
I accept 70% of Tesco stores are located in town centres. Is it Tesco’s desire to remain in town centres? If so, does Mr. Keohane believe planning authorities need to adjust the cap for town centre developments or is he happy with the guidelines? Does he believe the cap should vary to take account of town size and so on? He has stated Tesco does not wish to suck people from certain towns and that it is preventing leakage. What is the smallest town in which Tesco currently has or would locate a store?
Each multiple will state it intends to create jobs. Data provided for us this morning showed that there had been no change during the past couple of years in the percentage of people employed in the retail sector. Currently, 14% are employed in the sector. That leads me to believe jobs are being displaced, although I accept new ones are created and some people lose out. Is it the case that the same percentage of the workforce is employed in the retail sector as previously? That is what the data suggest. If the delegates do not have all the answers, we can get them another time.
Chairman: We were in Banbridge where I think there is 30,000 sq. ft. of retail space in the town centre and there are negotiations on a figure of 60,000 sq. ft. Banbridge is a huge retail centre. There is a proposal in respect of a retail unit of 130,000 sq. ft. well outside the town. What informs decisions on such developments? This gives a total of 190,000 sq. ft. The 130,000 sq. ft. development would not result in any crushes because if everyone in Banbridge were to visit simultaneously, each person would have four sq. ft. As Deputy English suggested, it would be like a giant hoover on the town; people would be pulled from a huge hinterland. I understand it is preferable for people to travel half a mile or a mile to shop, rather than 20 or 30 miles. How will this fit in because I know it is the first Tesco Extra store to be planned? I know this is not strictly the responsibility of the delegates but surely Tesco Ireland is involved in such discussions because it may impact upon it. Will this development impact upon Tesco stores in Dundalk and so on?
Mr. Tony Keohane: No. As I said, that is not our jurisdiction and we do not think about it when we get up in the morning. The planning guidelines we are discussing do not relate to Northern Ireland, Great Britain or any of the other 12 or 13 countries in which Tesco operates. We are talking about the Republic of Ireland and can only answer questions relating to our area of responsibility.
Deputy Damien English: With respect, we are talking to our colleagues north of the Border about the guidelines to find some common ground. An issue relating to 130,000 sq. ft. of retail space must feature in Tesco Ireland’s thinking. This will suck business from Tesco in Border areas.
Mr. Tony Keohane: We never discussed it and I was not even aware of it.
Mr. Dermot Breen: The Deputy is referring to something, of which we are not aware.
Mr. Tony Keohane: That project is alien to us and we have no information on it.
Mr. Dermot Breen: We have enough information on our plate.
Deputy Damien English: Now that the delegates know about it, do they share the concerns regarding the possibility that it will not serve local towns?
Mr. Tony Keohane: All I know is that Tesco’s people, no matter where they are, will work with local authorities in the jurisdiction in which they are involved. We will work with local and national planning authorities in this jurisdiction. That is all I can say.
Deputy Damien English: I accept that. This is an important issue, to which we will return.
Mr. Dermot Breen: It is a different jurisdiction that has nothing to do with us.
Mr. Tony Keohane: Earlier I addressed a question on average sizes and so on. Tesco is a multi-format business with small, medium and large stores and we do not think in terms of averages. We are anxious to have appropriate stores in appropriate communities and our smallest stores are around 2,500 sq. ft. in places such as Castlepollard and small residential areas of Dublin such as Camden Street which hosts a store of 2,000 sq. ft. Our distribution network in Ireland means we can supply small, medium and large stores.
Senator Brendan Ryan: My principal question was related to the impact of stores north of the Border, an issue with which Deputy English has dealt. Notwithstanding the response of the delegates, I would be very surprised if store planning was not conducted on an all-Ireland basis, as I worked with a cross-Border organisation. However, I understand what the delegates are saying and why they are saying it.
Has Tesco Ireland ever objected to a planning application by a competitor or is it company policy never to do so?
Mr. Tony Keohane: It is our company practice not to do so. The only time we would do so is if somebody applied to locate a store right beside us. Until we understood the nature of the scheme and any interaction affecting traffic flows into our store, we might reserve our position but we have never followed through on an objection to any competitor in the State.
Deputy Michael Fitzpatrick: Can Mr. Keohane comment on the notion that out-of-town centres have advantages over outlets in town centres because of the cost of rent and car parking in the latter? He said seven out of ten Tesco outlets were in town centres. I am from Kildare and believe Tesco has a distribution centre in Kilcock. It has several shops in the county — in Maynooth, Naas, Clane and other towns. Does Mr. Keohane describe the stores in those towns as being in the town centres?
Mr. Tony Keohane: I would describe our current store in Naas as edge-of-centre, as I would the stores in Newbridge and Maynooth.
Deputy Mary Alexandra White: Edge-of-centre.
Mr. Tony Keohane: The store in Clane is also at the edge of town.
Deputy Michael Fitzpatrick: Does he include those among the seven out of ten which are located in town centres?
Mr. Dermot Breen: It depends on the planning definition of a town centre. We do not define what is or is not the town centre — it is determined by the planners.
Deputy Michael Fitzpatrick: If that part of town is designated as the town centre, Tesco refers to its store as a town centre store.
Mr. Tony Keohane: We are trying to deal with the perception that all we ever wanted was to have out-of-town stores because that is not our position. Our position is to work with the local and planning authorities to determine the best location for the store appropriate to that town. There are advantages both ways. If the desire is to maintain and develop town centres the stores must be convenient for consumers because otherwise they would go somewhere else. We know from our experience over the years that consumers will bypass a town or shopping centre, whether it is at the edge of a town, out of town or in town, if it is not convenient. We can plan whatever we like but if it does not pass the consumer test, it is no good.
Deputy Michael Fitzpatrick: If Tesco is in a town centre it will attract people to the town and that will benefit all the other retailers in the town.
Mr. Tony Keohane: That is not necessarily true and one must consider each town individually. The bigger the town the more questionable the assumption is. Consumers will not travel from home at the edge of town to town centres to do their normal bulky grocery shop every week. They will object and drive to the next town, even if it means travelling further. We have replaced stores when customers have decided to bypass them and drive on to the next town.
Deputy Dara Calleary: Did the Competition Authority consult Tesco, formally or informally, for its report on the retail planning cap?
Mr. Dermot Breen: It has prepared various reports and surveyed us for data, as it did all retailers. It assembled its data from surveys of all the retailers.
Deputy Dara Calleary: Did it consult Tesco specifically on planning guidelines?
Mr. Dermot Breen: No, our input consisted purely of data submission.
Deputy Damien English: Will Tesco accept that there is an impression that large multiples at the edge of town can draw out smaller businesses? The witnesses seem to have research that shows the opposite but can they make the evidence available to the committee?
Mr. Tony Keohane: We will do so.
Deputy Damien English: We want to take a balanced look at the issue and there is a big difference between that research and the evidence of other parties. It is a fundamental issue and we must get to the bottom of it. We all want to protect existing town centre businesses and displacement does not serve anyone’s interest.
Chairman: I thank Mr. Keohane and Mr. Breen for appearing before the committee, assisting in its deliberations and fielding some incisive questions in a frank and forthright fashion, which we deeply appreciate. If there is any other material they wish to submit in the context of our overall deliberations we would appreciate if it was furnished to the committee in order that we have a fair and balanced view of the position. We appreciate the delegation giving of its time and helping the committee in its deliberations. Given that the delegates are returning tomorrow they are gluttons for punishment. People are entitled to the utmost respect and we hope they appreciate that.
Mr. Tony Keohane: Thank you, Chairman.
Deputy Mary Alexandra White: There is a votáil.
Chairman: Tesco has called that votáil to get rid of us. In any event we shall see the delegation tomorrow. When our deliberations are completed and the report is completed of course the delegates will receive a copy. I thank the delegation for its assistance. I do not blame Tesco for calling the vote, that was said in jest.
Sitting suspended at 2.40 p.m. and resumed at 3 p.m.
Chairman: I thank the representatives of the Musgrave Group for their patience as they suffered the vagaries of parliamentary democracy. Life inside the Parliament does not run as smoothly as one would expect in the outside world. I am glad to welcome Ms Edel Clancy, communications director of the Musgrave Group, Mr. Donal Horgan, CEO of SuperValu, and Mr.Chris Martin, CEO of the Musgrave Group. I know the witnesses have a busy schedule and I ask them to be as brief as possible in summarising their submission. We have allotted five minutes for each submission but there will be an opportunity for questions afterwards.
I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I note the presence of our former colleague, Jim Glennon, in the public Gallery. Everybody who has left these Houses seems to be doing well. Mr. Glennon sat on this side of the table for some time and I welcome him back.
Mr. Chris Martin: 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.
Deputy Damien English: I thank Mr. Martin for the presentation. Are Musgrave outlets generally in town centres or on the edge of town? We heard definitions of all sorts of towns today. Are most of Musgrave stores in neighbourhood centres or town centres, and what is the average size of its stores? I realise Musgrave has three brands and I ask for the average size of each.
The Competition Authority sparked this debate off. It seems to maintain that the guidelines are affecting price and acting as a barrier to entry. Is that the case? Has the Competition Authority been in consultation with Musgrave? Has it asked for any data from Musgrave to back up the company’s view?
Mr. Martin might give a breakdown of the number of people Musgrave employs, both part time and full time. I accept that many people Musgrave employs would be returning to the workforce. From my own experience, Musgrave seems to have flexible working arrangements.
Does Musgrave seek any changes to the planning system? Mr. Martin stated clearly the company does not want the planning guidelines changed, but what of the planning system? Is Musgrave’s experiencing delays in that regard? We heard many presentations this morning, most of which stated there are problems and delays with planning. I ask him to comment on that because it is part of what we are looking at.
Is Mr. Martin familiar with a 130,000 sq. ft. development across the Border because I find it hard to believe that others were not? Are such centres a major problem for all other retailers? Is there a hoover approach? Will that have a serious effect on towns, etc.? Should we be looking at different versions of the cap for different sized towns? Is there any justification for looking at providing for a sliding scale approach for large towns?
Mr. Chris Martin: I will ask Mr. Horgan to speak about the size of stores and I will pick up the other questions.
Mr. Donal Horgan: On the first point raised on neighbourhood versus town centre, given the growth of our business over many years in our SuperValu and Centra brands, the vast majority of our stores are located in town centres. I will come back to the committee with the precise statistics.
In Centra the average store size is approximately 3,000 sq. ft. which is very much a convenience format. In SuperValu, which is our supermarket brand, the average size of a store is approximately 14,000 sq. ft, and the stores range in size from 10,000 sq. ft. to 22,000 sq. ft.
Mr. Chris Martin: There is no evidence that larger stores demonstrate lower prices. We certainly see that in our experience in the United Kingdom as well. As a result, we are firmly of the view that the cap helps stores develop in the right place.
We must come back with information on the breakdown of full-time and part-time employees. Otherwise, I would be putting a finger in the air.
We do not submit planning applications or participate in the planning process. Our retailers do. The only comment we would get back from them is that if there is a way of speeding the process up, then they would be willing to participate in it. Clearly it is in everyone’s interest to get to the right decision as quickly as possible.
Deputy English mentioned the store in Banbridge in Northern Ireland. My understanding is that it is approximately 130,000 sq. ft. I was aware of it because our retailers would have mentioned it. They would have had a concern with the store being so large in relation to the Northern Ireland population of 1.5 million. In my visits to our retailers they would have presented their view that it was out of kilter with what communities really wanted because of its sheer size.
Deputy English’s final question was on the version of the cap. Our belief is that the cap has served Ireland extremely well. It has certainly helped in getting the store right in terms of size. It is interesting to note that as stores get larger they get filled with non-food items in addition to food and they do not become just large food retailers. The real question for us is on retaining the cap but also retaining the test that ensures planning authorities look at developing town centres first rather than out-of-town centres.
Chairman: Musgrave also has stores in Northern Ireland.
Mr. Chris Martin: Yes.
Chairman: As CEO, would Mr. Martin be aware of everything happening in the South and the North?
Mr. Chris Martin: I would like to say that I was. However——
Chairman: If there was a significant development, would Mr. Martin be aware of it?
Mr. Chris Martin: I chair our Northern Ireland board every quarter, so I sit down with our team there and have a full board meeting. Part of the process is to go through developments that are taking place within the country and the concerns of retailers have certainly been brought to my attention as regards large developments within the province.
Deputy Damien English: Does the Musgrave delegation agree with our approach in seeking common ground with our colleagues in Northern Ireland as regards the serious pressures being experienced on both sides, especially along the Border?
Mr. Chris Martin: The real issue for us is that in Northern Ireland the planning process could have been controlled earlier. There has been significant out-of-town development there. The issue as regards a common approach will be interesting in terms of finding the right solution. We have a real concern that these large superstores, to use the Deputy’s term, have a significant “hoovering” effect on towns and town centres.
Senator Brendan Ryan: The delegation’s position is clearly at variance with the Competition Authority, which says that the cap on store size is inhibiting competition and indeed the evidence cited by the Musgrave Group is quite compelling. However, given Musgrave’s move from the Republic into an environment where no cap is in place, obviously it has no fear of such a business environment.
Mr. Chris Martin: I shall answer that in a slightly different manner. We have taken the opportunity to work with retail partners in Northern Ireland and Great Britain, and interestingly, my earlier career was with ASDA in the early 1980s at a time when it was developing out-of-town sites. The consequence of such developments by ASDA and other multiples was the demise of the high street. It is interesting that over the last five to ten years many of those multiples have begun to move back into the high street, and that is where we saw an opportunity, working with our retailers in Great Britain. That is why we are seeing a dynamic, namely, consumers wanting to come back to the heart of their towns.
Deputy Arthur Morgan: I must declare an interest in that I am a director of a company which supplies some of Musgrave’s customers or outlets. As a journalist said to me recently when he heard that we supplied the HSE, “It certainly does not cramp your style”. People can take that as a——
Chairman: We shall be calling into those stores on our next visit north.
Deputy Arthur Morgan: I apologise to Mr. Martin and his colleagues for missing the presentation. Musgrave has been around a while and the business has continued to grow. Other stores right across the State have continued to grow, with the retail cap in place. Musgrave has not seen a need for it. What would the delegates say is their biggest store at present? Given that the entire grocery retail sector is growing, I do not understand why these other people see a need for these massive stores. Perhaps the delegates might address this from the retail perspective for the benefit of lay people such as members of the committee.
Mr. Chris Martin: I shall ask Mr. Horgan to comment as well. However, the point to recognise is that we clearly work with retailers who live and stay in the local community. They work out the right shape and size of store that suits the individual community. We have seen a range of stores in terms of size for SuperValu, Centra and Daybreak — ranging from the small to the large store. Some of our larger stores are in the region of 24,000 sq. ft. to 26,000 sq. ft.
Mr. Donal Horgan: Our largest store is actually 24,000 sq. ft. It is difficult to say what is an optimum size, because different towns will require different store sizes, but it is generally in the region of 22,000 sq. ft., which provides a very compelling food offer for consumers in those locations.
When Deputy Morgan references the point as regards significant growth still happening in the market and asks why multiples want to open bigger stores, the philosophy of Musgrave is to have local retailers in the heart of their communities and those stores centred there. The flair of the local entrepreneurial retailer, coupled with the scale of our support services to them, is the formula that ensures all our brands continue to perform well. It brings that unique local flavour to retailing in Ireland, which is not as evident as a dimension in some of the other local markets in which we operate. That, perhaps, provides an opportunity, especially in the UK market, to introduce our type of store size and fill a need that does not exist because of the plethora of superstores that are not necessarily meeting all consumer needs.
Deputy Dara Calleary: Can the delegation give us some more information on the sequential test and perhaps indicate where we might find more data in this regard? As regards the three countries in which Musgrave operates, Spain, the UK and Ireland, do planning regulations outside Ireland dictate policy much more than in this State?
Mr. Chris Martin: I shall answer two of those questions and then again defer to Mr. Horgan. The sequential test requires planning authorities to look, first of all, at what is available in a town centre before looking at opportunities outside. We also participate, as the committee knows, in the United Kingdom, and one of the issues there is that this test is being re-examined. It is being proposed that what was previously described as a needs test is now being assessed as an impact test. It is now a matter of looking at far more than what is available in terms of site, for example, the degree of competition within the town centre itself. There is a problem with that because the impact test has not actually been defined. There is a good deal of debate taking place at the moment as to how it will operate. It is fair to say that what we see in Ireland is very relevant to the type of country it is. We are concerned, and that has given us an opportunity in Britain, to look for high street stores to which consumers will return after the development of major out-of-town sites.
Mr. Donal Horgan: Just to reinforce what Mr. Martin has said as regards the sequential test, our desire is to continue to see town-centre development prioritised. Thereafter, one can look at edge-of-town or out-of-town, but certainly the latter is almost a location of last resort. To echo Mr. Martin’s point in our earlier presentation, it is a question of bringing shops to people and not people to shops. Developments should be sited in communities so that we may continue to have very strong community-based retailing here in Ireland.
Deputy Michael Fitzpatrick: I must apologise to the Musgrave delegation for crediting Tesco with its distribution centre in Kilcock. It was just a slip of the tongue.
What about sustainable development in communities? What has been the effect of the Musgrave organisation on communities in which its outlets are located? Perhaps the delegates will talk a little about the involvement of those outlets with the communities. As regards the distribution centre in Kilcock, for example, are there contacts with farmers locally, does Musgrave take in agricultural produce there, or is that all dealt with through local outlets?
Mr. Chris Martin: Our stores do far more because they are locally owned. They are not just local employers but they access local produce, fruit and vegetables, and so on. It is in their interests to be good neighbours in terms of doing the right thing, so they participate in activities such as the Tidy Towns competition and so on.
In terms of supporting local suppliers, we adapt our distribution network to make it more available to local suppliers, who want to support a small number of stores. They might not be able to support the whole network nationally, but they can support five or six. We filter in that cost factor within our organisation to support people. We also allow retailers to access local produce as well. As an organisation, Musgrave works with Enterprise Ireland on the first sale initiative, and through that we have supported companies such as Clonakilty Black Pudding and Sunshine Juice in terms of the development of those businesses. This goes right to the heart of the support Musgrave gives, which is directed at both the local retailer and the local supplier.
Mr. Donal Horgan: I can give some additional evidence of that community support, given that we are a sports-mad country. It is not unusual to see both teams playing in a local junior hurling final being sponsored by the local SuperValu. There is no conflict of interest in supporting the competition itself as well as both teams in the final. This is visible evidence of support of local communities and increasingly stores allow their facilities to be used almost as community centres. It is not unusual to see community development groups gathering in meeting rooms in such centres. The atmosphere within the stores facilitates friendly interaction between neighbours.
In terms of support for agricultural produce, we have worked hard over the past number of years to establish local co-op groups and I will speak parochially of Cork, to give an example. Many of our onions are sourced in Ireland and we set up a co-op in the Bandon region to bring that product to our distribution centre. This enables farmers to serve not only the Bandon area but a much wider range of stores through our extensive distribution network. We are constantly on the lookout for opportunities to support such projects and we are currently sponsoring a new initiative aimed at bringing young and emerging artisan food producers to markets. We hope to give them not only distribution support but marketing, packaging and product development support. We want to enable them to get their businesses off the ground and this is important in the current economic circumstances.
Deputy Dara Calleary: Can the Musgrave Group sort out the Cork hurlers?
Mr. Donal Horgan: Unfortunately, some problems are beyond resolution.
Chairman: I think that is a job for the former Deputy, Mr. Jim Glennon.
Deputy Damien English: We discussed car parking with witnesses this morning and I am conscious that some members of the Musgrave Group are in town centres and have no car parking facilities while others are in neighbourhoods with such facilities. What is the feedback from members on this issue? It was suggested at the discussions in Stormont last week that we should consider parking charges for out-of-town parking to level the playing field as the money could be used to subsidise parking in town centres. What do members of the Musgrave Group think of this because it forms a big part of the problem?
Chairman: As a corollary to that, do out-of-town centres have advantages over town centres, such as unlimited free parking near motorways? They offer an all-in-one shopping experience in an enclosed mall with greater control over on-site competition, something the Competition Authority seems to forget. These centres alienate retailers in town centres by lowering footfall, the lifeblood of such communities and retailers.
Mr. Chris Martin: No doubt, the provision of car parking can make shopping easier for customers. During the latest hike in oil prices, particularly in Britain, people travelled less to superstores and tried to use local facilities more. It is important that planners consider car parking in town centres as parking charges are a disadvantage to the use of town centres. There must be equity between town centres and edge-of-town developments and people must be encouraged to use town centres as much as possible.
Chairman: I thank the representatives of the Musgrave Group very much for attending and assisting the committee in its deliberations. Our job is to investigate how planning guidelines will impact on new retail outlines in Ireland and the contribution of the witnesses was very informative, forthright and frank. The inquisitorial nature of the questions indicates the degree of thought given to this subject by members of the committee. I believe the witnesses will be here again tomorrow so they will be sick of us. Round one is the easy round. The witnesses are in the dressing room at the moment but when they go on the pitch, as the former Deputy, Mr. Jim Glennon, will attest, there may be a rolling maul. We look forward to seeing them tomorrow.
The witnesses may forward any information that they did not have to hand today to the committee within the next week or ten days. They will be given a copy of the final report.
Chairman: I welcome the representatives of the Irish Pharmacy Union, including Mr. Seamus Feely, secretary general, Ms Kate Healy, press and communications manager, Ms Liz Hoctor, president, Mr. Michael Kennelly and Mr. Darragh O’Loughlin, vice president. I know Ms Healy personally and feel I should declare that interest.
The witnesses are all very welcome and I thank them for taking the time to come here today. I am sorry for the hold up; we asked the witnesses to attend the committee earlier but the vagaries of parliamentary democracy interceded. We have had a busy schedule today and this is the final presentation. We ask the witnesses to be as brief as possible because we have a detailed submission and do not want it to be rehashed; we want it to be summarised in five minutes. We will stick to this time limit strictly so if I intervene the witnesses need not call me cantankerous.
The presentation will be followed by a discussion with members, which is probably of more importance. Before the witnesses begin, I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses, or an official, by name or in such a way as to make him or her identifiable. This probably will not arise but I must always give this warning. Ms Liz Hoctor will be leading the charge.
Ms Liz Hoctor: I thank the committee for giving the Irish Pharmacy Union, the representative body for over 1,800 community pharmacists, the opportunity to address them on the issue of building new retail outlets. I will not introduce the members of the delegation because the Chairman has done so.
Community pharmacists are health care professionals, with an expertise in medicine, who play a vital role in health care delivery. The community pharmacist is the most accessed part of the health service; in Ireland people visit the pharmacy twice a month, on average. People do not need an appointment for this and they get access to expert health care knowledge. The majority of pharmacies are small, family-run businesses that are located in villages and small to medium-sized towns. They employ over 16,000 people in this country. Pharmacy is one of the few parts of the health service that works well and it is, therefore, vital that we have a rational and planned distribution of pharmacies, which will meet the needs of our population.
The retail planning guidelines do not contain specific provisions relating to the planning and spatial considerations associated with pharmacies. They do not restrict competition in the pharmacy market. Evidence of this exists in the increase in the number of pharmacies in recent years. Indeed, Ireland is the most liberal pharmacy market in Europe.
The restrictions in the retail planning guidelines on the size of out-of-town retail developments have helped preserve town centres. Out-of-town hypermarkets would lead to the closure of local shops and job losses. They would force people to travel longer distances to access essential services. This would lead to greater car dependency and would create major problems for people who do not have access to a car. Therefore, we ask the committee to consider making a recommendation that current restrictions on the location and size of out-of-town retail developments be maintained.
In recent years there have been moves by private developers to build large out-of-town health centres with on-site pharmacies. Such developments involve the majority and sometimes all the general practitioners in an area relocating to a single out-of-town health centre with an on-site pharmacy. This type of development has a negative social, health, environmental and economic impact. As with large out-of-town retail developments, out-of-town health centres with on-site pharmacies will have a negative impact on town centres and reduce footfall, not just to pharmacies but to all local businesses. Ultimately, people’s access to essential services, including GP and pharmacy services, will be greatly reduced. Those most affected will be the most vulnerable in society — the elderly, the chronically ill, parents with young children and those without access to a car.
The Government’s primary health care strategy did not encourage the locating of pharmacies in health centres. Pharmacies were part of the primary care network and were located in the community with links to primary health care teams. The HSE’s primary care guidance document states: “Where the HSE develops primary care facilities on its own property a retail pharmacy outlet will not be included in the schedule of accommodation.” The Oireachtas endorsed this position by passing the Pharmacy Act 2007, which prohibits inappropriate business relationships between doctors and pharmacies.
Significant changes have occurred in the provision of pharmacy and medical services since the last comprehensive review of the retail planning guidelines in 2000. These changes have not been reflected in national planning policy and this has resulted in a vacuum in the policy. There is now an urgent need for a clear policy on the location of pharmacies in the retail planning guidelines at national level, in the interests of proper planning and sustainable development. This would permeate down through the planning hierarchy to local level and be reflected in decisions on individual planning applications. It needs to be made explicit that the overall policies, objectives and assessment criteria outlined in the retail planning guidelines apply to pharmacies. In particular, the sequential approach to the location of retail development should apply to pharmacies. This requires that the preferred location for new retail development, including pharmacies, be within the designated town, district, village or local centre. All these centres would then be identified in the relevant development plan for an area.
We ask the committee to consider recommending that policy objectives relating to pharmacies be included in the retail planning guidelines to recognise that pharmacies perform an essential social, health and economic function in catering for the needs of local communities. Pharmacies should, therefore, not be located in health centres and this is in accordance with Government policy. They should be located within designated local, district, town and city centres so that they are easily accessible to the most vulnerable in society. A provision to this effect should be included in the criteria governing the location of retail development in the retail planning guidelines.
I thank members for their attention and would be happy to answer any questions they may have.
Deputy Cyprian Brady: There is a proliferation of pharmacies in Dublin city centre and its suburbs. When pharmacies make decisions as to where to locate, what are the main criteria they follow? Are they based on population, the site or access? I know of two pharmacies opening within 50 yards of each other in a Dublin suburb and I wonder how they can both be sustained. Both sell the same products and provide the same services and there is competition between them.
Mr. Seamus Feely: As with most European countries, a person can open a pharmacy anywhere. In most member states, including the United Kingdom, one has to apply for permission as pharmacy legislation ensures a rational distribution of pharmacies and the process is not part of the planning regime.
A key consideration in the question of where to open a pharmacy is the extent of services provided in a particular community. Access is a factor, as are footfall and the nature of the people who live in that community. The number of GP surgeries has also to be taken into account because pharmacies depend on prescriptions. The ultimate decision rests on whether one feels one can sustain a business in a particular community.
A significant number of new pharmacies have opened since the original regulations were removed in 2002 and we are concerned about the long-term viability of some of them. The biggest users of pharmacies tend to be people who are chronically ill and the elderly.
Deputy Cyprian Brady: Has the IPU noticed an increase in the number of pharmacies closing since 2002?
Mr. Seamus Feely: There have been a number of closures in recent years and there were between ten and 12 in 2007, the last year for which we have figures. In the current climate we do not know what will happen because pharmacies are not immune to the effects of the downturn on its front-of-shop activities.
Deputy Dara Calleary: It seems the biggest threat to the IPU are health centres. Despite the policy of Government and the HSE they continue to be established. Is there bullying of GPs in this regard? Are they made offers they cannot refuse? It seems one cannot lose from a business perspective by setting up a pharmacy in a health centre. Under what pressures, commercial or otherwise, are people being put to set up a pharmacy in a health centre?
Mr. Michael Kennelly: That is exactly what is happening in Killarney at the moment where 18 GPs are moving into a site close to the bypass which is owned by the HSE. It is a commercial venture and the intention is to move one pharmacy onto the site to hoover up the vast majority of the prescriptions issued. It will lead to a number of closures in the town and the removal of pharmacies from neighbourhoods in which they are currently located.
I welcome competition and have no problem with someone wanting to open up a new pharmacy on a level playing pitch. I will compete on service and price but one cannot compete where GPs use their patients as captives and move to between 3 km and 4 km from the town centre where their own pharmacy is on site. Killarney does not have a developed public transport system so the only way patients will be able to get to the site in question is by taxi. I do not believe that patients who take a taxi will be able to afford to pay for another to go back to their pharmacy of choice afterwards. It is wrong.
Deputy Dara Calleary: The HSE owns the land but is it developing it?
Mr. Michael Kennelly: If it was a HSE-developed project no pharmacy would be allowed on the site so there have been manoeuvres to ensure it is categorised as a private development with the HSE’s acquiescence. The HSE will be the anchor tenant and it will pay rent at preferential rates on its office space. The developers will own the property and will use the pharmacy as a retail outlet to enhance the profitability of the venture.
Deputy Dara Calleary: Will pharmacies have to pay key money, as is common where there is a large anchor tenant?
Mr. Michael Kennelly: They are not supposed to do so but I do not know. However, I know what happened in Mitchelstown because I saw an e-mail from the auctioneer who was involved in selling a pharmacy unit in one of these centres, where the figure was €4.5 million. That is an awful lot of money.
Deputy Dara Calleary: Key money.
Mr. Michael Kennelly: No. To get round the Pharmacy Act they were going to sell the unit off the plans, knowing they were going to wipe out everybody else in the area. What happened at the end of the day, I do not know. Prior to the Pharmacy Act that is the kind of figure the developers were looking for.
Ms Kate Healy: Following on from what Mr. Kennelly had to say, our major concern about health centres with on-site pharmacies, particularly when located out-of-town, is that they undermine competition in the local pharmacy market leading to the closure of pharmacies. Ultimately, it will reduce the choice of services for patients and will create problems, particularly for those who are most vulnerable and have difficulty accessing essential health services in such centres as they do not own a car.
Mr. Darragh O’Loughlin: What we have learned from the UK, where these developments occurred years before they started in Ireland, is that where large medical centres are built on the outskirts of town bringing together all the general practices, the pharmacies tend to cluster around them. Half the pharmacies in the town will move out of the town centre to the ring-road to be near the medical centre and the other half close down.
What happened in the UK is that the local NHS trust then realised the communities in the town centres had lost this essential service and it had to pay to put back into the town centres satellite offices of the NHS. Effectively, the NHS had to pay for the provision of a service that the pharmacists had been providing free for years. We believe the location of pharmacies in medical centres is a bad idea. In addition, the Department of Health and Children in its primary care strategy states it is a bad idea. It is why Government policy is opposed to it. Steps are being taken by private developers around the country who wish to engage in a lucrative business, to try to circumvent the primary care strategy and the Pharmacy Act.
Deputy Damien English: It is news to me that all GPs are moving into health centres. I am familiar with GPs moving to out-of-town centres due to property values and one or two GPs joining together with a pharmacy. As regards the larger health centre referred to, do quite a number of these exist or is this a trend taking place in a number of places and is it causing concern for the IPU?
I am interested to hear the IPU’s view in regard to one GP, his or her staff and a pharmacy moving to a new neighbourhood centre where it makes sense to have a small health centre with a pharmacy and GP. I thought this was the type of health centre we were talking about earlier.
Mr. Darragh O’Loughlin: The Deputy has identified the primary difference between that scenario and what is happening in Killarney, Castlerea, Mitchelstown and Kinsale.
The Deputy’s point makes sense where a new community is established, be it Adamstown in Dublin or in another suburb on the outskirts of our provincial towns, for a GP or pharmacist to establish a practice there. That maintains patient choice and accessibility. It is important services are accessible to patients. Locating all the GPs in an area that is not accessible does not make sense. Patients whose GP moves to another side of town can choose to visit another GP close to their home, thus the choice remains with them. Nobody has a choice if all the GPs and pharmacies are located in one location on the edge of town. This also undermines competition and makes it difficult for elderly people and young mothers with small children, who are the people we see most frequently, to access these services.
Deputy Damien English: It is like car sales showrooms which are often all located together out of town.
Mr. Darragh O’Loughlin: Yes.
Senator Brendan Ryan: Obviously some of these pharmacies that are moving to health centres are members of the IPU. Do they tend to be well established pharmacies or are they new entrants?
Mr. Darragh O’Loughlin: One would have to be fairly well-established to have access to the level of capital required. There is no specific profile as this problem is only starting to develop around the country. By and large, it takes a great deal of capital to build one of these centres. In the current environment, one would not get that type of capital as a graduate fresh from college.
Senator Brendan Ryan: The IPU submission is that this practice should not be permitted in the future.
Ms Liz Hoctor: We are saying that pharmacies should not be located in health centres and that any development should be equitable, sustainable and, most important, accessible. If pharmacies opt to locate in health centres, access for patients will be reduced, competition will be undermined and patient choice will be removed.
Senator Brendan Ryan: Presumably the IPU would expel such pharmacies from the union.
Deputy Damien English: The issue of health centres also needs to be addressed. I accept the IPU represents only one sector in this regard. The notion of every GP locating on one side of town is not good practice. It is an issue which we will have to address.
Chairman: What is the annual average number of new entrants to the pharmacy profession?
Ms Liz Hoctor: Currently, it is approximately 170 into schools in Ireland. Members will be aware that two new schools have come on-stream.
Ms Liz Hoctor: A further 200 students train in the UK. The derogation which prevented Irish students who trained in the UK from working in a pharmacy less than three years old was removed before Christmas. This means Ireland is the most liberal pharmacy market in Europe.
Deputy Michael Fitzpatrick: I must attend another meeting in a few minutes. I listened carefully to what was said in regard to new health centres. The Minister for Health and Children opened a new health centre on the Vista Campus for which Ulick McEvaddy provided funding. This centre is being used not only by pharmacists but by other health professionals. It appears to me that the location of an on-site pharmacy is an inherent part of that centre. I do not see this as having an effect on other chemists in the town. People attend the doctor and pharmacy in the medical centre and I understand the HSE is taking rooms to provide professional services there. Are the representatives from the IPU stating that the union does not favour pharmacies setting up in that medical centre?
Ms Liz Hoctor: I am saying that I do not favour a pharmacy opening up in that centre.
Deputy Michael Fitzpatrick: The Minister for Health and Children opened it.
Ms Liz Hoctor: I am aware that the Minister for Health and Children opened the health centre in Naas yesterday. I am saying that I am not in favour of pharmacies being located in one big one stop health shop. On the face of it, a concept like that can seem like a very good idea but the reality is that the pharmacy in the HSE’s own health promotion plan is the door they ask patients to use first. If one centralises all the GPs in one area and puts one pharmacy in there, that pharmacy will hoover up all those prescriptions. It will undermine the existing pharmacies that are dispersed through the community. Effectively what will happen is that the pharmacies that are located throughout the community will take a clear pragmatic business decision and will be drawn in like a magnet to locate around the health centre. They will not all survive but they will take that decision. That will take the services away from the high street.
In our experience a number of pharmacies that have currently opened in health centres do not open at lunchtime, on Saturdays and are certainly not available on Sundays. What do patients do on those days? Currently they can go down to the pharmacy downtown when they are stuck for medicine. If the pharmacy is in the health centre and has closed all the other pharmacies because it has undermined the competition, it will be closed and they have made their money from Monday to Friday. I do not think that is equitable. It does not improve access is not sustainable into the future. As a society we need to start planning how we will deliver services for our patients. I think they deserve that.
Deputy Michael Fitzpatrick: Has the IPU the facts and figures, the evidence to prove that to the committee?
Ms Liz Hoctor: The experience in the UK has already shown that, where all the GPs relocated in the big centres. A recent analysis by the King’s Fund shows that people do not feel the care provided in these centres was as good as the care when the GPs were spread out throughout the community. As my colleague, Mr. Darragh O’Loughlin, stated, what has happened is that the pharmacies moved out to locate around the health centres. The NHS was forced to duplicate resources and open direct stores staffed by nurses. We have the resource by way of the distribution of pharmacies throughout the country.
Deputy Michael Fitzpatrick: I have a final question which Ms Hoctor may refuse to answer, if she so wishes. She mentioned the centre opened yesterday in Naas by the Minister for Health and Children. As far as I am aware, there were already four or five pharmacies in the town. As a representative, what has been the reaction of those pharmacists to the opening of the new centre?
Ms Liz Hoctor: It is too early to say what will be the impact of the new centre-campus opened in Naas yesterday. I understand the centralising of secondary care — hospital care — is under consideration. If policy is to be built upon, we must ensure primary care is not also centralised but dispersed throughout the community.
Deputy Damien English: We are trying to protect or save town centres and ensure retail outlets are more conveniently located. Doctors and pharmacies are an essential part of the infrastructure of a town centre. Many grocery shops in some of the towns we visited last week were going out of business, leaving only doctors, architects and solicitors. We must try to strike the correct balance. This issue relates not only to pharmacies but to everybody shipping out of a area. The guidelines with which we are dealing were put in place to protect town centres. Ms Hoctor has made a valid case which we should consider. I accept there are pros and cons. However, we are dealing with the protection of town centres.
Chairman: How many pharmacists are members of the Irish Pharmacy Union?
Mr. Seamus Feely: Currently, approximately 1,500 pharmacists are members.
On the point raised by Deputy Fitzpatrick, the average pharmacy obtains 65% of its revenue from prescription medicines. In some communities the figure is approximately 92%. Removal of GP services from the community will result in a loss of business.
On Deputy English’s point, it is important to indicate that average footfall into pharmacies is approximately 200 people a day. Approximately 500,000 people a week visit pharmacies in Ireland. The removal of this service from town centres will impact significantly on other businesses. From the point of view of planning and development, it is important people continue to visit town centres. Footfall into pharmacies is high. As I stated, approximately 200 people a day or 500,000 a week visit pharmacies. These are significant figures. The average person visits a pharmacy about 23 times a year.
Deputy Michael Fitzpatrick: We discussed with another delegation the issue of town centre and out-of-town development. I am interested in hearing if the IPU is in favour or against town centre and out-of-centre development. From my understanding of what Mr. Feely said, the IPU is against the concept, as well as rotation.
Mr. Seamus Feely: While we are opposed to the concept, we have a particular concern about out-of-town centres. The impact of the out-of-town medical centre is the same as that of the hypermarket located on the outskirts of town. Let us take as an example Killarney town which has ten or 11 pharmacies. If the 2,200 people who normally visit the pharmacists in the town centre move their business, this will have an impact on other shops in the area.
Deputy Dara Calleary: If 13 doctors were located under one roof on Main Street, Killarney, would the IPU still have a problem with it?
Mr. Seamus Feely: Where a new practice is located in the centre of the community, it does not have as big an impact. As Deputy Brady pointed out, the pharmacy market is competitive. While I accept pharmacies must compete with new outlets, they have a better chance of surviving and maintaining their business when their competitors are located in the same community or locality.
Chairman: Is Liam Sheehan still practising in Killarney?
Mr. Michael Kennelly: Under the national health care strategy, the intention is to have groups of three to five general practitioners working together. A town such as Killarney should have four primary care centres. It is the scale of what is being proposed there that is wrong. Up to 18 general practitioners are moving onto the one site, taking their medical card patients away from the town centre. That is what they are doing. The patients have no choice. Many of them have been asked to cease driving and there is no public transport available to bring them to the doctor’s surgery. General practitioners often move up to 3 km away from the town centre and patients are forced to travel that distance to see them. It will be a stress test and patients may be required to use their pension to pay for taxis, which is not right. Leaving aside pharmacies, it is not right that GP services are being relocated outside existing neighbourhoods to remote locations.
Chairman: I thank the Irish Pharmacy Union delegation for its assistance in our deliberations and its detailed written submission. We must deal shortly with another issue which arose from late night events. I thank the delegates for their patience and facilitating us by attending earlier than planned. The presentation provides us with useful information. We were delighted to facilitate the delegation by providing time to meet it. Mr. Feely may know the workings of this place better than most of us. We appreciate the delegation’s efforts in putting together its presentation within a short timeframe. We will continue our deliberations tomorrow and will be preparing a report to be forwarded to the relevant Ministers. As a matter of courtesy, we will forward a copy of the report and its recommendations to all the delegations which have attended our deliberations.
The joint committee adjourned at 4 p.m. until 9.30 a.m. on Wednesday, 4 February 2009.