# Retailers will have to pass on Euro benefits to consumers: Tanáiste



## rmelly (8 Jun 2008)

[broken link removed] 
Great - problem solved. Good to see that the government has moved on from Mary Harney's solution of shopping around.


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## ajapale (8 Jun 2008)

Part of the problem relates to the way in which the UK based retailers work.

Say they are buying wine from a Euro country. When selling in the UK they factor in a Sterling-Euro exchange risk into the selling price. If they now go on to sell in Ireland they add on another Euro-Sterling exchange risk! This when there is no exchange risk at all!

I have posted here before about this but I dont know how the practice can be stamped out.

I was hoping the the German Discounters would buy in euros and sell in euros and thus gain a competitive advantage over the UK based retailers. But Im unsure as to how they price for exchange rate risk.


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## ontour (8 Jun 2008)

If it is purely the inclusion of exchange rate risk, the relationship between sterling and euro prices would be consistent across the product ranges.  I recall that great variations between exchange rates were identified for products in the same stores.   I will have to have a look at this in the coming weeks.

I think that logic is trying to be applied to retailers deciding that people here will pay more for the same product or service than our counterparts in the UK.  recalling my college days now...price elasticity of demand...


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## ang1170 (8 Jun 2008)

ajapale said:


> Say they are buying wine from a Euro country. When selling in the UK they factor in a Sterling-Euro exchange risk into the selling price. If they now go on to sell in Ireland they add on another Euro-Sterling exchange risk! This when there is no exchange risk at all!


 
Not true: to get no risk, the retailer would have to figure out how much they were going to sell of it priced in Euro and avoid the double conversion (i.e. when they buy and when they sell). As it is (assuming they're trading in sterling) they do have to do two conversions (though even this is a simplistic way of looking at it).

Anyway, it's all academic: the bottom line is that they will price items with what they think the market will pay. We're willing to pay it, so they're happy to price accordingly. 

This is especially true of non-basic items: people on low incomes can only afford the basics, and can and do shop around for them, hence you get price competition on basic things (bread, milk etc.). Anything that's in the least discretionary and competition goes out the window, as we seem happy to pay whatever's asked.


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## ajapale (8 Jun 2008)

ang1170 said:


> Not true: to get no risk, the retailer would have to figure out how much they were going to sell of it priced in Euro and avoid the double conversion



Not really. If the retailer buys in Euro and sells in Euro then there is zero exchange rate risk. This is one of the advantages of the Euro.

Put another way; why should Irish consumers pay for the sterling exchange risk for UK retailers?


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## Brooklyn (8 Jun 2008)

rmelly said:


> [broken link removed]
> Great - problem solved. Good to see that the government has moved on from Mary Harney's solution of shopping around.



There's no indication of what they're actually going to *do*, though. Apart from "monitoring" and "maintaining pressure", whatever that means.


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## rmelly (8 Jun 2008)

Brooklyn said:


> There's no indication of what they're actually going to *do*, though. Apart from "monitoring" and "maintaining pressure", whatever that means.


 
Exactly.


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## Complainer (8 Jun 2008)

rmelly said:


> [broken link removed]
> Great - problem solved. Good to see that the government has moved on from Mary Harney's solution of shopping around.


GIven that there is no legislation which covers this area (and it is extremely unlikely that the current Govt will bring in such legislation), don't hold your breath waiting for a result.


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## ClubMan (8 Jun 2008)

rmelly said:


> Exactly.


So the original "shop around" advice is still the best?


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## Megan (8 Jun 2008)

A number of shops are now covering the sterling price on the price tags so we won't know the difference. Coast being one in Limerick today.


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## ubiquitous (9 Jun 2008)

I noticed quite a few price cuts (not special offers) in Tesco over the weekend. For example, some items that were €2.99 are now €2.75.


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## Dachshund (9 Jun 2008)

Megan said:


> A number of shops are now covering the sterling price on the price tags so we won't know the difference. Coast being one in Limerick today.



I would recommend trying the garment on in store and then ordering it online. Coast UK charge a flat fee of £7.95 for any package to Ireland.

I wanted to a buy a dress from Reiss, they were charging €215 in store, online it was £145 (€181.00). Even with the delivery charge I would still save about €30.00. 

I told the store assistant that I would be buying online instead.


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## ang1170 (9 Jun 2008)

ajapale said:


> Put another way; why should Irish consumers pay for the sterling exchange risk for UK retailers?


 
Same reason they pay for for any of their other costs, or their profits for that matter...


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## theoneill (10 Jun 2008)

Personally I now browse the high street shops for the items i like, go home and buy them via the internet. The only fools here are us, if we all stop doing business with retailers and service providers that are ripping us off they will be forced to revise their pricing policy. 

Incidentally I was looking at the price of You & Your Money and their Sterling / Euro price was appalling. Shame on you Eddie, you have been added to my list.


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## ClubMan (10 Jun 2008)

theoneill said:


> Incidentally I was looking at the price of You & Your Money and their Sterling / Euro price was appalling.


Even allowing for the _VAT _differences? Isn't it 0% in the _UK _and 21% here? Not sure what scope there is for dynamically varying the price of magazines based on currency fluctuations given the lead time to produce and print them etc. anyway?


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## ubiquitous (10 Jun 2008)

theoneill said:


> Incidentally I was looking at the price of You & Your Money and their Sterling / Euro price was appalling. Shame on you Eddie, you have been added to my list.



Did you take into account the fact that magazines are subject to 21% VAT here and zero VAT in the UK? Hardly Eddie's fault...


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## ClubMan (10 Jun 2008)

if anybody is that price sensitive then they could always ask their local library to buy the mag and read it there.


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## theoneill (10 Jun 2008)

ubiquitous said:


> Did you take into account the fact that magazines are subject to 21% VAT here and zero VAT in the UK? Hardly Eddie's fault...



Point taken
*removes Eddie from list and adds government



ClubMan said:


> if anybody is that price sensitive then they could always ask their local library to buy the mag and read it there.



 You may have a point, But I think as a nation we are not sensitive enough to prices.

Also I wonder can anyone answer a question I bought paracetamol in a pharmacy in France for 17cent, the cheapest I got it here was for e1.50?
Even in Tesco just off Oxford St. it was 20p.

Are medicines in the rest of Europe subsidised?


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## ClubMan (10 Jun 2008)

theoneill said:


> You may have a point, But I think as a nation we are not sensitive enough to prices.


Yes - a lot of people prefer moaning to action.


> Are medicines in the rest of Europe subsidised?


Over the counter medicines? Don't think so as a rule. Were they exactly the same brand, potency etc.?


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## theoneill (10 Jun 2008)

I think they were more generic, but still I found the price difference staggering.
  But they were the exact same strength as any you would buy here.


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## ClubMan (10 Jun 2008)

theoneill said:


> I think they were more generic


So you were not necessarily comparing like with like - i.e. the same brand, packet size etc.?


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## theoneill (10 Jun 2008)

I can understand that branded goods will be more expensive but nearly 10 times more expensive? As for the packet, the quantities were the same. Besides in France the drugs were bought in a pharmacy which you would expect to be more expensive.


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## ClubMan (10 Jun 2008)

theoneill said:


> I can understand that branded goods will be more expensive but nearly 10 times more expensive?


I don't know. But comparing some generic product with a big brand version is simply not comparing like with like.


> Besides in France the drugs were bought in a pharmacy which you would expect to be more expensive.


Why?


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## theoneill (10 Jun 2008)

Generally I would expect over the counter medicine to be more expensive in a small local pharmacy in an isolated mountain village than in a large supermarket.


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## MB05 (10 Jun 2008)

I think there is something stopping them selling generic brands here.  All the UK chemists and supermarkets sell their own version of everyday medicines yet they don't carry their own line over here.  I always stock up when I am in the UK or USA.


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## theoneill (11 Jun 2008)

That seems very strange, if other countries allow the sale of generic medicine in supermarkets why not here? Why are we a special case?


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## ubiquitous (11 Jun 2008)

theoneill said:


> Incidentally I was looking at the price of You & Your Money and their Sterling / Euro price was appalling. Shame on you Eddie, you have been added to my list.



You & Your Money is €2.95 here, and £2.00 (€2.53) in the UK.

When VAT is excluded, the price here is €2.43, compared to €2.53 in the UK, ie the price here is actually cheaper!


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## ClubMan (11 Jun 2008)

MB05 said:


> I think there is something stopping them selling generic brands here.





theoneill said:


> That seems very strange, if other countries allow the sale of generic medicine in supermarkets why not here? Why are we a special case?


First step might be to ascertain whether or not _MB05 _is correct in his/her assumption.


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## ubiquitous (11 Jun 2008)

I have heard pharmacists' trade representatives on the radio quite recently explaining that the State medical card system is structured in such a way that pharmacists actually lose money on prescription drugs supplied to medical card patients, as the State does not refund the full cost of the drugs supplied to patients. They claim that they recoup this by inflating their charges to other customers. I don't know whether this is true, although I suspect that it is. If my suspicion is correct, then this would explain the price difference across borders. Ultimately another stealth tax


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## cobalt (11 Jun 2008)

The main reason medicines are so much dearer in Ireland compared to other European countries is our smaller population (and therefore smaller market for the products). In order to place a medicine on the market, it must be licensed by the Irish Medicines Board. (Similarly, meds sold in UK must be licensed in UK, meds in France licensed in France etc.)

This licence fee in each country is a huge cost to the manufacturer. They recoup it by factoring it into the price charged for the med in the country. In Ireland, because our population - and hence market for the med - is so small, the cost is spread over relatively few people, and so the price is far higher. These higher cost prices are agreed between the manufacturers and the Irish government. This is even before wholesalers and retailers apply a markup.

_Cost price charged by manufacturer to wholesaler -> wholesaler adds markup to yield wholesale price charged by wholesaler to retailer (e.g. pharmacy) -> retailer adds markup (zero markup in the case of medical card prescriptions!) to yield retail price charged to consumer._

In fact, the retail price of some meds in countries like Spain is lower than the cost price in Ireland due to economies of scale!

Many meds simply aren't licensed in Ireland at all because it wouldn't be cost effective. The range of meds available in the UK is far greater. Unlicensed medicines are posing an increasing problem in medical practice in Ireland.


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## pjq (11 Jun 2008)

The only way that the UK retailers are going to listen is if a shopping boycott can be organised , maybe a symbolic boycott of Tesco ( they can definitely afford it) for a day . All that's needed is a well known personality to lead .
pjq


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## ClubMan (11 Jun 2008)

Good luck with the boycott.


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## John Rambo (12 Jun 2008)

Up until quite recently £1 Sterling would get you €1.50. Do you think if the euro had weakened and retailers had raised raised their prices consumer rights activists would support that? People are trying to have their cake and eat it with this issue. I'm no fan of UK retailers but they are entitled to price items as they see fit in different markets. If you don't like it don't buy it or hop an a plane and go elsewhere to buy it. This is real playing to the gallery stuff from the politicians.


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