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PRICE WAR; Tesco creates ' new border' in 11 of its stores.

Byline: PAT FLANAGAN

RETAIL giant Tesco slashed its prices by up to 25 per cent yesterday in a desperate bid to beat cross- border shopping.

The multi- billion euro UK retailer rushed in dramatic price drops in 11 Tesco stores in border counties to stem the exodus of consumers into the North.

The company claims the move narrows the price move narrows the price difference on thousands of household goods and groceries to its lowest level between North and South in 30 years.

Tesco bosses shut down the 11 stores at the weekend to restock the shelves with thousands of items marked with the new lower prices..

The company has been badly affected by the flow of shoppers to rivals such as Sainsbury's and Asda in the North.

But most of the new goods have been sourced in the UK, raising fears the move will lead to a loss of Irish jobs.

There are also worries that the decision will create a new border as Tesco stores south of Drogheda will not have the new lower prices.

Announcing the reopening of the stores in counties Donegal, Sligo, Leitrim, Cavan, Monaghan and Louth, Tesco Ireland chief Tony Keohane said prices on 12,500 goods were reduced by an average of 22 per cent.

He added: " This substantial investment will enable us to compete in the long term with prices north of the border.

" It will remove the incentive or the need for consumers to travel, which has been bad for jobs, for local economies and the national economy. When currency costs and travel and journey times are taken into account, we believe many customers will find it is cheaper to shop in these stores south of the border."

Mr Keohane said the new prices were " long- term structural changes" and not just temporary promotional deals.

He added: " We are starting this in these 11 stores to secure jobs and livelihoods in the border towns." Until now Tesco depended on Irish distributors and agents to import international brand import international brand groceries like breakfast cereals, cleaning products and toiletries.

But because of the strength of the euro Tesco has found it can source the same goods more cheaply in the UK.

Prices have been reduced in all categories including bread, dairy products, frozen food, meat, vegetables, packaged groceries, deli products, health and beauty, products, baby products, health and beauty, ready meals and household products.

Mr Keohane said: " From now on, this is as far north as anyone needs to go to get great value.

" We are one of Ireland's largest employers and we are making fundamental changes which have reduced our prices significantly." The move comes just weeks after Tesco announced a 5.2 per cent increase in sales - but expressed worries about the effect of cross- border shopping on its profits.

And unions are poised to oppose changed staff conditions for new stores.

Paul Kelly from the lobby group Food and Drink Industry Ireland claimed it was a " black day" for the Irish food industry.

He said some well- known Irish brands could disappear from Tesco shelves.

Irish Mirror Comment: Page 10

CAPTION(S):

EXTRA First shoppers on arrival receiving gift tokens LAUNCH Tesco chief Tony Keohane announces 12,500 prices reduced CHARGE Shoppers rush to take advantage at Tesco Extra in Drogheda, Co Louth, yesterday
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Publication:The Mirror (London, England)
Geographic Code:4EUIR
Date:May 6, 2009
Words:555
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