Ireland Bans Superstores

Date: 1 Jan 2001 | posted in: Retail | 0 Facebooktwitterredditmail

The Irish government has made permanent a temporary cap on the size of retail stores in effect since 1998. The new law restricts stores in the Dublin area to 3,500 square meters (38,000 sq. ft.) and applies a 3,000 square meter (32,000 sq. ft.) limit to the rest of the country.

The policy also requires that new retail stores be located in town centers. If no sites are available, and the development is deemed necessary by local authorities, then it may be located on the edge of the town center (defined as within “convenient walking distance of the primary shopping area of the town centre”). Out-of-town retail developments are strongly discouraged.

The policy was issued by the Ministry for the Environment and Local Government. Its purpose is to foster sustainable development, maintain competition, ensure that retail outlets are readily accessible by public transit, and protect the viability of town centers.

The policy applies to grocery stores and “hypermarkets,” which, like U.S. supercenters, sell both food and general merchandise. Non-food warehouse stores, such as do-it-yourself home centers, are restricted to 6,000 square meters under existing law.

Unlike the U.S., where land use is strictly a state and local matter, Irish planning policy is determined at both the national and local level. The national government establishes broad policies and guidelines, which are implemented through plans developed by local governments.

The policy outlines the importance of town centers as focal points for community and civic activities, and notes that these functions cannot be replicated by shopping malls. Moreover, the long-term viability of town centers depends on maintaining their commercial base. “Where new developments compromise [downtown vitality], they should be rejected,” the policy states.

The policy also stipulates that local governments should enact zoning policies that safeguard local shops, provided that they substantiate the importance of such stores to the community.

In preparing the policy, the government commissioned a study by Goodbody Economic Consultants, who concluded that “available evidence suggests that economies of scale are exhausted at a store size of approximately 2,000 [square meters].”

Developers and chain retailers lobbied intensely for an easing of the size cap in the months leading up to the Ministry’s final decision. They were joined in their opposition by the Irish Competition Authority, which contends that larger stores would reduce prices.

Studies, however, have found that grocery prices in the Republic are 5 percent lower than in England and Northern Ireland, which have few restrictions on large-scale chains. Indeed, the Irish grocery market is robustly competitive compared to most of its heavily consolidated European neighbors. Independent grocers enjoy a 45 percent market share in Ireland, up 10 percent in the last decade. By comparison, independents have only 8 percent of the English market.

Limiting the size and location of new retail stores has become increasingly common as communities look for ways to maintain their character and local economies. Dozens of U.S. cities have enacted size caps. Many countries have them as well, including Norway, France, Denmark, and Argentina.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.