Discounters and supermarkets in the border towns in Northern Ireland are benefiting as the economic downturn sends Irish shoppers searching for bargains.

Discounters Aldi and Lidl's share of the defined grocery market increased nearly 10% since last year and they now account for nearly 8% of the market.

Asda and Sainsbury, meanwhile, saw their share of the Republic of Ireland's grocery market rise by more than 300% year on year despite the fact that neither has a shop in the South.

Asda and Sainsbury now account for 2.6% of the Republic's grocery market, up from 0.6% in the same period last year. Market research specialists TNS Worldpanel, which compiled the figures, said mid-term breaks played a part in their performance as parents took advantage of the time off to shop in the North.

TNS Worldpanel, whose figures cover the 12 weeks to 22 March, also found that there is now deflation in the grocery market, with sales down 0.5% on the same period last year.

Tesco in particular is seeing the effects of the changes in customer behaviour. The British giant's share of the defined grocery market in Ireland fell from 26.2% to 25.7%. Documents revealed by Retail Intelligence last week show that like-for-like sales in its shops are well below expectations and Tesco says cross-border competition and higher prices in the Republic are the main reasons for this.

The global retailer has cut prices in the past six weeks as it seeks to regain market share and prices are set to fall further in the coming weeks as it begins to exert its buying power by ordering certain goods for the Irish market through its British division.

In particular, prices in the ambient goods sector, which includes everything from household goods to canned soup, are set to fall. Price promotions in Britain will also be run here.

Dunnes Stores, on the other hand, outperformed Tesco; its market share grew by 0.2% to 23.8%. Sources suggested its Value Club promotions are helping to attract customers.

The research also found that Superquinn's market share dropped from 7.9% to 7.2% but this was due in part to the fact that Easter fell in the 2008 period.

Super Valu's share dropped slightly to 20% while other multiples such as M&S and Boots held steady at 1.8%. Symbol groups saw their market share fall from 6% to 5.6% and other multiples dropped from 4.4% to 3.7%.

TNS Worldpanel's figures are based on a basket of over 200 grocery categories and are not based on the total till receipts. Their figures only include goods taken home by customers, and do not include convenience purchases.