Margaret Heffernan: price war?

Dunnes Stores looks set to revive plans for a central distribution unit that would allow it compete better against its rivals in the grocery market. The retailer is gearing up for a price war this summer but the distribution unit would make Dunnes more competitive in the long term.

Retail Intelligence reported last week that, despite having shelved the plans after planning permission was refused for a centre in Donabate, the retailer is "once again making serious moves towards establishing a central distribution function". It said senior executive Dick Reeves, who recently reduced his day-to-day involvement in Dunnes' grocery operations, is heading the project.

Tesco, Superquinn, Super Valu, Aldi and Lidl already have central distribution units, leaving Dunnes the only market heavyweight without one. Tesco sources believe its facility in Donabate has helped it address the problem of products running out in its shops. Anecdotal evidence suggests Dunnes has been suffering from this.