Throughout that period, the supermarkets recorded strong results. According to a report by Bord Bia, grocery retail value sales in Ireland have grown significantly in recent years, hitting around €12.4bn a year.

The growth in grocery spend benefited the likes of Musgrave, the Cork-headquartered retail group and wholesaler that owns SuperValu and Centra. Shops in its network took in €6.3bn at the tills in 2021, up from €6.1bn. The group’s pre-tax profit rose to more than €110m.

Recent accounts for Aldi Ireland showed it achieved sales of close to €2bn in 2021, although its operating profit fell to €39m.

Despite the sunny results for retailers, some analysts predicted storm clouds on the horizon after Russia’s invasion of Ukraine last February. Consumers have seen the value of their money erode as inflation and energy costs bite. 

Last week, a report in the Irish Times said many franchise operators of SuperValu and Centra stores had seen electricity bills treble after a contract negotiated by Musgrave with Energia ended.

It followed a warning Musgrave issued to the Government last summer about the effect the rising cost of energy would have on its retailers, arguing its partners were “under pressure like never before”.

As 2023 progresses, could the bumper growth enjoyed by the supermarkets in recent years be under threat or can they see off the challenges and keep their tills ringing?

Emer Healy, a senior retail analyst at Kantar Worldpanel, expects strong growth this year. However, she also forecasts rising inflation and less sales volume.

Healy said the 12-week period to January 23, 2023, saw take-home grocery sales increase by 6.8pc, with shoppers contributing an additional €211.8m to the overall market performance. As a result, Healy said shoppers spent an additional €90.50 per household year-on-year.

She said growth came as grocery price inflation hit 16.3pc – the highest level seen since Kantar started tracking grocery inflation, trailing just behind Great Britain.

“Irish households will now face an extra €1,159 on their annual shopping bills if they don’t change their behaviour to cut costs.”

Over the four weeks to January 22, 2023, Healy said the total grocery market grew 5pc, with shoppers spending an additional €47m year-on-year. She added shoppers now make more trips than last year – up 3.3pc, with prices soaring 14.6pc.

“As a result, we see a theme returning that we saw during the last recession – little and often. As prices soar shoppers are picking up less volume  -13pc year-on-year but still spending significantly more.”

Healy said new trends were emerging as supermarkets continue to fight for market share.

“The Irish grocery market is more competitive than ever before, with shoppers looking for the best deals and retailers looking to retain customers. This is reflected by many supermarkets using their loyalty schemes to help shoppers save.

“Sales of premium own-label lines have reached €152.6m, up €5.7m on last year. Value own-label lines saw the strongest growth, up 34pc year-on-year with shoppers spending €17.9m more on these ranges.”

Healy said Kantar predicts inflation will level off in the second half of the year to an average of 5.6pc, with take-home grocery sales to grow between four and five per cent.

“Increased budgetary pressures will impact where and what shoppers will buy,” she said.

Alan Makim, head of retail sector strategy at AIB, feels the grocery sector’s performance has been surprisingly resilient, particularly in the second half of 2022 and the early part of this year.

While there had been “very obvious challenges”, energy costs were at the fore for grocery retail, he said.

“The grocery sector is a relatively fine-margin business and energy costs would roughly account for about 1pc of total turnover. So when there was concern about doubling or trebling of energy costs, that would quickly eat into a retailer’s profits.”

Looking at the general trading environment, Makim said consumers would have noticed price inflation in their shopping as retailers are forced to pass on additional costs from manufacturers.

“This has led to a greater ‘search for value’ for many consumers and has had some impact of the volume of items sold in larger supermarkets,” he said.

Comparing Covid to now, Makim flags the pandemic had a “very positive” impact on the grocery sector sales, with most of the larger retailers having benefited despite additional costs. He flagged the adoption of hybrid working meant some stores in once busy areas had remained quiet.

For the most part though, behaviours had returned to normal, he said, with more store visits leading to smaller average transactions.

“The only area for retailers to watch out for is the sharing of the weekly grocery spend with a range of stores rather than a concentrated spend in a single trip that we saw during Covid,” said Makim.

Outside of energy inflation, another critical issue flagged by Makim is the availability of labour. He said AIB’s customers had flagged competition for staff was driving up the hourly rate being paid.

Makim predicted further expansion from the international players in the market, with all the big operators set to bolster their technological offerings for consumers.

Ian Allen, managing director of SuperValu and Centra, said the boost grocers experienced had started to unwind over the last year, but remained above pre-Covid levels.

Allen said consumers had become more price conscious, with a “pronounced movement towards own-brand ranges in recent months”. These sales were up over 10pc across SuperValu and Centra last year, compared to 2019.

Allen also recognised a “strong rebound” in convenience, which was hit hardest during the pandemic. Musgrave plans to open 18 new Centra stores this year and is exploring opportunities for SuperValu.

Key challenges for Allen remained the inflationary environment. He highlighted the significant cost concerns for both businesses and consumers. While he was happy to see macro energy prices come down, he added it could take “some time” for it to filter through. He said it could be “impossible to predict” what will happen with food prices.

Allen mentioned some of the challenges in the supply chain across Europe, particularly with the shortfall of strawberries, raspberries, peppers and tomatoes. He blamed weather in Europe and North Africa leading to lower agricultural production levels.

“Thankfully the shortfall has eased and we are replenishing shelves daily.” 

The supply-chain issues were also flagged by Rosemary Garth, communications chief at Tesco Ireland. Despite the issues and inflationary pressure, she said the Irish grocery retail market had been robust.

Garth referenced trends that had benefited Tesco, including its position in home delivery and its use of technology.

Significantly, it had introduced its improved loyalty scheme, Clubcard Prices, giving customers access to exclusive deals. It has already signed up nearly one million households.

From a growth perspective, Garth was also feeling bullish about the future of Tesco. Last year had been a busy one, with Tesco purchasing nine supermarkets in Galway and opening a further handful of stores bringing its total to 165 nationwide.

Aldi Ireland group managing director Niall O’Connor is also focused on growth. O’Connor recently announced a €73m expansion plan which would see it build 11 new stores in Dublin over the next five years. It also launched a nationwide recruitment campaign to fill 360 new jobs.

Aldi’s low-cost model could see it well positioned for the tough inflationary environment. It recently conducted a survey which found over three quarters of people had financial worries and are seeking value for every cent.

Looking to the future, all the retailers and analysts seemed optimistic for grocery retail, though some recognised the pandemic boom was starting to unwind.

For AIB’s Makim, the outlook for the sector is looking a lot better than had been initially feared.

“There has been some significant reductions in wholesale energy prices that will benefit retailers, although depending on your scale and ability to negotiate with energy suppliers the pace that this will happen at may vary.

“The general rate of inflation is also reducing which will give both retailers and more importantly customers comfort and greater confidence in their spending.”

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