European Pricing, wish and utopia

While EU and Euro seem to be a good basis for harmonization and transparency of prices there are still lots of obstacles before consumers will see any effect.

On consumer level equal prices in all EU countries are simply not easy to realize but they are certainly not needed today from the manufacturer's point of view. By far most consumers in Euro countries still have their old currency as standard for price comparison and most consumers do their shopping locally.

In the longer term it is advisable to avoid great price differences for the same product but today's biggest price gaps cannot be blamed to manufacturers but to tax level differences and trade margins. Certainly manufacturers use different prices in countries, especially when high A&P spending is needed, but it is not the main factor for the international differences. European buying and forming of alliances does give the buyers some tools to be able to buy where the product is the cheapest but it does not work out in general. The pricing deals with bonuses, allowances, listing fee, etc. keeps the buyer loyal to the national supplier although a sharper eye can be expected on the basic levels of the real international products.

Main reasons for the price gap for identical products in different countries and retailers are the Taxes/VAT and the trade margins.

VAT taxes vary from 0-25%, sometimes for the same product category. See the list of main tariffs at vat in EU.
It is clear that real harmonization of VAT in EU is still far away. Different consumption patterns as well as efficient manufacturers lobbies have created a Gordian knot that seems unsolvable for EU politicians. Next to huge VAT gaps the trade margins for basic food products go from 0 - to almost 50%. Popular products, generally with European brands, are often used by retailers to benchmark their price levels, accepting margins that will not even cover logistical costs.
The traditional margins for retailers were 20-30% in times of growth and low competition, but hard discounters have forced many popular products to realize low consumer prices cutting the margins for manufacturer as well as retailer. To compensate for that loss of margin more and more attention is given to products that consumers can or will not easily compare.
Don't be surprised when retailers consider 45-50% margin for a real new product where no comparison is yet relevant.

The key for the retailer is not to compare himself only with the discounters for the volume products but to find their way in shifting categories. French retailers are well accustomed to selling clothing, gardening, leisure goods etc. in their hypermarket but also in many supermarkets, giving the idea of one stop shopping possibility. In the last years UK retailers have put heavy emphasis on clothing and it highly contributed to their profits and they are already dominating the market for basic clothing. Some others, like Aldi en Lidl, bring totally different products in their shops just to create traffic and strengthen their low cost image. Who would even consider 10 years ago to buy a state of the art computer at Aldi. Today many IT professionals use the promotions of these discounters to replace their old PC or notebook. They don't care about the brand, they want the right components and capacity and are quite prepared to buy it at a food retailer.

Price levels in Europe are subject to retailer's communication strategy. Some products play a big role but many do not and in the dynamics of the market still lots of opportunities can be created. Do not follow the dogmas of lowest price but be aware of the price levels, VAT and margins in Europe as well as the shifting importance of the categories.