Retail Monitor: Heightened concerns after disappointing Christmas
Weak sterling sends consumers online and to the North
Retailers in Ireland saw a worrying downturn in performance during the second half of 2016, according to a new report from Retail Ireland, the Ibec group that represents the sector. In its latest Retail Monitor, published today, the group said softening consumer sentiment and a further move towards online shopping resulted in the weak results, particularly over the crucial Christmas period.
Retail Ireland Director Thomas Burke said: "There were disappointing results across the board over the Christmas trading period, with some retail categories coming under particular pressure. Total sales fell by 0.1 per cent when compared with the festive season the previous year.
"There are a number of reasons behind this. A weaker sterling has resulted in shoppers increasingly turning to UK online retailers, with a larger number of consumers also crossing the border to shop. Consumer confidence, on which the the retail sector is so reliant, has dipped significantly over recent months, partly due to Brexit concerns. This was particularly evident over Christmas, where sales were far below expected levels. Many retailers reported only marginal growth, or in some cases a decline on Christmas 2015."
"There was a notable reduction in the pace of retail sales growth during the entire second half of last year, down from 3% in the period January to June, to 1% in the July to December period. While domestic retailers are moving quickly to adapt to the new environment, Government must aid them by taking urgent and decisive steps to address the high cost of doing business, particularly labour taxes, insurance, and rates. They need to ensure that domestic retailers are not at a competitive disadvantage to online and other markets."
"The Irish retail sector is going through a period of significant structural change, which has been accelerated by the impact of external political and economic factors. Retail was the last sector of the economy to enter a recovery phase after the downturn and remains well below its pre crash peak. Retailers require additional support from Government over the coming months to sustain and grow the 275,000 jobs they provide in every city, town and village in the country."
Key retail trends set out in the Retail Ireland Monitor include:
Service Stations: Figures show a levelling off in growth this quarter in the service station category. Overall fuel consumption was flat in Q4 2016 versus Q4 2015. Within forecourt convenience, double digit growth was recorded in the areas of food, coffee and impulse.
Pharmacies: With Christmas Day falling on a Sunday a lot of customers left their shopping late with the 23rd being a particularly big day. Online shopping continues to be an increasingly important channel, with later delivery cut off times enabling customers to shop online well into the week before Christmas.
Department stores: Overall Q4 was disappointing for department stores reflecting the fiercely competitive nature of this category. A weak sterling has continued to make cross-border shopping attractive and online growth with Irish retailers slowed dramatically, as customers purchased from British based online retailers.
Furniture and homewares: Furniture and home accessories have been one of the best performing retail categories throughout 2016 and this continued in the last quarter of the year. A number of new entrants are set to open their first Irish stores during 2017.
Computer and electronics: Computer and electrical stores struggled in Q4 2016. This was the worst performing category during the critical December trading period compared to the other major retail categories.
DIY and hardware: Seasonal categories, dependent on colder temperatures, struggled to generate volumes as the weather remained mild in the DIY and hardware category.
Supermarkets and convenience: Christmas Day falling on a Sunday meant shoppers had two extra days to buy groceries this year. Supermarkets and convenience stores saw steady growth over the last quarter of 2016. Promotions played a significant part in volume growth particularly during the Christmas period.
The report can be found on the Retail Ireland website, or by clicking here