Retail Ireland, the Ibec group that represents the sector, today published its latest Retail Monitor. The report (see attached) details that sales values grew by 2.7% in the fourth quarter of last year compared to the same period in 2017, hitting the pre-Christmas industry growth targets and further demonstrating the slow but steady growth that has characterised the sector over recent times. The report does, however, also highlight growing concerns in the sector around declining footfall and a gradual softening in consumer sentiment and spending.
Retail Ireland Director Thomas Burke stated: "The fourth quarter of 2018, and the Christmas period in particular, has further emphasised the dramatic shift in shopping patterns that is underway in Ireland at present. While sales values held up reasonably well, there is consensus in the sector that footfall levels in traditional shopping hot spots are continuing to decline. This is largely as a result of a move to online shopping by Irish consumers and changing consumer shopping patterns. Retailers have reacted to that move and are now offering an increasingly compelling proposition in this space. This is challenging margins however as online fulfilment costs are high and there is intense price competition in this market.”
The Monitor also reveals that sales in December, historically the biggest shopping month of the year, grew by a mere 0.4% when compared to figures in November. Deep discounting and promotional events in early November are central determinants of this low growth according to the report.
Mr. Burke concluded: “2019 is likely to be a challenging year for the Irish retail sector, with ongoing structural shifts requiring the industry to rethink its traditional approach. Allied to this, Brexit impacts will likely require the reimagining of supply chains and depending on negotiations over the coming weeks, could impact consumer spending power.”
Key trends set out in the Retail Ireland Q3 2018 Monitor include:
Supermarkets and Convenience Stores: There was strong competition in the supermarket and convenience sector over the fourth quarter of the year, with a large focus on couponing in the multiples. Consumers in this sector remain strongly motivated by price, but 2018 marked the strongest year for this sector since the economic downturn of 2007/8.
Fashion & Footwear: A combination of online pressure and an unseasonably warm early winter period led to significant discounting and promotional activity in this category. The early Christmas sales period in November was tough, with sales particularly soft during the week of Black Friday. However, a pickup in trade in the latter part of December, combined with an extra trading day during Christmas week, compensated somewhat.
Fuel: Prices at the pumps took a tumble in December, but there was only a modest increase in volume sold of 3.6%. While the fuel mix in new car sales continues to favour petrol and hybrid models as consumers move away from diesel, it should be noted that there was a 10% drop in vehicle sales in December 2018 when compared to 2017.
Pharmacies: Pharmacy sales were strong in December with the sector growing by 3.8% when compared with the same month in 2017. There was deep discounting and promotional offers on beauty products and perfumes over the Christmas period. Prescribed medicines and other medical product sales fell in the period, largely as a result of the unseasonably mild early winter period which led to a lower rate of flu and cold outbreaks.
DIY & Hardware: Mild conditions did little for the heating, fuel and insulation sectors, an important component of category sales in the fourth quarter of the year. This was compensated for by solid if unspectacular demand in the non-seasonal DIY and homewares areas. The sector gets a boost in the final quarter through Christmas decoration, tree and lights sales. Performance in these categories was strong, with consumers in the mood to invest in upgrading their Christmas offer.
Books, newspapers, stationery stores: Christmas 2018 can be split into two halves, with the first half dominated by Black Friday activity, and second half sales strongest in the last ten days. Online had a significant impact on footfall over the entire season, but impacted most during November. The last-minute shopper reversed this trend and returned to stores, particularly shopping centres. Overall the physical book market was up 4% during this period, year on year.
- Q4 2018 Retail Monitor - Retail Ireland.pdf - 461 Kbytes