Cantillon

Inside the world of business

Inside the world of business

A bad year for retailers and there is more to come

THE GIANT baby blue “20 per cent off Megadays” storefront display is unfurled once again at Clery’s - the supersized canvas promo signs have been used so much by the department store over the past year, they must be starting to fray. Retailers across the board are feeling fragile after an annus horribilis in which consumer spending is on track to tank as much as 7.5 per cent.

But can the post-Budget, pre-Christmas shopping season put the shine on a dismal year?

READ MORE

The case “for” includes the reduction in excise duty on alcohol and the reversal of last year’s half-point increase in the standard rate of VAT, both of which will help dampen the attractiveness of cross-Border shopping, if only by a smidgen. (It’s a pity for Irish retailers that Alistair Darling did not get his way and increase the UK rate of VAT above 17.5 per cent, as he was reported to have wanted to do in yesterday’s British press, as this would have made the UK-Republic VAT gap even closer.)

The case “against” a last-minute seasonal bonanza for the nation’s shopkeepers includes the public sector pay cuts and miserable tightening of social welfare payments, including the cancellation of the Christmas bonus.

But it’s the decision by the holy trinity of Dublin department stores – Clery’s, Arnotts and Brown Thomas – to open on St Stephen’s Day that exemplifies the glumness in the sector. These stores cannot afford to sacrifice an entire Saturday to tradition anymore.

Yesterday’s CSO retail sales data shows that sales volumes at department stores fell 5.9 per cent in the year to October. But the 16.5 per cent plummet in the value of these sales tells the real horror story.

So who’s up for an early rise on St Stephen’s Day to snap up those big-ticket loss leaders that Arnotts boss David Riddiford has promised will be present and correct? Cantillon is staying in bed.

Albion’s loss

The rather coy response of the Taoiseach to Gordon Brown and Nikolas Sarkozy’s bold move to super-tax bankers bonuses has raised the prospect that Albion’s loss may be Éireann’s gain. Mr Cowen may be quite right when he says the issue is rendered moot by the terms of the Irish bank guarantee – which bans banks bonuses at covered institution – but that leaves unanswered the more pertinent question of bonuses paid to IFSC-based bankers.

The details of the British and French taxes are not yet clear and they may never see the light of day. It will also take some time before it becomes clear if they are sufficient to cause bankers to uproot their business, lives and families in significant numbers.

But if they do move, then Dublin and the IFSC would have to be on the list of possible landing spots. In his Budget speech this week the Minister for Finance made it clear that there will be a big push next year to try and promote the IFSC.

He claimed that “particular opportunities” exist for Ireland to become the European hub for the international funds industry following European legislative changes. Moves aimed at strengthening Ireland’s competitiveness in this regard are promised in the Finance Bill.

These no doubt could only but be enhanced by the ability for the managers of these incoming funds to enjoy the fruits of their labours undisturbed by the attentions of the British and French tax authorities.

Risky deal

The list of investors who Bernard McNamara claims backed his failed venture to redevelop the Dublin Glass Bottle site is truly amazing.

Pretty much every one of the names that have surfaced to date fall into the category of “should have known better”. If businessmen of the calibre of those who McNamara claims are his backers did not see that a dangerous bubble was emerging in the Irish property market then what chance had mere mortals.

The presence of two property developers who were successful in their own right on the list given by Mr McNamara to the courts this week is particularly striking. They more than the others should have had a appreciation of the risks inherent in the deal, which Mr McNamara has told the courts were such that he himself doubted its viability.

He was only persuaded to become involved, he told the courts, because of the involvement of the Dublin Docklands Development Agency in the deal. They, of course, are the player who would least have expected to call the property market.


For regular commentary on business and economic issues visit our blog, Current Account, at www.irishtimes.com/blogs/business

Twitter users can receive links to the latest business news and blog posts by following us at

twitter.com/IrishTimesBiz