Pre-Christmas retail sales remain ‘soft’ despite improved outlook

Despite the improved economic outlook, consumer spending in the run-up to Christmas has been "softer" than expected, according to Retail Excellence Ireland (REI), with many stores reporting only a marginal upswing in sales.

As a consequence, the retailers’ umbrella group is predicting bigger-than-normal discounts in the post-Christmas sales as shops seek to clear unsold stock.

“Christmas 2014 will trade marginally up on Christmas 2013. It would seem that while all the indicators pointed to a vibrant Christmas 2014, the fact is that seven years of frugality is a hard habit to break,” said REI deputy chief executive Seán Murphy.

Trading ‘failed to ignite’

“The expectation was that the last few days before Christmas would be buoyant. Unfortunately, trading failed to ignite across Ireland,” he added.

The group’s latest trading update said that while retailers outside the main urban areas had enjoyed increased footfall in recent days as a significant customer cohort exited the cities to return home, the bounce in sales had been “less than expected”.

Overall, there has been a notable decrease in the number of items purchased this Christmas despite an unheralded level of retailer promotional activity, it said. While sales might have grown slightly, margins were “most definitely down”.

“Customers are buying less, but buying better. The days of customers walking down our primary streets laden down with bags are over,” said Mr Murphy.

The group said some retailers were preparing to drop prices by up to 80 per cent in the sales in a bid to convert unsold stock to cash.

REI said it had detected a change in certain consumer behaviours since the recession, with many customers seeking to buy tickets and experiential products rather than physical ones. A case in point is the 70,000 tickets sold for the One Direction Dublin concerts.

Snow Glow Elsa

REI said the market in counterfeit toys was fast becoming one of the most lucrative illicit markets, noting that the supply of this season's must-have toy, the Snow Glow Elsa doll marketed in association with the film Frozen, had run out in most shops weeks before Christmas.

Despite coming from a low base, online sales have continuing to command a bigger slice of the Christmas market.

REI said some retailers were forced to abandon “click-and- collect” services as they simply could not cope with the increased level of demand.

Consumers were likely to defer purchases of “big ticket” items such as flooring, furniture, kitchen and bathrooms until January when they could avail of discounted prices, said Mr Murphy.

“The Government’s home renovation incentive scheme will act as a further call to action for the home improvement market,” he added.