It was bound to happen once the first engorged winter energy bills landed through Irish letterboxes. Data from several sources suggests that the retail sector is in for a challenging period after December as the cost-of-living crisis bites.
The signs are not yet bad enough to suggest the sector is facing a blue Christmas. But the seasonal period ahead may represent the last planned splurge for many Irish consumers before they go into hibernation until the inflation crisis abates.
Retail sales volumes have fallen for the past six months in a row. Meanwhile, data this week from the Central Statistics Office shows the domestic economy is already contracting. Only the State’s burgeoning multinational sector will keep the economy out of recession next year.
All of this is being reflected in the retail industry. Retail Ireland, the sector’s Ibec lobbying division, said this week it expects Irish customers to spend €5.4 billion at the tills this month. But that spend is roughly the same as last year. In truth, a flat performance would be an achievement in a period when real wages are falling fast as inflation tops 9 per cent.
KPMG’s Next Gen Retail survey, released on Friday, said cost was the “central issue” for shoppers this Christmas. It found that more than 62 per cent of those it surveyed said they planned to reduce their spending this festive season, which is not a great harbinger for Retail Ireland’s predictions of flat spending.
KPMG also suggests there is a mini resurgence in online spending as customers hunt for bargains, with 47 per cent of those surveyed planning to do more shopping online to cut costs. About three-quarters are expecting Christmas to be “significantly more expensive” this year.
Unemployment is still low and the Government retains the financial firepower to ease some of the pain of the cost-of-living crisis. Still, consumers are starting to get nervous.