CHRISTMAS 2009 was shaping up to be a quiet one for Irish retailers, with shops forced to cut prices as fewer consumers hit the streets, according to the latest figures from the Central Statistics Office (CSO) and retail analysts Experian.
The CSO’s retail sales index, for the month of November, shows that the volume of sales was down 8.2 per cent compared to November 2008, while the value of the sales that were made was down 12.9 per cent over the year.
The data gives the first indication of trading in the run-up to the Christmas period for Irish traders, who have been hit by falling sales in recent months.
Compared to October, sales volumes rose 1.1 per cent in November but were static in terms of value. If car sales are stripped out, it was an even worse performance, with the volume of sales increasing just 0.3 per cent compared to October and the value of those sales falling 0.3 per cent.
On an annual basis, however, the struggling motor industry is still proving to be a drag on sales. Core sales excluding cars fell by a more modest 5.4 per cent year on year in volume terms and by 10.6 per cent in terms of value.
Separate figures published yesterday by information services group Experian suggest that footfall in Irish shops slipped by more than 7 per cent in the final quarter of the year compared to 2008.
“The final quarter of 2009 and the usually buoyant Christmas period have proved stressful for retailers, as many sold off stock at less than premium prices,” said Experian’s Paul Slevin. According to the company’s surveys, Christmas week was the only week to show higher footfall in the Republic – a finding that may be explained by department stores’ decision to open on St Stephen’s Day.
The value of the goods sold in Irish shops fell in 10 out of the first 11 months of 2009, Davy analyst Rossa White noted. “We do think larger retailers had exceptionally fat margins heading into the recession, but the independent sector may well be struggling to cope,” Mr White said.
Retail Ireland, the Ibec-affiliated body representing the sector, said retail operating margins in 2009 had been “clearly seriously squeezed” due to price cuts, while rents had not fallen. “With retailers taking in less money at the tills, the employment prospects for the sector are a source of very serious concern,” said Retail Ireland director Torlach Denihan.
“It is of note that the management of the retailer 3G Mobile has said the decision to liquidate the business is due to extremely high rents and inflexible leases,” he said.
Retail Ireland wants the Government to “build on the decision to ban upward-only rent reviews” by reforming the arbitration procedures that occur in the event of a landlord-tenant dispute at the time of a rent review.
CSO figures show a further recovery in the motor trades in November, where sales volumes rose 3.5 per cent compared to October. But there was little sign of pre-festive cheer in bar sales, which slipped 1.5 per cent on the month and are down 12 per cent compared to the previous year.
Although anecdotal evidence suggests the St Stephen’s Day sales were successful, the freezing weather in the closing days of December and early January are likely to have had a negative impact on sales, said Bloxham economist Alan McQuaid.
“That said, the icy road conditions are also likely to have deterred shoppers from going North, which may have worked in favour of retailers in the Republic,” he added.
