Rise in sales masks declining footfall, warns Retail Ireland

Industry body’s retail monitor shows value of shopping rose 2.7% in final quarter of 2018

Sales in the final quarter of 2018 demonstrated the slow but steady growth of retail in recent years, said Retail Ireland. Photograph: PA

Sales in the final quarter of 2018 demonstrated the slow but steady growth of retail in recent years, said Retail Ireland. Photograph: PA

 

The value of Irish retail sales rose by 2.7 per cent in the final quarter of last year compared to 2017, according to Retail Ireland, the Ibec group that represents the sector.

While the headline figure was ahead of pre-Christmas industry growth targets and demonstrated “the slow but steady growth” of retail in recent years, the group said the uplift in sales masked a decline in footfall as consumers increasingly migrated online.

Discounting

It noted that sales in December, historically the biggest shopping month of the year, grew by just 0.4 per cent when compared to November.

Deep discounting and promotional events in November such as Black Friday are central determinants of this low growth, it said.

“The fourth quarter of 2018, and the Christmas period in particular, has further emphasised the dramatic shift in shopping patterns that is under way in Ireland at present,” Retail Ireland director Thomas Burke said.

“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,” he said.

“This is largely as a result of a move to online shopping by Irish consumers and changing consumer shopping patterns,” Mr Burke said.

“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,” he said.

The group’s latest barometer pinpoints several key trends, including ongoing strong competition between the grocery multiples with an increasing focus on couponing.

A combination of online pressure and an unseasonably warm early winter period led to significant discounting and promotional activity in the fashion and footwear sector.

Climate

Elsewhere the group noted that fuel prices at the pumps took a tumble in December, but there was only a modest increase in volume sold of 3.6 per cent.

A separate report on European retail markets, meanwhile, has warned that the positive economic climate, which is currently driving retail in Europe, is softening and that retailers may soon need to readjust.

Union Investment’s Global Retail Attractiveness Index (GRAI) shows, there are 25 points between the current top performer, Portugal, and the weakest market in Europe, Belgium. This difference is the largest that has been recorded for the index over the past 12 months.

“The ongoing positive economic climate in Europe, which is delivering rising revenues for online businesses as well as brick-and-mortar retailers in almost every country, is softening this trend at present,” it said.

“However, any sustained weakening of consumer sentiment is likely to cause retail markets to drift further apart,” said Henrike Waldburg, head of investment management retail at Union Investment.