Feel-good factor to fuel shopping spree

Consumer spending over Christmas in the Republic will hit a record €4 billion, writes Claire Shoesmith

Winding my way through the mass of people on Henry Street in Dublin last weekend, I vowed never again to go shopping on a Saturday in December. As someone who often wanders around central Dublin at the weekend, I was amazed by how many extra people were filling the streets and couldn't help but marvel at where they all came from.

Still, while, for me, the crowds were a frustration, for the many retailers in the city centre, each individual is a potential customer and therefore a potential sale.

"The Christmas period is a massively important time for retailers," says David Brennan, owner of O'Reilly Jewellers on Dublin's Wicklow Street and a member of the Dublin City Business Association, which represents retailers in Dublin. "For most of us, it is the highlight of the year."

According to a survey by consultants Deloitte, Irish consumers are set to spend record levels this Christmas, at a time when, elsewhere in Europe, people are tightening their belts.

The survey, which questioned 6,800 people across nine EU states, found that Irish consumers plan to spend 8 per cent more on gifts this Christmas than they did last year.

This is the biggest increase across the nine countries surveyed and puts Ireland in line to be the biggest spender across the region. Elsewhere in Europe, spending intentions are flat, if not slightly down on last year, according to Deloitte.

Brennan also believes that this Christmas period will be a particularly good one for Irish retailers.

"We are already seeing more people coming into the city than last year," he says, saying that improvements to the city's public transport system have helped the situation.

He also said that he expects that the busiest day is still to come. "There are a lot of people who leave things to the last minute and Christmas Eve is likely to be a phenomenally busy day," he says.

A spokesman for the Luas light rail system said that there has been a considerable growth in demand on the system in the past few weeks.

So far this month, the number of tickets sold for journeys on the Luas is up 13 per cent on November, and November's figures were 9 per cent ahead of October. The average monthly growth this year is about 6 per cent, according to the spokesman.

Pat Delaney, head of the Small Firms' Association, this week predicted that consumer spending over the Christmas period will hit a record €4 billion, with as much as €22 million an hour being spent on Christmas Eve.

This is up almost 10 per cent on last year and is equal to levels of growth last seen in 2001 and 2002.

According to Cormac Hughes, a partner at Deloitte, 40 per cent of Irish people wait until the last minute to decide what to buy, a statistic that backs up Brennan's prediction that Christmas Eve is going to be a busy day.

"This presents a good opening for retailers in the battle for the consumer wallet," said Hughes, adding that the large volumes of sales made at Christmas are a good opportunity for retailers to attract shoppers they wouldn't usually target and to encourage them to shop with them on a regular basis in the future.

So what has given the Irish the spending bug this year?

"There is a huge feel-good factor in the economy at the moment and really things couldn't be better," said Delaney.

"Inflation has declined, the interest rate rise when it came wasn't as bad as it could have been and there are strong prospects for employment growth."

Delaney also believes that the imminent maturity of some of the special saving incentive accounts (SSIAs) starting next year is adding an extra feel-good factor to the economy.

"People think that they are well off now and know that they are going to be even better off next year with the release of their SSIAs, so many of them are splashing out now," he said.

According to Deloitte's survey, 84 per cent of those questioned expect to spend at least as much if not more than they did last year, citing reasons including improved household income and more innovative and interesting presents to choose from.

The poll also showed that 86 per cent of Irish consumers are very optimistic about the outlook for the economy next year.

As many as 77 per cent of those surveyed were optimistic about the security of their job, while 76 per cent expect that their financial income to at least stay the same if not improve next year.

"It would be hard for things to be better than they are now," said Delaney. "It has been a remarkable year."

Comments made earlier this month by European Central Bank (ECB) president Jean-Claude Trichet that further interest rate increases next year were not inevitable helped boost confidence further after the first interest rate rise in five years at the beginning of December.

Retailers aren't the only ones who benefit from the increased footfall in the city centre. For Jon O'Connell, a Dublin-based taxi driver, the run up to Christmas is also busy.

"This is one of the most lucrative times of the year for me," he says. "There is huge demand for taxis both from people doing their Christmas shopping and from those out at Christmas parties."

All this buoyancy among consumers and retailers is backed up by a report released earlier this week by Bank of Ireland Business Banking. The study forecast that this year would be the best year for retailers since 2000.

While the Government's retail spending figures run slightly behind the current trends, the latest statistics for the month of September reiterate the positive mood, showing an increase of 6 per cent, excluding motor trades, compared with the same month last year. Figures for October are due out today.

So if you haven't bought all your Christmas gifts yet, never fear because there's still plenty of time left and the retailers will love you for it.

But may I suggest that you don't leave it until Christmas Eve. Personally, I can't imagine the city centre being any fuller than it was last Saturday.