‘Real hope’ that retail recovery will gather pace in 2015

Industry group forecasts boost to consumer spending power from low inflation

Consumers will have more spending power this year as inflation remains low, benefitting shops, a report by Retail Ireland forecasts.

The industry group said the dramatic fall in oil prices and an expected 55,000 rise in the numbers in employment this year would support a recovery among retailers.

Strong VAT returns in January, which were €225 million or 12.9 per cent ahead of returns for the same month last year, suggest this recovery is starting to gain traction, Retail Ireland said. “There is now real hope that the pace of recovery will increase during 2015.”

However, cost pressures and what it called “unrealistic wage demands” could derail progress, the Ibec-affiliated group added.

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Retail Ireland estimates consumer spending will rise 2.7 per cent in 2015, following 1.3 per cent growth last year, and that inflation in the economy will be 0.4 per cent.

Battle for footfall

Inflation in the price of goods is running at minus 2 per cent, with retailers keeping prices down in a battle for consumer footfall. The most recent figure from the

Central Statistics Office

shows consumer prices are in deflation, running down 0.3 per cent in December compared to a year earlier.

Despite “intense competition and aggressive discounting”, it was “a generally satisfactory Christmas” for supermarkets, Retail Ireland said, although the Thursday timing of Christmas day delayed the peak-trading days until immediately before the holiday.

In its latest Retail Monitor report, it notes that the greater Dublin area continues to record the strongest recovery for supermarket and convenience store sales in the fourth quarter, with regional locations lagging behind.

Coughs and colds boosted sales of healthcare products at pharmacies compared to the previous winter, it said.

But mild weather earlier in the period affected the women’s fashion trade, with the sale of coats and winter boots “down considerably”. The opposite was true for menswear, which enjoyed a more successful fourth-quarter.

Furniture sales enjoyed “a bumper 2014”, reflecting the greater activity in the property market. “Indications are that furniture will continue to lead retail’s recovery.”

This was mirrored by the strong end to the year for electronics, electrical goods and computers, but competition from global e-commerce giants means the value of sales isn’t matching the increased volume of goods being sold.

Sales of books, newspapers and magazines will continue to struggle as consumption moves to digital formats.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics