Retail sales fall 7.5% in December


The volume of retail sales fell 7.5 per cent in December from a year earlier, and provisional figures showed sales fell 14.1 per cent during 2009, the Central Statistics Office (CSO) said today.

According to the CSO, sales volume rose 0.4 per cent compared to November figures, when they rose 1.1 per cent, but were static in terms of value.

Retailers have been forced to reduce prices to try and entice customers back into stores and are using sales and promotions to attract business.

However, in December the value of retail sales continued to fall, slipping 12.5 per cent compared to December 2008, and flat on the month.

Excluding car sales, the year-on-year decrease in retail sales value in December narrowed to 11.6 per cent, while the monthly change widened to -1.5 per cent.

Ulster Bank's Lynsey Clemenger said the figures were "disappointing". 

"While this renewed weakness in core sales is somewhat discouraging, it was not totally unexpected given the signs from the monthly retail data in October and November," he said.

The motor trade has been one of the worst hit by declining sales volumes, recording a fall of 15.1 per cent. However, retail weakness has been seen across all sectors. Non-specialised stores, including supermarkets, were down 3.5 per cent.

Food and beverages fell 6.8 per cent in volume compared to December 2008, while fuel sales were down 12.2 per cent. Furniture and lighting was down 13 per cent.

The fall in core retail sales was fuelled by a 2.2 per cent drop in food sales during December.

"This was somewhat surprising given that in the three months preceding December sales of food rose at average monthly pace of 0.1 per cent. While there is no doubt that food sales were weak in the month, the extent of the weakness may reflect difficulties in capturing the seasonal nature of some purchases around the Christmas period," Mr Clemenger said.

Property economist Patrick Koucheravy of CB Richard Ellis said consumers appeared to be cautious about spending, despite heavy discounting, and predicted another challenging year ahead.

“Our own analysis of footfall on Grafton and Henry Streets in Q4 2009 indicates that the shoppers are still out in numbers, but they’re extremely cautious and spending habits are still shifting," he said.

"Considering this data and the fact that the New Year sales were crippled by the bad weather, some of the increase to the Live Register last week could be attributed to retailers having to let staff go after a difficult year as well as retail workers hired on a temporary basis for the holiday season. Although the latest consumer sentiment figures indicated renewed optimism in January, we expect 2010 to be another difficult year, as with interest rates likely to increase, discretionary spending may be even further compromised.”

Provisional estimates for the final quarter of 2009 show a decline of 8.2 per cent in volume, with value of retail sales falling by 13.1 per cent.

On a quarterly basis, the volume of retail sales rose 1.6 per cent, while the value dipped 0.6 per cent. Excluding motor trades, the volume of retail sales decreased by 6.4 per cent year on year, and the fall in value narrowed to -11.6 per cent.

Davy analyst Rossa White said the volume of core sales has yet to bottom, although sales were down only 1.2 per cent compared with April 2009.

"The data also provide enough evidence to suggest that the economy overall did not bottom at the end of 2009," he said.

"Total sales have bottomed, only because of the intra-year recovery in car sales (seasonally adjusted) since the total collapse in Q1 2009. It is not a guide to trend."

Annual estimates show that the volume of retail sales fell 14.1 per cent in 2009 compared to 2008, and decreased by 18 per cent in value terms.

"The decline in consumer expenditure last year reflected the impact of contracting disposable incomes and exceptionally weak consumer confidence which prompted an increase in precautionary savings. Although there are signs of improving consumer sentiment in recent months which should provide some support for demand, the further erosion of disposable incomes arising from falling employment incomes and an increased tax burden, due to the carryover from 2009, will give little scope for increased consumer demand in 2010," said Bloxham economist Alan McQuaid.

"That said, the indications are that the car ‘scrappage scheme’ introduced in the December Budget will prove a success, with new sales up 5.0 per cent year-on-year in January despite no activity in the first two weeks of the year as a result of the severe weather conditions.

"The Society of the Irish Motor Industry believes that new car sales will hit 70,000 in 2010, an increase of 20 per cent plus on 2009. Whether strong car sales feed through into higher retail sales generally remains to be seen, though we still think there will be another overall fall in personal expenditure in real terms this year."

Retailers said the year had been a difficult one, with Retail Ireland director Torlach Denihan describing it as the "worst year experienced by the sector in living memory".

He called on the Government to assist the retail sector to achieve reductions in its cost base. "The top cost concerns for retail businesses are rent, payroll and government charges," he said.