Retail sales increased 0.9 per cent in volume in November compared to a year earlier, the latest figures from the Central Statistics Office (CSO) show. However, once the motor industry is excluded, core retail sales fell 0.9 per cent, indicating a tough start to the Christmas trading season for many retailers.
The volumes of goods sold, excluding cars, also fell 0.2 per cent last month compared to October, suggesting that the heightened economic uncertainty posed by the Government's loan negotiations with the European Union, European Central Bank and the International Monetary Fund (IMF) reduced consumers' willingness to spend.
The value of core retail sales fell by an even greater degree, declining 1.9 per cent year-on-year and 0.4 per cent compared to October. This indicates that retailers are still cutting prices in an attempt to convince consumers to buy. If the motor industry is included, the value of sales fell 1.1 per cent year-on-year and 0.1 per cent on a monthly basis.
Industry group Retail Excellence Ireland (REI) warned this morning that December was on track to be the weakest period of trading in recent history, with destination shopping locations the worst affected as consumers follow advice not to make unnecessary journeys due to the snow and ice. It predicts a like-for-like decline in volumes of 6.7 per cent compared to last December.
The CSO figures for November show that bar sales continued to be one of the hardest hit categories, with the value of sales plummeting 13.4 per cent and the volume of sales down 11.4 per cent year-on-year. There was also little sign of pre-Christmas cheer, with volumes down 4.6 per cent in November compared to the previous month as drinkers stayed away from the pubs.
Furniture and lighting sales also continue to be one of the worst-performing categories, with volumes down 9.7 per cent year-on-year. This reflects both the extent to which consumers are reluctant to splash out on big-ticket items and the ongoing stasis in the housing market.
There was some good news for department stores, which was one of the few categories to show year-on-year increases in the value of their sales in November, which rose 8 per cent, while sales volumes in this category rose 12.9 per cent. Both the volume and value of department store sales were down, however, compared to the previous month.
Although retail sales have stabilised compared to the 20 per cent year-on-year drops that were being recorded by the CSO at the start of 2009, the latest figures will not provide any comfort to the sector ahead of the critical Christmas period.
Industry body Retail Ireland said earlier this week that the dramatic economic events of the last few months had hit confidence. "The retail sector remains in survival mode," said Retail Ireland director Torlach Denihan. Figures from InsolvencyJournal.ie show that there were 168 insolvencies in the retail sector in the first 11 months of the year and the industry now expects further job losses in the new year.
Alan McQuaid, economist at the stockbroking firm Bloxham, said personal spending was likely to fall for the fourth consecutive year in 2011, although the drop would not be as big as it was over 2008-2010. "The bottom line is that it is now likely to be 2012 before we see a positive average annual change in consumer expenditure, which is bad news for the retail sector," he said.
