December 2010 stands as ‘the weakest period of trading in recent history’, according to Retail Excellence Ireland (REI ). However, according to David Fitzsimons, chief executive, REI, city shops fared worse than regional traders over Christmas just past.
“The retail industry was hit with the perfect storm in recent weeks,” Mr Fitzsimons said. “If IMF intervention and a very severe budget were not enough, the arrival of Arctic conditions minimised shopping activity and left many of the largest destination shopping centres and cities near empty.
“While regional retailers have been negatively impacted due to reduced shopper activity, they have also gained as customers stay local. Retailers who are in the worst distress are those who are in the primary shopping centres and retail park locations, with Dublin hit very severely. These schemes are dependent on custom from a wide radius and charge rent based on significant footfall levels — however, the footfall stayed away from these locations due to the adverse weather.”
Meanwhile Retail Ireland, also representing the Irish retail sector, revealed this week that post-Christmas sales are strong so far, but said it remained cautious with regard to the outlook for 2011.
“The strong post Christmas sales are some badly needed good news after the 10 per cent fall in last week's retail sales by comparison with the same week last year,” said Retail Ireland director Torlach Denihan. “Next year will be very challenging for the retail sector. Since the start of the recession there has been a massive fall in what customers spend, but the cost of running a shop has hardly fallen at all. Rents, hourly wages, REPAK fees and local authority charges have by and large not fallen. If Government is serious about saving jobs in the retail sector it should tackle each of these areas in turn.
“It is particularly inappropriate that the Retail Joint Labour Committee is dictating an increase in wages in the retail grocery sector from January under an Employment Regulation Order (ERO ). A decision on the implementation of this increase should be deferred pending the outcome of the review of the entire ERO system, as required by the agreement with the IMF and the EU Commission.”
Other key trends identified by REI and its retail members in relation to poor Christmas trading were noted as follows:
• Major shopping centres and retail parks are poorly prepared for snow, especially those with open surface car-parking.
• Local authorities could have done more to make local towns more accessible. Footpaths are cited by many retailers as being unacceptable.
• Late night trading has been decimated as customers are eager to get home as early as possible.
• Gift card sales are significantly lower as customers spend less, and concern grows about the ability of some retailers to continue to trade.
• Credit card sales are far reduced as customers spend what they have and stay away from credit.
• Customers continue to buy for function and not fashion.
• Customers continue to seek additional discounts at the till, especially when shopping with independent retailers. Many comment that customers are so focused on price that in some cases they are buying the discount and not the product.
• Cross border activity is significantly reduced from 2009 levels due to the current exchange rate, a more competitive priced offer in the South and the adverse weather.
• Grocery is holding up relatively well but is negatively impacted by a significant reduction in the frequency of shopper trips.
• There is growing concern about the increasing price of raw materials which will be reflected in higher consumer prices in 2011
• Many retailers are disheartened and some express concern about their ability to continue to trade. Most suggest that further business restructuring is now required in 2011. This will equate to further retail industry job losses.
• A majority of retailers complain that rent and rates are too high and the scheduling of the Budget on December 7 had a very negative impact on trade in the run up to the budget announcement.
• A significant fall off in retail activity is expected from January 10 onwards, with retailers hoping that Election 2011 will deliver some consumer optimism.