The Grant Thornton Retail Excellence Ireland (REI ) review of retail sales for Q3 2016 has raised some cause for concern, as data shows industry growth rates weakening.
Few sectors performed well, with most experiencing like-for-like declines on the same period last year. The impact of the Brexit vote and weakening Sterling as well as disruption to trading with strikes and political instability can be seen through the quarter.
Lynn Drumgoole, communications director with REI, said: “There were few winners this quarter in terms of retail sales. Sectors that are particularly struggling are those that are dependent on discretionary income, with ladies fashion down close to 5 per cent and footwear down over 6 per cent year on year. Particularly worrying also is the decline in hot beverage sales - down close to 6 per cent in September - as this is generally a strong indicator of consumer activity.
“It is a concern for retailers as to what will happen over the coming weeks and months. Consumer activity isn’t as strong as it was through the first half of the year, and as we approach the run-up to Christmas retailers are cautious. Overall, it’s a concerning picture as we are trending the wrong way after a positive start to 2016.”
Damian Gleeson, partner at Grant Thornton, said: “We hear that the good times are back, the unemployment figures are falling by the day, and that we are the fastest growing economy in Europe. If this is the case why are we not seeing this in consumer spend? The Q3 figures published by Retail Excellence Ireland actually indicate that overall retail industry sales are down on the sales achieved in Q3 for 2015. How can this be?
“Obviously, Brexit has had an effect with sales in certain discretionary sectors such as jewellery and ladies fashion, which are significantly down. However, some sectors such as garden centres and home appliances have experienced significant increases. These patterns are very difficult to decipher.
“The continued rise in grocery sales is consistent with an improving economic environment, however, with the other sectors it appears that volatility is the new normal with external factors such as Brexit having a significant impact on consumer trends. If these represent difficult times to be in retail due to ever-fluctuating consumer spend patterns, then the current pressure on employment costs makes life as a retailer positively hazardous.”