Retail Ireland: Slow Growth Leaves Retail Lagging Behind Recovery
Published on May 11 2015 10:47 AM
Ibec group Retail Ireland has published its Retail Ireland Monitor for Q1, which points to a concerning lack of real growth in the Irish retail sector during the first three months of the year.
Tom Burke, director of Retail Ireland issued the following warning, “Despite improvement in key economic indicators across the general economy, the retail sector continues to lag behind. While sales volumes have improved, sales values remain sluggish, finishing just 0.9% ahead of the same period last year”.
Burke added: "It would appear that shoppers are still extremely price conscious, so while sales volumes are up 5.1%, the increase in the value of sales is significantly below that. This suggests that Irish retailers are discounting heavily to drive footfall and sales in store.
“Interestingly, the report highlights that certain categories such as furniture and home-wares are outperforming the general retail sector, largely as a result of the release of pent-up demand, while others including supermarkets, books, news and stationery continue to struggle".
Deflation and brutal competition have greatly impacted value growth in supermarkets and convenience stores, which slowed from 1.5% to just 0.2%. Supermarket value growth in the same period was effectively flat. Price pressures continue to hamper growth in the service stations sector with sales volumes marginally up in Q1.
Pharmacy sales continue to be driven by front of shop growth offsetting a decline in prescription revenues. High incidence of coughs and colds have seen a strong start to the year for over the counter medicines. Beauty sales, meanwhile, have risen in line with a recovering economy, with a strong Mother’s Day closing out the quarter.
"The retail sector continues to struggle,” said Burke. “Despite strong economic growth, value for money is still the key determinant for Irish consumers. In addition, retailers face increasing cost pressures.
“Firstly, a weak euro has resulted in higher import costs for those retailers sourcing products from outside the eurozone. Secondly, retailers are very concerned about proposed increases in other costs, specifically wage increases. With recovery in retail still fragile, Retail Ireland warns that any increased costs could further destabilise a sector which has endured a torrid last six years and remains significantly challenged.”
© 2015 - Checkout Magazine by Niall Swan