Irish Retail Enters Recession, According To Retail Excellence
Head of Public Affairs and Communications at Retail Excellence, Lorraine Higgins has said today (April 24) that the “Irish retail industry has now entered recession based on the fact the industry is experiencing a third consecutive quarter of decline with fifteen of twenty sectors recording decreases in sales revenue”.
Higgins was speaking following the release of the Grant Thornton Retail Excellence Q1 2017 Retail Productivity Review which highlights some very negative trading patterns. Significantly, the review confirms consumer activity has not been as strong as it traditionally would be in most sectors of retail at this time of year.
Higgins said, “Q1 2017 proved retail is continuing to contract which is in stark contrast to an improving economy and falling unemployment numbers. The figures for this quarter are most concerning but the situation is further exacerbated when you consider this is the third period of decline recorded.
“Few sectors performed well, with fifteen of twenty sectors recording decreases in sales revenue. January 2017 traded down -1.79% against January 2016 which points to the continued weakness of the January sales due to significant pre-Christmas discount activity commencing with Black Friday. March 2017 was a particularly weak month with sales erosion of -2.64% partially as a result of when Easter fell and also due to accelerated consumer sentiment erosion,” she continued.
“Traditionally strong performing sectors at this time of year were adversely impacted in Q1 like Footwear (-8.83%) and Childrenswear (-10.15%). Jewellery sales fell -6.91% probably as a consequence of Irish consumers purchasing high ticket items in other markets even though such items may not be covered by insurance policies without a legitimate VAT receipt being provided. Grocery recorded a -3.28% like-for-like decline in March 2017 with that of 2016 which can be attributed to Easter falling in April this year. On the other hand, the Garden sector recorded an 7.34% rise in sales and furniture and flooring was up 3.71%.
“Overall 2017 paints a concerning picture as we continue to trend the wrong way. With the UK facing into an election, the impact of Brexit being felt, and hyper intense competition remaining in most retail sectors, the outlook is a challenging one. Undoubtedly, there is a real need for cost curtailment in the Irish retail industry, however with commercial rents remaining stubbornly high and in some cases rent increases being sought, the outlook is bleak. Some operators are being pushed to the edge and more retail industry failure can be expected,” Higgins concluded.
Damian Gleeson, partner at Grant Thornton commented, “The Retail Excellence Ireland quarterly statistics for the first quarter of 2017 demonstrate that consumer concerns and the resulting negative sentiment are materialising in a contracting retail sector. It is ironic that at a time when the country's unemployment figures are dropping and the exchequer tax intake is increasing that this negative sentiment is growing. This is due primarily to the current prevailing uncertainties such as Brexit, the Trump effect and increasing world security issues.
“This negative sentiment is reflected in a significant drop in sales in such areas as footwear, children's wear & jewellery. How long will it take for sentiment to recover we ask? The answer is unclear, but with shock tactics such as Prime Minister May's General Election announcement this week sentiment and thus, retail is unlikely to recover soon,” Gleeson concluded.
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