Retail Ireland Warns of ‘Brexit Shadow’ On Christmas
Retail Ireland, the Ibec group that represents the retail sector, expressed growing unease at softening consumer demand and retail sales in the run up to Christmas today (November 16). Laying out its concerns in the latest edition of the Retail Ireland Monitor, the group claimed that the last quarter has seen retail sales growth slow and consumer sentiment dip in the wake the effects of the UK decision to leave the EU.
Supermarket and convenience store sales have risen 3.4% since 2015 (2.5% when comparing 2106 Q3 to 2015 Q3), and department stores 3.3% (1.5% when comparing 2016 Q3 to 2015 Q3). Specialised food and drinks stores sales have also grown 1.5% in the last year (0.6% when comparing Q3 2016 to Q3 2015).
However, these increases have seen a stalling or a decrease when comparing September 2016 to August 2016, with Supermarkets and convenience stores only growing 0.2%, Department stores 0.8%, and Specialised food and drinks stores shrinking 1.5%.
Retail Ireland interprets these changes as ill omens for Christmas shopping, and calls on the Government to prioritise support for the sector over the coming months. Retail Ireland Director Thomas Burke said: “While sales values grew by 1.1% in the third quarter of the year when compared with the same period last year, the steady decline in growth rates quarter on quarter is a cause for concern.
“The 23% slump in the value of sterling since the beginning of the year has prompted more consumers to travel North to shop, with new figures also showing a surge in online shopping in the months following the UK vote. Central Bank statistics show that e-commerce transactions recorded on Irish debit and credit cards jumped by 20% from €1 billion to €1.2 billion between July and September as sterling fell. This was way above trend and is likely to have mostly gone to UK based online retailers.”
Mr Burke added, “The Irish retail sector is working hard to adjust prices to reflect this new reality, but is still selling products that were purchased at a much different exchange rate a number of months ago. Goods prices have fallen by 2.9% on average over the last quarter and, in the first 10 months of the year, were down 8.5% on the same period three years ago.”
Mr Burke sees limited scope for retailers to reduce prices further, and said the pressure “has the potential to destroy margins in the sector.”
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