Stephen Lynam, Retail Ireland
Anecdotally, retailers are saying things are starting to pick up, but no-one is getting too carried away.
The latest CSO figures published for retail sales in Ireland in May showed strong growth, but this is tempered when the impact of car sales is factored out of the data.
While the value of sales rose by more than 4.1 per cent, sales excluding motor trades and bars rose by 1.1 per cent last month compared with May 2013.
There was an increase of 3.4 per cent in the volume of those sales, highlighting the fact that retailers continue to discount prices to drive footfall.
Speaking to IFCR magazine, Retail Ireland director Stephen Lynam said: “The figures are positive after several years of decline. We estimate that retail sales fell by 25 per cent since the start of the recession so we are only just starting to come out of that now.”
“The figures from 2013 suggest that spending was flat and for 2014 consumer spending will increase by about two per cent.”
The deferred purchases of big ticket items – which are now being bought out of necessity – have seen furniture sales increase by up to 20 per cent. Smaller items like food and beauty products are not seeing as much as a lift due to the fact that Irish consumers have completely changed their shopping habits.
Commenting on the forecourt market, Stephen said: “The volume of fuel sales is up about five per cent on last year.
“Anecdotally retailers are saying they are having a better year. We had a sunny June which puts more people on the road plus there are 60,000 more people in employment than one and a half years ago so this means more commutes and more fuel required.
“The kind of things that sell well during a heat wave, ice cream, beer can be picked up at the local forecourt.”
It’s been said that Irish people are now as averse to debt as German’s are averse to inflation. Just over 90 years ago the Germans had such a bad experience of inflation that they said vowed to never let it happen again.
“In the same way, Irish people never want to experience the levels of debt we have seen in recent years,” explained Stephen.
“They are simply not willing to spend what they don’t have or throw good money after bad. When it comes to their grocery shopping, during the boom years, the average punter would have shopped in one or two stores. The average is now four.”
He added: “Retailers have had to respond to the needs of Irish consumers as it is believed that they will never return to the old ways of shopping.”
This seismic shift in shopping habits has certainly benefited the discounters with Lidl and Aldi which have both seen their market share increase dramatically.
Latest data from Kantar Worldpanel shows that, over the 12 weeks to the end of April, the two discounters saw their combined market share in Ireland grow from 13.5 per cent to 15.6 per cent on a year-on-year basis.
With shoppers opting to use the German discounters, plus many people now opting for a 48-hour food shop, retailers are having to adapt.
“People are not wasting food throwing out perishable goods at the end of every week so they will buy what they need,” said Stephen.
“It is good on many levels; it’s sustainable and good for the environment but it poses big challenges for the retailers.”
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