In its latest Retail Monitor, published today, Retail Ireland, the Ibec group that represents the sector, said that sales values have grown by 4.1% in the third quarter of the year, compared to the same period in 2016, helping to partially offset growing fears regarding increasing input costs. The report also shows that most retail categories experienced an increase in performance during the quarter.
Retail Ireland Director Thomas Burke stated: "2017 has so far proven to be a relatively strong year for the Irish retail sector. Sales values grew across almost all retail categories in the third quarter of this year, with full year increases also recorded. However, the benefit of these growing sales is largely being eroded by an increase to rent in many prime retail locations, rising labour costs and increasing utility costs. Increases in the National Minimum Wage of over 7% since January 2015, and the recent Public Service Obligation (PSO) levy increase show Government is significantly driving these input costs upwards. For some in the sector there is a palpable sense of running to stand still.
“However, retailers are now looking forward to a busy Christmas period and have a legitimate expectation of an improved performance on last year, as pay increases and tax cuts help boost the consumer mood and increase spending power. The coming 8-week period will make or break the year for many retailers, with some doing over 30% of their annual trade in this period. Retailers are hopeful that this positive momentum can be carried into the crucial end of year trading period.”
Key trends set out in the Retail Ireland Q1 2017 Monitor include:
Supermarkets and Convenience Stores: With the Consumer Price Index continuing to show food and take-home alcohol deflation, growth in this quarter, suggests that shoppers are now trading up rather than taking the savings.
Department Stores: Total sales values grew by 2.6% and total sales volumes increased by 7.4% compared to the same quarter in 2016. The beauty business remains flat, with declines in traditional beauty brands being balanced by strong reactions to new emerging brands.
Fuel: Total fuel consumption in quarter three was down marginally when compared to the same quarter in 2016, as electric vehicles and hybrids now account for 4% of vehicle sales in Ireland.
Pharmacies: The deflationary environment continued to affect pharmacies this quarter, particularly impacting core toiletries and some beauty products.
Fashion and Footwear: Women’s luxury accessories continue to be a key sales driver, along with athleisure, training shoes, and menswear. As we enter the last quarter of the year, competition in this category from online UK and US shopping platforms will heighten due to the strong euro.
Books, newspapers, stationery stores: Newspaper and magazine volumes continue to decline, as consumers continue to migrate their media consumption to online sources.