Economic outlook on the Irish retail sector

Retail Ireland, the Ibec group that represents the retail sector in Ireland, has recently published its Christmas Retail Monitor 2017 that predicts the Irish household will spend an average of €2,654 in shops this December, approximately €870 more than any other month of the year and roughly 2.6% more than Christmas 2016.  The monitor predicts an increase in total sales of over €100 million, with sales over the Christmas season expected to top €4.5 billion, up from €4.4 billion in 2016. However, with a greater number of Irish shoppers now choosing to shop on foreign websites, the challenge for Irish retailers will be to ensure that this buoyancy is felt locally and that Irish based retailers benefit from this anticipated additional spending.


The growing migration by Irish consumers online over recent months is creating a challenge for Irish retailers. Local traders have to date been unable to stem the flow of close to 75% of online consumer spending that currently leaves these shores.


Irish retailers are reacting however, and the online consumer offer is stronger than at any point in times past. Irish retailers also continue to focus on getting their in-store activity right in these crucial trading weeks and will be seeking to capitalise upon an increasing willingness on the part of consumers to spend their greater levels of disposable income.


Key indicators point to retail prices remaining low, thanks in part to intense competition between retailers and positive currency movements. Other insights from the monitor include:

  • Consumer goods prices have fallen by 2.2% in the first ten months of 2017 and by 8.4% in the last three years. This pattern is set to continue as consumers avail of record discounts arising from Black Friday and Cyber Monday sales
  • Retail sales in the first ten months of this year are up 3.9% in value terms on the same period in 2016
  • Gross disposable income was up 5.4% in the first half of 2017, following on from growth of over 4% in 2016
  • Overall employment grew by 2.9% in the first half of 2017. The labour market is now approaching full employment with unemployment at its lowest rate since 2008
  • Central Bank statistics show that total e-commerce spend is likely to exceed €16 billion before year end. This would represent a close to 50% increase since 2015, highlighting the increasing number of Irish consumers shopping online. The uplift in online sales in the online channel is running at six times that of traditional bricks and mortar outlets.

Expectations for Christmas by retail sector supermarkets and convenience stores: For grocery and convenience stores, Christmas comes late with the feast day falling on a Monday this year. Therefore, the week beginning 18 December will be make or break for this category. Black Friday has minimal effect on food sales other than to trigger even keener competitive activity. This keen competition for market share will drive heavy discounting and promotions, a dividend for shoppers but costly for retailers.


Department stores: Department Stores are expecting Christmas to be a bit of a nail-biter this year with last

minute shopping expected well into the final week. Early sales or pre-Christmas price promotions are not expected within this category of retail this year. For 2017 the big focus is around personalisation, fragrance, champagne and chocolates. For men it will be about trainers, expensive branded and limited editions at mid-price, and as always, for women, luxury accessories and niche fragrance.


Pharmacies: Overall there has been a positive start to the Christmas period for pharmacies, with footfall and sales up on last year. Top sales are expected to come in premium cosmetics, fragrance and Christmas gifts this year. Online sales in the category are expected to grow over the weeks in the lead up to Christmas Day as firms discount to drive traffic to their web stores. Community pharmacies report slightly slower growth thus far, but hopes remain high for the weeks ahead.


Computers, electrical and electronics stores: TV’s, tablets and video game systems were the key sales drivers over Black Friday and Cyber Monday and significant demand for these products is expected continue right up to Christmas Day. While discounting and promotions were used to generate sales over the Black Friday weekend, there will be a renewed emphasis on margin retention on the run up to Christmas.


Please see here a link to the full report.

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