2014 turning point for retail, but legacy costs a concern

Wednesday, 28 January 2015
Retail Ireland, the Ibec group that represents the retail sector, welcomed the latest CSO retail sales figures for December which show modest growth, as predicted in the group's Christmas Retail Monitor. In December, the value of sales rose by 1.8%, but the volume of sales rose by 5.2% (excluding car sales), which shows that many shops continue to offer significant discounting to increase footfall.

There were particularly strong performances in sectors such as furniture and lighting and department stores but others sectors such as books, news and stationery did not perform as well over the year. More must now be done to build on this positive momentum, as legacy costs such as high rents and commercial rates continue to hamper growth in the sector.

Retail Ireland Director Thomas Burke said: "Christmas is the most important retail trading period and 2014 marked a turning point for the sector after some tough years. The modest growth forecast in our Christmas Retail Monitor has been confirmed in the latest CSO data. This is a positive sign for 2015, we are now seeing more people at work, rising disposable income and greater consumer confidence all having an impact on the sector.

"However this growth is coming off a low base and increases in trade remain modest, when the huge fall in the value of sales over the period 2007-2013 is considered. The retail sector suffered disproportionately during the crash and its recovery has lagged behind the general domestic economy. Legacy costs continue to hamper growth for many retailers and have the potential to destabilise the recovery. The value of core retail sales remains some 17% below its pre-crisis peak and this reflects the challenging business conditions which many traders still face.

"Retail employs over 275,000 people and is the largest employer in the country and 75% of retail jobs are located outside Dublin. We must address the issues of unsustainably high rents and disproportionate local authority commercial rates if we are to achieve balanced regional growth. More needs to be done to make town and city centres better places to visit and shop, including a greater Garda presence and the introduction of more shopper friendly transport and parking options."