Retail Ireland releases Christmas Retail Monitor 2015

Monday, 7 December 2015
Retail Ireland, the Ibec group that represents the retail sector, today published its Christmas Retail Monitor 2015, with key indicators pointing to the best Christmas for the retail sector since 2008. The monitor tracks key trends across the economy and the sector to give an insight into how they are likely to impact the key Christmas trading period. Crucially, more money is likely to be spent in the shops this December (€4,050 million up from €3,920 million in 2014), representing an annual rise of over 3.5%. Irish households will spend an average of €2,450 this December, approximately €600 more than any other month of the year.

Key indicators set out in the Christmas Retail Monitor 2015 include:
  • Retail sales are on the up: Retail sales in the first ten months of this year are up 2.3% in value terms on the same period in 2014.
  • Rising employment means that more people have more money to spend: In Q3-2015, the employment market reached 1.98 million people, the highest level recorded since Q1-2009. Retail Ireland's most recent forecasts suggest that there will be in the region of 59,000 extra people at work since last Christmas.
  • Disposable income is growing again, but remains behind 2008 levels: Total disposable income levels at the end of last year were still down 10% on 2008. The gap will have closed somewhat in 2015, but not entirely. Budget 2016’s pro-consumer measures will likely result in average take home pay increasing by 1.5% next year. Combined with measures adopted in the previous two budgets, most earners now stand to be between 1.5% and 3.5% better off from 1 January than they were in 2014.
  • Consumer sentiment has recovered strongly: Consumer sentiment has soared by over 10% in the first 10 months of 2015. The positive correlation between enhanced consumer confidence and retail sales performance indicates that spending should continue to improve throughout the coming months.
  • A cheaper Christmas for consumers: Competition remains intense in the sector and this is keeping prices down. At present, goods inflation is at minus 4% annually as shops battle for footfall. Goods prices this December are on course to be at their lowest level since December 2001. Downward price pressures will continue into the post-Christmas sales period.

Retail Ireland Director Thomas Burke said: "Irish retailers are optimistic as we head into the hectic Christmas period. The next few weeks are by far the most important trading period of the year and key indicators are pointing in the right direction. More people are at work, disposable income is rising and the Irish consumer is more positive about the future.

"The recovery is not evenly distributed across the retail industry. Categories such as electronics, fashion, footwear and furniture are all outperforming the market. Growth in other categories such as books, news and stationery and grocery remains weak. Consumers' continued demand for value is evidenced in the difference between the growth in retail sales volumes and values. This is particularly evident in the grocery sector. Volume growth is running at over three times value growth and is a further sign of widespread discounting in Irish stores. While not ideal for retailers, it's great news for Irish consumers as they continue to hunt for Christmas bargains.

In terms of expectations for Christmas 2015 within the various categories of retail, Mr Burke pointed to the following:

Pharmacy: The category is expecting strong growth in the region of 4-5% over the Christmas period. There has been a big shift in the percentage of sales moving online and it is expected that online growth will outstrip store growth until the last few days of the shopping period, when online becomes less of an option for people and the rush begins in stores. Beauty and fragrance will lead the growth in the pharmacy sector this festive season.

Hardware and homeware: Within the homeware sector the two key categories will be Christmas related products and gifts. This Christmas, we are seeing a move to quality with growth coming more from average spend increase rather than volume growth. This reflects a preference for higher quality decorations, lights and trees that will last for years to come.

Grocery: The grocery sector remains among the most challenged of the retail sectors. Companies within the sector report an insatiable consumer appetite for value as margin in the sector continues to suffer at the expense of volume. Wide-spread discounting will be the key trend over the coming weeks. Consumers can expect to find some real bargains as they do their Christmas food and drink shopping.

Books, news and stationery: The overall book market is expected to be up in value terms over the Christmas period versus last year, but this is being driven by sterling inflation against the euro. Book volumes will be challenged in the sport category due to the Brian O’Driscoll and Roy Keane effect last year and in the Entertainment category due to weaker titles this year. However the History and Politics category will benefit from the popularity of 1916 related titles.

Department stores: The sector is expecting to see a significant uplift on 2014, already over the last quarter strong growth on the same period in 2014 has been recorded. Menswear sales have been particularly good. This is a combination of new brands that are well recognised, upgraded environment and a general improvement with consumer sentiment. Men are back out spending money on themselves. Strong growth on bigger ticket / premium items on furniture and electrical is also notable. This again is a great indicator for 2016.