Tuesday, 28 June 2016
Retail Ireland, the Ibec group that represents the retail sector, today welcomed the continued growth in retail sales as evidenced by the May sales numbers released by the CSO this morning. However, retailers cautioned that this strong momentum should not be taken for granted and that threats to continued growth remain, especially in the context of Brexit.
Retail sales values, excluding bars and car sales, increased by 3.7% in the year to the end of May, pointing to a strong performance over the first five months of 2016. There was also strong volume growth across the retail sector in the year to the end of May, with sales volumes increasing 6.6% in the last 12 months.
Retail Ireland Director Thomas Burke said: “Retail sales have been robust in recent months with sustained growth across most of the major retail categories. There is, however, significant concern within the sector at the potential impact that last week's decision by the UK to leave the European Union will have on the retail trade over the coming months."
The UK's decision to leave the European Union will have both short term and long term consequences for retail trade in Ireland. The sector, which is characterised by a large number of UK headquartered retail chains, holds significant fears over the effect that recent currency fluctuations may have in the coming months.
Mr Burke added: "the most obvious short term impact is likely to come in the form of the potential return of cross border trade, driven by the devaluation of Sterling against the Euro. The falling value of the pound makes it more attractive for those in the border region to cross to the North to shop. This will inevitably have an impact on retailers in the border area. The other major concern in the short term is the impact this political and economic uncertainty may have on consumer sentiment. After a number of very difficult years for the retail trade, anything which serves to cause consumers to question retail purchases is a major worry for the sector.
"In the longer term, concerns also exist around issues such as a potential return to customs controls and duties between the UK and Ireland and possible added logistical complications of moving products between the two islands, as well as between the North and South. Such additional costs in the supply chain would be bad news for Irish retailers who are still struggling with legacy costs and in more recent times increasing utility and labour costs.
"Given recent developments, Government must now do all in its power to address this increasing cost base for Irish retailers and ensure rising costs don't out strip growth in this crucial part of the Irish economy."