Retailers up-beat as we enter key Christmas trading period

Monday, 9 November 2015
Retailers up-beat as we enter key Christmas trading period - Retail Ireland
Nearly half of shoppers plan to do most of Christmas shopping in November
Households to spend €600 more in December than in other months
Doubling of tax free allowance on gift vouchers welcome

Retail Ireland, the Ibec group that represents the retail sector, today published its Q3 Retail Ireland Monitor (see attached pdf) ahead of the approaching crucial Christmas period. The group predicts the best performing Christmas in seven years for Irish retailers, with January tax cuts helping to raise consumer mood and boost spending. The weak euro is also attracting more tourists, with Dublin city centre outlets in particular benefitting from foreign shoppers. A new survey of over 14000 shoppers suggests about half (46.9%) hope to get most of their Christmas shopping done in November (see details of survey below).

Retail Ireland said it expects core retail sales for December 2015 to reach €4.05 billion, up by 3.5% over 2014. Strengthening momentum means that consumer spending growth will top 3.1% in the full year of 2015 versus last year. Personal consumption expenditure on core retail goods during December will be equivalent to about €2,450 per household, approximately €600 more spending per household than in any other month of the year.

Retail Ireland Director Thomas Burke said: "The Christmas period accounts for over 30% of total sales in certain categories of retail, with nearly half of shoppers planning to complete their Christmas shopping in November. The coming weeks will determine the overall annual performance for many retailers, and follows a broadly positive year to date."

"Growth was recorded across virtually all categories of retail during the first nine months of the year but despite positive trends, retail sales this Christmas are still expected to be 12.2% down on 2007 levels. The fact that sales this Christmas will only be up 3.5% on the level of retail sales of Christmas a decade ago in value terms, despite rising costs and legacy debts, underlines the last decade's status as a lost decade for the sector. While we are finally seeing light at the end of the tunnel, not all parts of the country are keeping pace. The recovery in Dublin and other major urban centres is significantly ahead of other parts of the country."

Commenting on the Government’s decision to double the tax free allowance on gift vouchers from €250 to €500, Mr Burke said: "This progressive move will allow employers to recognise the contribution of employees to their businesses in a given year without the previously punitive tax implications. We also welcome Minister Noonan's decision to implement this change from October 20th rather than in January. This will allow the full benefit of the change to be realised for employees and businesses in the short term and will further help to boost the Christmas trade for Irish retailers.”

Retail sales values in the year to September are up 2.4%, with a particularly strong rebound in furniture, homewares, fashion and electronics. While growth has been strong, demand for value remains obvious with growth in sales volumes running at two-and-a-half times that of sales values. Price discounting remains a prominent feature of the Irish retail landscape. Other key retail trends set out in the Retail Ireland Monitor include:

    Supermarkets and convenience stores: Falling consumer prices still significantly hampering value growth, despite a more robust performance during Q3

    Department Stores: Despite a reported dip in the number of high-spending Chinese visitors, Q3 returned another solid period with value growth at 4.1% and volumes up 7.8%, driven by fashion accessories, beauty and homewares

    Pharmacies: Positivity slowly returning, despite continued impact of Government action on the cost of drugs

    Fashion & Footwear: Fashion is certainly back in style, with record tourist spend, together with a strong end to the summer sales and a busier back to school rush seeing Q3 values surge 8.4% with volumes up 12.4%

    Furniture and home accessories: With total sales value jumping 12.2% and volume soaring 18.4% versus last year's Q3, furniture and homewares once again dominated as Ireland's best performing retail category

    Books and news: Despite modest improvements boosted by higher average spend, books and news remain challenged by Sterling exchange volatility and consumer preferences for digital formats

Survey results:

During which month do you expect to shop for most of your Christmas gifts this year:

September 0.95%
October 7.93%
November 46.9%
December 42.65%
Other 1.5%

The online survey of 14041 shoppers was completed by Eason in September.