Monday, 26 August 2019
Retail Ireland, the Ibec group that represents the sector, today published its latest quarterly Retail Monitor. The report details that sales values grew by 2.4% in the second quarter of 2019, while sales volumes grew by 4.1% in the same period, demonstrating steady, if unspectacular growth.
The major influencers of sales performance in this period were the relatively wet and cool summer weather, which is in stark contrast to the summer of 2018 when Ireland experienced hot and balmy conditions. The other major trend emerging from the monitor is the impact of Brexit-related concerns on consumer sentiment and fears around economic overheating.
Speaking following the launch of the monitor, Director of Retail Ireland, Thomas Burke said:
“While, fortunately, there were no majorly disruptive weather events so far this year, it is the non-appearance of any meaningful warm spell of weather that has been the major influencer of retail sales so far this summer. As the country sizzled in the sustained spell of warm weather in 2018, retailers experienced a significant uptick in sales. This has not been matched in 2019 and many retail categories are struggling to replicate 2018’s performance as a result.”
The report also reflects the impact Brexit related concerns have had on retail sales in the first half of the year.
Mr Burke continued: “After a brief respite during late spring and early summer from almost saturation levels of Brexit coverage in the first quarter of the year, we are now again entering into a further period of intense Brexit debate ahead of the October 31st deadline. The trajectory of consumer sentiment has matched this public concern with an initial recovery over the late spring and summer period now subsiding as consumers begin to reflect once more on how Brexit might impact their personal finances. This has led to a softening in sales and is a cause for concern as the sector looks toward its busiest period of the year.”
In looking forward to the rest of the year, he concluded: “There is no doubt that choppy waters lie ahead for the retail sector. The type of Brexit we experience will likely shape our ambitions for growth in the sector for the remainder of 2019 and 2020. Our consumer is now hyper conscious of the negative impact a no deal Brexit could have on their personal finances and that means they are likely to react quickly to any sub optimum outcome. We too must plan for the worst but hope for the best.”
Key trends set out in the Retail Ireland Q2 2019 Monitor include:
DIY and Hardware: After a robust Q1, the second quarter was a little more subdued in the DIY and Hardware sector. With gardening related categories so dominant in the April to June period, it was always unlikely that the weather conditions, which turbo charged 2018 demand, would be repeated. And so, it proved, with growth struggling to materialise in the period. However, half year growth remains solid, with underlying demand in non-seasonal categories continuing to point to a consumer that is confident to invest in home related categories.
Books, News & Stationery: This category has shown improvement on Q2 2018, due mainly to a mix of price inflation and stable volumes. Price inflation is driven by increases in cover prices in both books and newspapers. Stationery price inflation has been largely driven by commodity price increases over the period. The later timing of Easter moved volumes from Q1 to Q2, delivering a strong April performance year on year in this sector.
Supermarkets and convenience stores: Members report strong value and volume growth for the 6 months to June 2019 over the same period last year. However, month on month the sector is showing a fall between May and June 2019, and between June 2019 and June 2018. While poorer than expected weather was a contributory factor, falling consumer confidence levels in advance of Brexit could also be starting to bite.
Pharmacy: Despite a mixed performance across the quarter, the April to June period saw moderate growth in the Pharmacy category. Following a strong performance in May, June sales were significantly softer, largely due to the annualising of sales against good weather last year. Seasonal healthcare performed well in Q2 with hay fever and cough/colds delivering strong sales. Beauty performance in May was strong benefitting from new product development, whilst personal care, particularly sun care, has been impacted by lower temperatures this year.
Fashion & Footwear: Sales values and volumes in the fashion, footwear and textiles category fell back in the second quarter of 2019, posting declines of 3.6% and 2.4% respectively, when compared to the same period a year earlier. Poor summer weather when compared to the same quarter last year has clearly taken its toll. These figures underline the important role weather plays in driving sales in these categories and the delicate seasonality of the trade.