THE RATE of decline in retail sales is levelling off, but consumers are spending the least amount per transaction in more than two years, according to the latest review of the retail sector by Retail Excellence Ireland (REI).
The average transaction value of consumers’ purchases was €45.64 in the third quarter, down from €66.74 this time last year, according to REI. It said the lower spending was the result of both falling prices and more cautious consumers.
The organisation, which includes more than 580 retail companies representing 8,500 stores (around a third of all retail stores in Ireland), said the timing of the Budget, which is scheduled for December 9th, later than is usual, would have a likely negative impact on shopper spending over the valuable Christmas period.
This, in turn, would have serious consequences for the retail industry, it warned.
“The unpalatable announcements expected in the December Budget are likely to kill consumer spend over Christmas,” said REI chief executive David Fitzsimons.
“Consumer sentiment is already poor, but people are now living in fear of what proposed cuts lie ahead in December and as a result, they are very nervous about spending what little cash they currently have at their disposal,” he said.
“Many retailers have been simply trying to make it through to Christmas and in many cases, their survival is dependent on a strong festive trading period. It is imperative that the Government approach the Budget in terms of what can be done to improve consumer confidence and stimulate spending.”
According to REI figures, like-for-like retail sales – sales in existing stores – in the third quarter fell 16.5 per cent compared to the same period in 2008.
Menswear continues to be the worst performing category of sales, REI said, with sales plummeting almost 24 per cent year-on-year. Giftware, homeware, footwear and jewellery also continued to fare badly.
However, sales are now stabilising on a quarterly basis, with average retail sales per square foot up 7 per cent on the last quarter.
Rent costs as a percentage of sales is also falling, REI said.
The cost of rent as a percentage of sales fell from an average of 13 per cent in the second quarter to 11 per cent in the third, but REI said this was still higher than the norm of 8.5 per cent in other European states.
“The good news from these results is that the rate of decline appears to be levelling off for 2009, with July in particular holding up comparatively well,” said Mr Fitzsimons.
