A significant dip in consumer confidence and a growth in online shopping fuelled by a weak pound led to a “worrying” decline in retails sales over Christmas according to a spending report published on Monday.
The latest monitor from Retail Ireland, the Ibec group which represents the sector, described the crucial Christmas trading period as "disappointing across the board" as total sales were down 0.1 per cent compared with the same period last year.
Retail Ireland director Thomas Burke blamed the collapse in sterling for driving shoppers increasingly on to UK websites and sending others across the Border into Northern Ireland.
He also said that consumer confidence had dipped significantly over recent months “partly due to Brexit concerns”. This was was “particularly evident over Christmas, where sales were far below expected levels. Many retailers reported only marginal growth, or in some cases a decline on Christmas 2015.”
2016 was a year of two halves, with growth in the first six months followed by a slowdown from July to December.
Retails sales grew by 3 per cent between January and June compared with the same period in 2015, followed by only 1 per cent growth in the last six months of the year.
Competitive disadvantage
“While domestic retailers are moving quickly to adapt to the new environment, Government must aid them by taking urgent and decisive steps to address the high cost of doing business, particularly labour taxes, insurance, and rates,” Mr Burke said. “They need to ensure that domestic retailers are not at a competitive disadvantage to online and other markets.”
When broken down, the figures show a levelling off in growth in service stations, with overall fuel consumption flat in the last three months of the year.
The last quarter was “disappointing” for department stores, reflecting the fiercely competitive nature of this category. “A weak sterling has continued to make cross-Border shopping attractive and online growth with Irish retailers slowed dramatically, as customers purchased from British-based online retailers,” the report said.
Furniture and home accessories was one of the best performing retail categories throughout 2016, and this continued in the last quarter of the year.
It was a different story in the struggling computer and electronics sector – the worst performing category during the critical December trading period compared with the other major retail categories.
It was a happier Christmas for supermarkets. As Christmas Day fell on a Sunday, shoppers had two extra days in the run up to buy groceries. This led to steady growth over the last quarter of 2016, with promotions playing a significant part in volume growth particularly.
