A weak pound and pressure on retailers to offer bigger discounts means Irish consumers can expect to get better value this Christmas than last as households look set to significantly up their spending.
According to the Christmas Retail Monitor from Retail Ireland, Irish consumers will spend an average of almost €2,600 in December, up €720 on any other month of the year and a slight increase on December 2015.
The monitor also reports that spending this December is likely to total €4.21 billion, up from €4.05 billion in 2015. It suggests that key indicators pointed to retail prices remaining low as a result of aggressive competition.
The Ibec group which represents the retail sector said the challenge for Irish shops this Christmas was to ensure spending buoyancy is felt locally. It said consumer prices had fallen every month since the Brexit vote as currency shifts influenced retailers’ pricing strategies.
While prices are falling, there has been a rise in disposable income across the economy with gross income up 1.8 per cent in the first half of 2016, having grown 5.3 per cent in 2015.
With goods prices in the first 10 months of this year down 8.5 per cent on the same period three years ago and the labour market improving, consumers should be in a stronger position to spend when compared to last Christmas, the monitor says.
Jobs market
In the third quarter of the year, the employment market topped two million – the highest level of employment recorded since the end of 2008 and the number of people in work today is almost 3 per cent higher than it was last Christmas.
The monitor also highlights significant growth in ecommerce transactions in the run-up to Christmas, with Central Bank statistics showing ecommerce transactions recorded on Irish debit and credit cards up 20 per cent from €1 billion to €1.2 billion between July and September as the value of sterling fell.
"The next few weeks are by far the most important trading period of the year," said Retail Ireland director Thomas Burke. "While retail sales growth has softened in recent weeks, retailers remain optimistic."
He said an increase in the numbers at work and a rise in disposable incomes as well as falling prices should lift the consumer mood and translate into increased sales.
“Currency pressures and a drop in consumer sentiment have made recent months difficult for many retailers. But the retail sector’s challenge is the consumer’s opportunity,” said Mr Burke. “The coming weeks will see heavy pre-Christmas discounting, and a new year sales bonanza.”
Border shopping
A separate survey from the AA suggested an increased number of shoppers in the Republic were set to cross the Border or go online in search of bargains priced in sterling this Christmas.
An online poll of over 9,000 people found that a quarter intended leaving the country between now and Christmas to shop. Northern Ireland and the UK were the top destinations, with 12 per cent planning a trip to Northern Ireland and a further 5.3 per cent intending to visit Great Britain.
These figures represent a significant increase on last year. In a November 2015 poll, 7.3 per cent said they were planning a trip to Northern Ireland.
"It is very likely that the currency is the key factor but it's probably not the only one," said the AA's director of consumer affairs, Conor Faughnan. "There is also a bit more confidence around this year. Traffic volumes are up, employment is up and people are spending more generally. In AA Roadwatch, we are expecting cities and city car parks to be very busy in December."
