Christmas cheer for Irish retail - Christmas Retail Monitor 2018 - December 2018 - Retail Ireland
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Christmas
Retail
Monitor
2018
Christmas
cheer for
Irish retail
December 2018Christmas Retail Monitor 2018
Festive cheer to make tills ring
After what has been a tumultuous year of highs and lows for Irish retailers, we have now reached
a crucial juncture in terms of determining the end of year position for the sector. With year to date
sales growth of 2.8% and an array of positive macroeconomic indicators all pointing to growing
consumer spending power, you would be forgiven for thinking that all was rosy in the garden for the
sector. Unfortunately, however, challenges remain. This year we have seen storms and heatwaves
derail sales for extended periods in certain categories and sales performance more generally has
been patchy during 2018. Overall, erratic data has made it challenging for retailers and analysts alike
to draw any determined trend from the monthly sales numbers.
However, strong footfall numbers from Black Friday weekend suggest that the consumer is ready
to celebrate the festive season and with this now key promotional event out of the way, retailers are
getting down to the serious business of driving towards end of year targets. A minor dip in sales
in October on the previous month, while concerning, should not derail this optimism. Despite the
choppy nature of sales in the year to date, the overall trend remains positive with the sector likely to
build on the consistent sales growth of the last four years. The persistent gap between sales values
and volumes during that four-year period has continued to close to a point where there is now
almost like for like growth in both sales’ quantities and values. This suggests a return to more normal
margins in the sector and a move away from the heavy discounting of previous Christmas seasons.
While concerns around the migration to digital platforms and the impact of Brexit on consumer
sentiment remain in the background, retailers are hoping that for the next four weeks at least these
challenges can be set aside, and consumers will embrace the festival of shopping that the Christmas
season brings. There is no doubt the spending power is there, the challenge now for retailers is to
best position themselves over this key trading period to convince consumers to part with that hard-
earned cash in their stores and through their various other sales channels.
Season’s greetings from Retail Ireland.
Thomas Burke
Director
thomas.burke@ibec.ie
01 605 1558Christmas Retail Monitor 2018
All retail sales – as at October 2018
2.8% -0.5% 3.9%
On a year-to-date basis, the Comparing sales during On an annualised basis, the
combined value of Irish retail October to those a month total value of Irish retail sales
sales is up 2.8% versus 2017, earlier in September, total (excluding sales of cars and
with volume up by 4.3% over sales values fell by 0.5%, with sales in bars) was up 3.9%
the same period. volumes posting a 0.9% drop. compared with October 2017,
with a 4.8% increase in volume
over the same period.
Retailers look to sustain steady growth during Christmas period
As we enter the most important trading period of the year, Irish retailers remain
confident that the steady growth in retail sales throughout 2018 can be sustained into
the Christmas trading cycle. With growing disposable income, rising wage levels and
continually falling prices, the spending power of Irish consumers is greater now than
at any stage in the last decade. For this reason, retailers have good cause for such
optimism, but they remain acutely aware of the delicate nature of Irish consumer
confidence which has experienced peaks and troughs during the last year. A slight dip
in sales in October should not give raise to unnecessary concern for traders, but it does
act as a timely reminder of the continuing fragility of the sector.
Core retail sales (ex Cars & Bars)
(y-on-y, % ch)
10%
8%
6%
4%
2%
0%
-2%
-4%
2011 2012 2013 2014 2015 2016 2017 2018
YTD
Values VolumesChristmas Retail Monitor 2018
Macro trends
Labour market hits record high Employment Growth
There was an annual increase in employment of 3.0% or 6%
66,700 in the year to the third quarter of 2018, bringing total 4%
employment to 2,273,200. This compares with an annual
2%
increase of 3.4% or 74,100 in employment in the previous
quarter and an increase of 2.2% or 48,500 in the year to 0%
Q3 2017. Unemployment decreased by 19,700 (-12.1%) in
-2%
the year to Q3 2018 bringing the total number of persons
unemployed to 143,800. This is the twenty fifth quarter in -4%
succession where unemployment has declined on an annual -6%
basis. While the tightening labour market is presenting
-8%
retailers with a challenge in terms of staff recruitment
and retention, it is certainly positive news from a trading -10%
2018F
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
perspective as more people working results in greater
consumer spending power.
Retailers battle for share of Real Disposable Income
growing disposable incomes 10%
8%
The total value of consumer spending in the economy 6%
is on course to grow by 5% in 2018, with volumes 4%
2%
likely to grow by 3.8%. Unlike the previous peak in 0%
consumer spending between 2005 and 2008, this -2%
-4%
growth is not credit driven. During that period Irish -6%
households were borrowing about €2 billion per month -8%
-10%
to fund spending. The challenge for Irish retailers at
present is to capture a larger portion of that growing
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2011Q1
2011Q2
2011Q3
2011Q4
disposable income, which is currently going to service
housing costs and to the entertainment sectors.
Record breaking Christmas in store Consumer spending (excluding housing)
102
Current indicators show that total consumer 100
spending in December will be 3% higher when 98
compared to December 2017. On average Irish 96
households will spend €2,690 this Christmas. This 94
Index: 2008=100
is €866 more than any other month of the year and 92
90
is up from €2,654 in 2017 and €2,587 in 2016. While
88
there has undoubtedly been some Brexit related
86
consumer nervousness in recent weeks, this is 84
unlikely to disrupt consumers spending to any great 82
extent during the festive period. This will, however, 80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
be monitored closely by retailers in Q1 of 2019 as we
inch closer to exit day for the UK.Christmas Retail Monitor 2018
Macro trends
Cost of living falls back to 2008 levels Inflation Oct YTD
4%
Inflation levels remain very low in Ireland with the overall 3%
cost of living now on par with 2008. Further depreciation in 2%
1%
sterling which reduced import prices, falling oil prices and 0%
intense competition in the retail sector has kept inflation -1%
-2%
levels in check during 2018. Irish consumer goods prices
-3%
grew by just 0.2% in the year to the end of October 2018, -4%
while Ibec predicts full year inflation of just 0.6%. This is -5%
Total
Housing and utilities
Alcohol
Restaurants
Education
Transport
Health
Communications
Recreation
Clothing
Food
Miscellaneous
Furniture
significantly below the year to date EU average of 2.2%.
Key drivers of falling retail prices include electrical products,
footwear and food. While the relative levels of discounting
have eased in recent months, retailers remain sensitive to
consumer demand for low prices.
Ireland EU
Consumer sentiment Customer Sentiment Index
remains unpredictable
110
Consumer sentiment has been inconsistent throughout 100
2018, largely due to continued uncertainty around Brexit
90
and the general geopolitical and economic uncertainty
that have arisen. While a further drop in sentiment in
Index
80
October saw the index dip to a 46-month low, retailers
70
remain positive and this is reflected in Q3 sales numbers
where value growth increased by 3.9% compared to 60
the same quarter in 2017. Retailers will hope that this
50
emerging positivity will be carried into Christmas 2018 2012 2013 2014 2015 2016 2017 2018
and the downward trajectory of the consumer sentiment
index can be reversed.
Online remains the fastest E-commerce sales
growing channel
1,800,000
With sterling remaining weak, we have continued to see 1,600,000
high levels of online transactions with websites outside 1,400,000
the State throughout 2018. According to the Central 1,200,000
Bank of Ireland, on an annual basis, total e-commerce 1,000,000
€
expenditure continued to grow at a robust pace in 800,000
600,000
Q3 2018, rising by 16% to just over €4.6 billion. Of
400,000
this, €3.3 billion and €1.3 billion is attributable to debit
200,000
cards and credit cards respectively. In September, total
0
e-commerce expenditure rose by 11% year-on-year to
€1.5 billion. Total e-commerce spend is now likely to
exceed €16 billion in the full year of 2018.Retail Ireland
84/86 Lower Baggot Street
Dublin 2
T: + 353 1 605 1500
E: retail@ibec.ie
W: www.retailireland.ie
Ibec Head Office Galway Cork Brussels
84/86 Lower Baggot Street Ross House Knockrea House Avenue de Cortenbergh
Dublin 2 Victoria Place Douglas Road 89, Box 2
T: + 353 1 605 1500 Galway Cork B-1000 Brussels
E: membership@ibec.ie T: + 353 91 561109 T: + 353 21 4295511 BELGIUM
W: www.ibec.ie/membership E: galway@ibec.ie E: cork@ibec.ie T: + 32 (0)2 512.33.33
W: www.ibec.ie/west W: www.ibec.ie/cork F: + 32 (0)2 512.13.53
E: europe@ibec.ie
W: www.ibec.ie/europe
Limerick Donegal Waterford
Gardner House Bank 3rd Floor, Pier One Quay Street Waterford Business Park
Place Charlotte Quay Limerick Donegal Town Donegal Cork Road Waterford
T: + 353 61 410411 T: + 353 74 9722474 T: + 353 51 331260
E: midwest@ibec.ie E: northwest@ibec.ie E: southeast@ibec.ie
W: www.ibec.ie/midwest W: www.ibec.ie/northwest W: www.ibec.ie/southeast
Extend Ireland’s global reach. Join the conversation. @ibec_irl
www.linkedin.com/company/ibec
www.ibec.ieYou can also read
