The volume of Irish retail sales (i.e. excluding price effects) dipped by
3.1% in December 2010 when compared with December 2009 and there was a monthly
decrease of 1.1% - - December was a month of record temperature lows which
impacted on retail activity in the key Christmas period.
The Central Statistics Office (CSO) said today ifIf Motor Trades are
excluded, the volume of retail sales decreased by 3.6% in December 2010 when
compared with December 2009, while there was a monthly decrease of 2.5%.
Motor Trades (-8.0%), Fuel (-21.7%), Furniture and Lighting (-21.5) and Bars
(-9.9%) were amongst the ten categories that showed year-on-year decreases in
the volume of retail of retail sales this month. Non-Specialised Stores (+2.2%),
Department Stores (+5.3%) and Electrical Goods (+5.1%) were the only categories
that showed year-on-year increases in the volume of retail of retail sales this
month.
The value of retail sales decreased by 4.1% in December 2010 when compared
with December 2009 and there was a month-on-month change of -0.9%. If Motor
Trades are excluded, there was an annual decrease of 3.3% in the value of retail
sales and a monthly decrease of 1.3%.
Provisional estimates are now available for the final quarter of 2010 and
these figures show that the volume of retail sales decreased by 0.6% year on
year in the fourth quarter, with the value decreasing by 2.1%. If Motor Trades
are excluded the volume of retail sales decreased by 1.8% year on year in the
final quarter of 2010 and the value of retail sales decreased by 2.4%.
Annual estimates show that the volume of retail sales increased by 0.9% in
2010 compared to 2009 and the value of retail sales decreased by 2.0% in 2010
compared to 2009. If Motor Trades are excluded, the volume of sales decreases by
1.8% in 2010 compared to 2009 and the value decreased by 4.3% in 2010 compared
to 2009.
Davy Research economist, Conall MacCoille, commented:
Irish retail sales decline in December
- Today's data from the Central Statistics Office indicate that Irish
retail sales declined in December – in value terms by 0.9% and in volume
terms by 1.1% – compared with November
- In annual terms, this means that the value of retail sales was 4.1%
below the level in December 2009 and 3.1% lower in volume terms
Poor retail sales figures indicate that the strength in the export sector
is not yet translating into consumer spending
- Following positive GDP growth in Q3 of 0.5%, driven by the export
sector, a key question for the Irish economy is when domestic demand may
begin to stabilise
- Today's figures complete the data for the final quarter of 2010. They
indicate that Q4 retail sales fell by 0.5% in both value and volume terms
relative to Q3
- So, at least for now, the retail sales figures provide little evidence
that Irish domestic demand is beginning to stabilise
 |
Source: Davy Research
|
Retail Ireland, the IBEC group that represents the retail sector,
today said that new CSO retail sales figures for December reflected the impact
of the bad weather on sector. 2010 was the third year in a row that the value of
core retail sales fell. The group said that the cost of running a shop had not
fallen and called on landlords to reverse all rent increases under the last rent
reviews and for the Joint Labour Committee to reverse its decision to increase
pay rates.
Retail Ireland director Torlach Denihan said: "Core retail sales (excluding
cars and bars) were poor in December and probably reduced the annual performance
by 1%. The weather along with the tough Budget certainly had a major negative
impact.
"While 2010 was a difficult year, however, the rate of decline in core retail
sales has slowed. Sales will probably fall for some time to come but there may
be some grounds to hope that the retail sector will bottom out in 2011. The big
unknown is how much consumers are going to cut back in response to the impact of
the budget tax changes on their pay packets.
"Last year was the third year in a row in which the value of core retail sales
fell and the cumulative decline is now over 20%. However while prices have been
cut to the bone, the cost of running a shop has not fallen. As over 50,000
retail jobs have been lost since the start of the recession Retail Ireland calls
for landlords to reverse all rent increases under the last rent review and the
Joint Labour Committee to reverse its decision to increase pay rates,"
concluded Denihan.
David Fitzsimons, Retail Excellence Ireland CEO said: "The CSO's
retail data paints a similar picture to our own - the decline in retail sales
that has affected Ireland's retail industry over the past three years continues.
There is no reason to believe that this trend will come to an end. As a result
we anticipate that January will see roughly 2,700 redundancies within the retail
industry.
“We eagerly await the publication of proposals from Fine Gael and Labour
to help domestic economic activity and the retail industry in particular.”
The main findings from REI's own Irish Retail Industry Performance Review for
Q4 2010 survey include:
- Like-for-like sales declined by 3% in October, 3.7% in November and 3.7%
in December
- Footwear was the strongest performing sector in the industry and the
only one to record overall growth of just over 3%. This resulted from the
purchase of functional footwear items suitable for the adverse weather
conditions in Q4 2010
- Ladieswear was the worst performing retail sector in terms of sales,
reporting an 8.64% drop compared with the same period in 2009. The Gift and
Homeware sector also experienced a very challenging quarter, seeing declines
of 7.43% in November and 8.12% in December
- Pharmacy, Menswear and Jewellery all saw like-for-like sales volumes
decline by over 3% in Q4 2010
- Rent cost as a percentage of sales increased from a Q4 2009 level of
9.96% of sales to a rate of 10.57% in Q4 2010, indicating that even where
rent reductions were given, these did not keep pace with the fall-off in
sales
- Wage cost as a percentage of sales improved very slightly to 14.32% in
Q4 2010, compared with 14.77% in Q4 2009
- The Average Transaction Value (ATV) continued to decline. It is now
€41.67 compared with €45.29 in Q4 2009 – a fall of 8%
- Sales per square foot in Q4 2010 declined by 9% when compared to Q4 2009
 |
Source: Goodbody
|
Goodbody chief economist, Dermot O'Leary, commented:
Record low temperatures and record high uncertainty undoubtedly hit retail
sales in December. Trends over the coming twelve months will be influenced by
underlying disposable income trends too.
Retail sales hit by weather & uncertainty in December -
Unsurprisingly, retail sales were weak in December. Total sales fell by 1.1%
mom, with core sales falling by a larger 2.5%. On an annual basis, retail sales
volumes fell by 3.1% in December (+0.5% in November), while the pace of decline
in core sales accelerated to -3.6% (from -1.0% in November). It is impossible to
disentagle the two major influences on consumers in December - uncertainty
around the IMF/EU deal and the weather - but there is no doubt that both
impacted negatively.
Price decreases spurring demand in some categories - While most
categories continue to show continuing weakness, there are some that are seeing
gains. The best performing is department stores, where sales volumes were up
5.3% yoy in December. Unsurprisingly, price discounts have to be used to
increase demand, but even allowing for that, the value of sales in department
stores grew by 1.3% yoy. Although deflation pressures overall seem to be easing
(deflator at lowest level since Q4 2008), it continues to be a problem for
retailers who are struggling with fixed, and sometimes rising, rental costs.
Fall in retail sales in prospect for 2011 - Trends at the start of 2011
will determine whether the political and economic uncertainty is having more
lasting impacts. However, underlying trends in disposable income are likely to
have the most important impact. In 2010, retail sales overall actually increased
by 1% in the full year, all due to the increase in car sales (core sales fell by
2%). At this point, a fall in retail sales of c.2% is in prospect in our view.