Retailers braced for major slump in Christmas sales

Amhran Nua

Looks like a lot of retailers are preparing for a serious shortfall in sales this year. Is the main cause shopping in the North, or would it be happening anyway? Have there been any studies of purchases made abroad via the internet?

Half of businesses expect to lay off some staff in the countdown to Christmas, a new survey has revealed.

The findings of a new study carried out by Retail Ireland of employers' lobby group IBEC come as retailers brace themselves for a major drop in sales this Christmas.

Two-thirds of IBEC members surveyed said they expected profits to be down on the same period last year, while 46pc said they expected to introduce redundancies before the end of the month.

The results come in the run-up to Christmas, which is normally the busiest time of year for retailers.

IBEC's Retail Ireland Director Torlach Denihan said the survey was "broadly based".

David Fitzsimons, the Chief Executive of Retail Excellence Ireland (REI), echoed the results of the survey. He claimed businesses were "concentrating on costs" in order to balance the books.

"That means wage cuts and job losses," he told the Irish Independent.

Month-on-month consumer spending has been down by an average of 15pc this year on 2008, according to the Central Statistics Office. Business chiefs last night said they expected this drop to be sustained as Christmas approaches.

Mr Denihan added that the December Budget would also have a say in people's spending habits over the holiday season.

"I think what people see on Budget day will be critical for the month of December."

jimmmy

Amhran Nua wrote: »

Looks like a lot of retailers are preparing for a serious shortfall in sales this year. Is the main cause shopping in the North, or would it be happening anyway?

Bit of both, I would say. As less + less tax and vat is collected in this country, the govt will have to borrow more to give to people who promptly go across the border to spend it on drink + food.

Amhran Nua

jimmmy wrote: »

Bit of both, I would say. As less + less tax and vat is collected in this country, the govt will have to borrow more to give to people who promptly go across the border to spend it on drink + food.

How many people though, I can't see too many people going North unless they are either buying big ticket items like TVs or computers, or live fairly close to the border. The internet purchases are an interesting one though, as far as competition with retailers goes. Whats the best solution to that issue, long term, or is there one?

jimmmy

Amhran Nua wrote: »

How many people though, I can't see too many people going North unless they are either buying big ticket items like TVs or computers, or live fairly close to the border.

It was reported in the Sunday Indo last week that it was 250,000 people
from south of the border who go north. Certainly many people close to the border do. Look around any car park in a supermarket in Newry, Enniskillen, Derry etc and see how most of the cars are southern. Listen to the accents of the shoppers in the shops there. See the full trolleys. See the prices. 15 bottles of Budweiser for 8 quid. A litre of branded whiskey for 15 quid. 2 litres of milk for 99 pence.

bangersandmash

Amhran Nua wrote: »

The internet purchases are an interesting one though, as far as competition with retailers goes. Whats the best solution to that issue, long term, or is there one?

Is it really an "issue" that needs to be resolved? Is ordering from amazon.co.uk depriving the exchequer if Amazon are employing people in Ireland, while presumably also contributing a considerable amount in taxes encouraged by our friendly tax regime?

If there is a solution, then presumably it will involve Irish retailers providing similar net experiences to their rivals and pricing their products to compete with other online retailers. Unlike bricks-and-mortar stores across the border, it's trivial for consumer to compare prices, and unsurprising if they go for the cheaper option.

Amhran Nua

bangersandmash wrote: »

Is ordering from amazon.co.uk depriving the exchequer if Amazon are employing people in Ireland

What if they aren't though, like I'd imagine 90% of the sites that people order from.

bangersandmash wrote: »

If there is a solution, then presumably it will involve Irish retailers providing similar net experiences to their rivals and pricing their products to compete with other online retailers. Unlike bricks-and-mortar stores across the border, it's trivial for consumer to compare prices, and unsurprising if they go for the cheaper option.

Agreed. Long term there may be no other option for retailers but to follow that trend, which means ultimately less floor space and staff required, if any - they can just position themselves in any EU country.

jimmmy

It must be embarassing for the govt, and the Tanaiste in particular who sees many people in her constituency , to have to be borrowing so much money ( 25 billion ) + so much of it spent by the refugees going across the border ? We cannot even sell imported food + drink to each other now ?

Absurdum

jimmmy wrote: »

It was reported in the Sunday Indo last week that it was 250,000 people
from south of the border who go north.

that figure was disputed in the Tribune last Sunday by the MD of the Nielsen Company
http://www.tribune.ie/article/2009/nov/08/analysis-of-grocery-sector-all-over-the-shop/

max 73

Amhran Nua wrote: »

How many people though, I can't see too many people going North unless they are either buying big ticket items like TVs or computers, or live fairly close to the border. The internet purchases are an interesting one though, as far as competition with retailers goes. Whats the best solution to that issue, long term, or is there one?

there is - until everyone wakes up and realises that our cost base (rates, vat, etc..) is too high and requires adjustment downwards - political will here but probably none will be offered, then can prices be reduced to a sensible level which offers the customer/consumer a choice...go to local store or shop online

the online shopping will continue to grow if action is not taken quickly - after i pay my weekly taxes to govt coffers and bills, mortgage, etc and whats left is my disposable income so therefore if i need something and can get it cheaper online, then i'll buy online....also if its cheaper in the local store, thats where i'll go - simple as that....its the consumers cash and they will dictate where it will be spent - CHEAPER option will win

jimmmy

Absurdum wrote: »

that figure was disputed in the Tribune last Sunday by the MD of the Nielsen Company
http://www.tribune.ie/article/2009/nov/08/analysis-of-grocery-sector-all-over-the-shop/

I read that report and it seems to be nitpicking. I guess nobody knows for sure how many households from south of the border do their shopping in the north. Obviously the percentage would vary from household to household...I know some who go up every 2 weeks, others who go up twice a year .
Look at the car parks ( its mostly southern cars ) / see the trolleys / hear the accents in the aisles + judge for yourself.

murphaph

Cost of business is simply much higher in the south for a start. Higher energy and insurance, higher wages, higher VAT. If we pay ESB staff etc. a load more than NIE staff then electricity will cost more. If we allow silly payouts in court for litigation, insurance will be higher. All of this contributes to higher costs which are all passed on.

Retailers themselves to an extent are guilty of not passing on savings when possible sometimes too, but the overall cost base, like with every industry in Ireland, is too high relative to our competitors and MUST fall.

jimmmy

murphaph wrote: »

Cost of business is simply much higher in the south for a start. Higher energy and insurance, higher wages, higher VAT. If we pay ESB staff etc. a load more than NIE staff then electricity will cost more. If we allow silly payouts in court for litigation, insurance will be higher. All of this contributes to higher costs which are all passed on.

Retailers themselves to an extent are guilty of not passing on savings when possible sometimes too, but the overall cost base, like with every industry in Ireland, is too high relative to our competitors and MUST fall.

+1. Well said. Ask any business person in the North what they pay for wages, electricity, accountancy fees, deliveries + other overheads + you will be shocked. If the govt brought down the minimum wage here + the dole it would help, but its too late for many people / businesses.

Darragh29

Someone said to me yesterday, "this Christmas is going to be very quiet"... When we chatted a bit more about it, we came to the conclusion that the only key difference would be that a lot less would be spent on presents. Toys that were being bought for a couple of hundred quid a few years ago, that kids never actually used in some cases, are not on the agenda now...

However we agreed that food, drink and good company are still on the agenda. In a way, maybe we'll be able to take back Christmas...

jimmmy

Darragh29 wrote: »

Someone said to me yesterday, "this Christmas is going to be very quiet"... When we chatted a bit more about it, we came to the conclusion that the only key difference would be that a lot less would be spent on presents. Toys that were being bought for a couple of hundred quid a few years ago, that kids never actually used in some cases, are not on the agenda now...

However we agreed that food, drink and good company are still on the agenda. In a way, maybe we'll be able to take back Christmas...

It may be ok for some fellows who sell food + drink ( esp in the North ), but for many other people - inc self employed who are not entitled to the dole - they struggle to pay the bills. Others have seen pensions + savings decimated.

thebman

People still go north for drink, guys in work were talking about for past few weeks. About half seem to be thinking of going up north just because of the savings on alcohol.

So we really need to look at our luxury tax rates as people are buying luxuries up north. TV's etc... also game up and most people in here are buying the smaller things online and only buying food in Irish stores.

Vat rate needs to come down to make it less worthwhile for people to go up north. If you want to do it in a tax neutral way, bring more people into tax net and everyone will be paying the tax that way.

Sneaky taxes aren't that sneaky and the people are seeing how much cheaper it is up north so the government needs to adjust it IMO.

Mr.Micro

People would not be going north if the retailers got there act together and cut a few prices along with getting in quality stuff instead of all that grey rubbish with big price tags. Prices have been too high too long here in the south and as long as there is better value up north people will continue to shop there. In Europe people can shop in whatever country is cheaper so why should we be different?

jimmmy

Mr.Micro wrote: »

People would not be going north if the retailers got there act together and cut a few prices along with getting in quality stuff instead of all that grey rubbish with big price tags. Prices have been too high too long here in the south and as long as there is better value up north people will continue to shop there. In Europe people can shop in whatever country is cheaper so why should we be different?

Why do you not set up a shop and see how easy it is so ? I am sure you will make a fortune;)

1huge1

I agree with a lot of what has been said and one thing that seems to be the common denominator is alcohol.
My opinions on a VAT reduction aside I think the excise duty on alcohol has to be lowered.
In the latest report from the CPI it shows an increase in the prices of ''tobacco and alcohol'' over 7% in the year when most other products/services have showed a decline. Now this might be due to the increase in excise on tobacco in April's emergency budget but it cannot be that alone.

I remember hearing recently that we have the 2nd highest excise duty on Alcohol in the EU, I believe the government will actually make more money this christmas by reducing the excise duty on alcohol.

Also of course the publicans need to reduce their prices but my point was more for alcohol bought in off licences etc...

Mr.Micro

jimmmy wrote: »

Why do you not set up a shop and see how easy it is so ? I am sure you will make a fortune;)

If its that tough think about the consumer struggling to get by on rip off prices for as long as I can remember. I am only too happy to shop where I get quality and value ( not often in Ireland):)

jimmmy

Mr.Micro wrote: »

If its that tough think about the consumer struggling to get by on rip off prices for as long as I can remember. I am only too happy to shop where I get quality and value ( not often in Ireland):)

Why not do your bit for the Irish economy and set up a shop south of the border, and see if you can make a living out of paying Irish taxes + overheads . It should be extremely easy + lucrative if all your competitors are ripping people off

Mr.Micro

jimmmy wrote: »

Why not do your bit for the Irish economy and set up a shop south of the border, and see if you can make a living out of paying Irish taxes + overheads . It should be extremely easy + lucrative if all your competitors are ripping people off

If the retailers were not making money then they would not be in business. The problems for them is that they are used to maximum profits and cannot accept that those days are gone. If they cannot handle the economic conditions then become a consumer and see what it is like or get another paye job. They have to shape up or ship out.

jimmmy

Mr.Micro wrote: »

If the retailers were not making money then they would not be in business.

Many are going out of business. Wages in retail are not as high as in the public service, for example, so its not as if the sector is making a fortune.
As I said , Why not do your bit for the Irish economy and set up a shop south of the border, and see if you can make a living out of paying Irish taxes + overheads ????????????????????????????????????????????????
It should be extremely easy + lucrative if all your competitors are ripping people off

drumaneen

Amhran Nua wrote: »

How many people though, I can't see too many people going North unless they are either buying big ticket items like TVs or computers, or live fairly close to the border. The internet purchases are an interesting one though, as far as competition with retailers goes. Whats the best solution to that issue, long term, or is there one?

COMPETE - (do we know how to do that here?) Amazed you had to ask

Mr.Micro

jimmmy wrote: »

Many are going out of business. Wages in retail are not as high as in the public service, for example, so its not as if the sector is making a fortune.
As I said , Why not do your bit for the Irish economy and set up a shop south of the border, and see if you can make a living out of paying Irish taxes + overheads ????????????????????????????????????????????????
It should be extremely easy + lucrative if all your competitors are ripping people off

Going out of business like all the people losing jobs but the retailers think they can continue to charge what they like. it does not seem to have dawned on them, less jobs = less money in the economy. I make my contribution to the Irish economy like most others but I will not pay rip off prices no matter what, and if I was lucky enough to be in the retail sector I would not have time to be posting on boards but would be busy trying to compete and not whinge whinge because people shop where prices are cheaper.

lmimmfn

Give me an incentive to shop in ireland rather than in the north?, cigs are cheaper, wine is a lot cheaper and on regular shopping there are decent savings to be had.

Id easily buy all local if the price was the same, its not,so it suits me in the current climate to save my money for more important things.

Save save save, its all gonna get worse, loads of tax increases coming.

jimmmy

Mr.Micro wrote: »

and if I was lucky enough to be in the retail sector .......

Why not get a job in the retail sector so ?
Or answer the question already asked : Why not set up a shop south of the border, and see if you can make a living out of paying Irish taxes + overheads ????????????????????????????????????????????????
It should be extremely easy + lucrative if all your competitors are ripping people off

Mr.Micro

jimmmy wrote: »

Why not get a job in the retail sector so ?
Or answer the question already asked : Why not set up a shop south of the border, and see if you can make a living out of paying Irish taxes + overheads ????????????????????????????????????????????????
It should be extremely easy + lucrative if all your competitors are ripping people off

Maybe they should set up another NAMA type scheme for the poor retailers here in Ireland and the taxpayer can bail them out as well. If I could not make a living out of retail then I would call it day. Its all about choice, nobody is forcing people to be retailers.

NewDubliner

Amhran Nua wrote: »

Looks like a lot of retailers are preparing for a serious shortfall in sales this year. Is the main cause shopping in the North, or would it be happening anyway? =

Uncertainty must play a role. Absolutely everybody, public or private sector has no idea of how much money they'll have next year.

I know a number of families who have switched to a 'Chris Kindle/Secret Santa' model, which will reduce their spending on presents twenty-fold.

And then, it's going to be so unfashionable for public sector or bank workers to have big Christmas parties.

Perhaps this will be the year we took Christmas back from the retailers?

Absurdum

murphaph wrote: »

If we pay ESB staff etc. a load more than NIE staff then electricity will cost more.

Average pay in NIE for 2008 was about £55,000stg excluding pension costs

Average ESB pay in 2008 was €75,000 including pension
http://www.tribune.ie/article/2008/may/04/esb-the-semi-state-with-the-best-salaries/

NIE is a lot smaller and doesn't have an equivalent to ESBI who make a lot of money internationally.

thebman

Mr.Micro wrote: »

Maybe they should set up another NAMA type scheme for the poor retailers here in Ireland and the taxpayer can bail them out as well. If I could not make a living out of retail then I would call it day. Its all about choice, nobody is forcing people to be retailers.

lol good luck buying your bread when there is no bakery :P

I agree in general though, many of the retailers around are in the wrong business and there businesses were only ever sustainable as long as people spent crap loads of money on things they didn't need.

irish_bob

Mr.Micro wrote: »

If the retailers were not making money then they would not be in business. The problems for them is that they are used to maximum profits and cannot accept that those days are gone. If they cannot handle the economic conditions then become a consumer and see what it is like or get another paye job. They have to shape up or ship out.

same could be said about the public sector