Green shoots of recovery are sprouting in Ireland, but retailers warn that the improvement is fragile and tax increases may hinder further growth.
Retailers across Ireland told Drapers they were “cautiously optimistic” that trade will continue to gain ground this spring, yet Irish consumers remain “prudent” with their discretionary spend.
Simon Smith, commercial director of Dublin department store Clerys, said: “The mood has improved with the general pick-up in the Irish economy but it’s fragile – I don’t think anything is running away with itself.
“People are still being cautious and the Government is putting a greater burden on shoppers with the local property tax charges, which has had a knock-on effect.”
Jonathan Shaw, managing director of Shaws, which has 15 department stores in Ireland, also cited the local property tax – charged on the market value of all residential properties in Ireland – as dampening consumer spend since it was introduced last July, but said other burdens were a factor.
“The new property tax is just one thing across many extra charges,” he said. “All sorts of things, such as water charges and septic tank charges, have increased the cost of doing business. On the other side, things like the universal social charge [a tax brought in during 2011] are biting customers.”
David Fitzsimons, chief executive of the country’s largest retail trade body Retail Excellence Ireland, said there had been a “change of mindset” since the Celtic Tiger days, with Irish consumers as shoppers seeking out a bargain.
“Fashion is one of the most distressed sectors here and although we have seen a small amount of uplift in like-for-like sales, margins are under pressure as consumers continue to wait for sales. Irish shoppers are still price-conscious and would postpone shopping trips in order to wait for discounts,” he said.
Michael Walsh, the marketing director of footwear and clothing brand Dubarry, which has a flagship store in Dublin, agreed optimism was yet to be reflected in sales.
“I feel consumer confidence generally is up since last year, but that’s not translating into results as yet. At our store in Dublin, tourist footfall is going up sharply but I’m not sure the Irish consumer is really feeling the recovery yet. Clothing retail is flat compared with last year but least we’re not going backwards.”
However John McElhinney, owner of McElhinney’s department store in Ballybofey, County Donegal, said shoppers were beginning to increase their in-store spend: “Spring has started well and it’s the best season we’ve had in a long time. For the last six years people have been very cautious but they are starting to spend a bit more now. I’m feeling optimistic about the rest of 2014.”
Amanda Pratt, designer at lifestyle retailer Avoca Anthology, also said the “indicators were good” for continued growth this year.
She said: “I’m cautiously optimistic. Employment is up, we’ve had very good financial news from the Government, so the indicators are good. Speaking for Avoca, we’ve had a good first quarter, online in particular has been great, up 128% this year. The recovery will take time, it’s one foot in front of another, but over the next year, or couple of years, I expect things to get back to normal.”