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Signs of recovery raise hopes in Ireland

Rising tourist numbers and demand for investment pieces are driving a recovery in Ireland – and sales forecasts for the next few years give more cause for cautious optimism.

The Irish clothing market is set to grow in value terms this year for the first time since 2006 – a welcome surprise for retailers given the country has been blighted by low consumer confidence, VAT rises and a weakened economy over the past five years.

Figures from Mintel predict the clothing retail market in the Republic of Ireland will grow in value this year from £2.95bn to £2.97bn, and retailers are reporting that trade so far this year has been holding steady. While most are cautious about the outlook, positive sentiment for the future of the Irish fashion retail sector is increasing.

At premium outlet centre Kildare Village, based just outside Dublin, footfall exceeded 2.2 million visitors in 2011, and the outlet experienced a 24% increase in comparable sales growth during the same period.

Numbers

Value Retail, Kildare Village’s parent company, says this trend has continued into 2012 and predicts that footfall this year will increase to about 2.5 million visitors, fuelled by growth in tourism.

“We’ve had a great start to this year,” says Maria McGovern, retail and marketing director at Kildare Village. “We opened here in July 2006 with 14 brands and we’ve grown every year.”

According to Nigel Blow, chief executive of Dublin department store Arnotts, 2012 has so far been a good year for the retailer. “Consumer confidence is still very fragile,” he says. “But the decline in sales does seem to have come to an end and we are now seeing slight growth.”

A spokesman from 10-store lifestyle mini-chain Avoca also reports that trade is better than last year. “Although consumer confidence is not great here in Ireland,” he says, “I think it is much better than it has been over the past two years.”

So what’s driving the uplift in trade? Value Retail says at Kildare Village, tourism has played no small part in ensuring the outlet’s success. Inbound tourism into Ireland grew 7% in 2011, and in the first quarter of 2012 Kildare Village saw a 94% rise in the number of Chinese visitors shopping at the centre.

“We have a shuttle bus that meets every train coming into Kildare town from Dublin,” says McGovern. “It then brings people out here to the village.”

On the back of rising tourist numbers, Value Retail’s Chic Outlet Shopping villages, of which Kildare is one, has teamed up with sales agency AviaReps to promote its shopping villages as tourist destinations across Europe and in 12 non-EU markets.

Blow agrees that tourism has helped business. For spring 13, Arnotts has introduced luxury accessories brands including Longchamp and Coach, thereby capitalising on a growing number of Chinese tourists visiting the Irish capital.

He says: “They want to shop luxury brands. It’s because of this that we’ve introduced new brands. We’ve improved our offer and we are seeing sales uplift as a result of those areas.”

Louise Kennedy, designer and owner of luxury Irish label Louise Kennedy, which has stores in Merrion Square, Dublin, says her business has benefitted from clients wanting to invest in luxury garments that reflect higher production standards, hence Kennedy has put an emphasis on occasionwear.

She says: “When the market experienced a downturn in Ireland we focused on where we could bring more value to our clients. As a result, we’ve focused on occasionwear, weddings in particular, and a professional woman’s wardrobe. We also looked at adding more luxury to the product; for example, all our tailored garments are lined with pure silk.”

So while the luxury end of the market is bolstering the Irish clothing market, what about the high street? Samantha Bain, general manager of Irish-based young fashion retailer A Wear, says the volume market continues to be “promotion-led”.

“Domestic trade is behind last year, which is why the business is focused on driving international sales through ecommerce and wholesale,” she says.

However, the general trend of customers splashing out more, but less often, on investment pieces is also permeating the high street sector.

Bain says: “We’ve seen uplifts in workwear which we think reflects the current state of the job market, with young women wanting to look their best for work and interviews.”

The appetite for investment-led pieces, despite the downturn, is something on which both Blow and McGovern agree. “In a tough economy you need to have a good understanding of your customer,” says Blow. Kennedy adds: “A recession is a good time to re-evaluate your business model.”

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