'Brexit shadow' is cast over retailers in the lead-up to Christmas period
Published 16/11/2016 | 02:30
A 'Brexit shadow' is hanging over Ireland's retail sector as Christmas approaches, an Ibec industry body has warned.
The slump in Sterling following the June vote has resulted in a rise in the number of shoppers heading to Northern Ireland, while there's been a surge in the number of Irish people shopping online on UK websites, according to the Ibec business group's Retail Ireland unit.
"Central Bank statistics show that e-commerce transactions recorded on Irish debit and credit cards jumped by 20pc from €1bn to €1.2bn between July and September as Sterling fell," said Retail Ireland director Thomas Burke.
"This was way above trend and is likely to have mostly gone to UK-based online retailers."
The last time the euro neared parity with Sterling in 2009, shoppers flooded across the Border to towns including Newry and Banbridge.
Some businesses over the Border have already been offering £1 for €1.
The current attraction of shopping in Northern Ireland is also amplified by the fact that some British retailers operating here have still not adjusted euro prices in Irish outlets to reflect the slump in Sterling.
Mr Burke said that the Irish retail sector was "working hard" to adjust prices to reflect the new reality.
"Goods prices have fallen by 2.9pc on average over the last quarter and, in the first 10 months of the year were down 8.5pc on the same period three years ago," said Mr Burke.
He insisted there was "limited scope" for retailers to reduce prices further.
"Retailers are squeezed on the one side by a consumer that is demanding price reductions to reflect the Sterling devaluation, and on the other by UK-based suppliers seeking price increases to offset increasing input costs," he said.
"This pressure has the potential to destroy margins in the sector."
In a report published this morning by Retail Ireland, the Government is asked to prioritise support for the retail sector in coming months "to ensure recent currency shifts are not allowed to erode the jobs-intensive retail recovery".
Mr Burke said: "A resolute focus on cost competitiveness is required. As Sterling drops and competitive pressures rise, a renewed effort is needed to keep labour, energy, regulatory and insurance costs in line."
Yesterday, Cork-based retail group Musgrave, which controls chains including SuperValu and Centra, said that it had reached an agreement with global grocery brand giant Unilever following a pricing dispute.
Unilever had wanted to hike prices it charges Musgrave for some products, with the Cork business having refused to accept the increases.
That prompted Unilever to initially stop selling Musgrave any items from its huge brand portfolio, which includes well-known products such as Lyons Tea, Dove, HB and Lynx.
The price increases were being sought by Unilever despite the fall in Sterling.
Musgrave and Unilever said yesterday they had reached a "satisfactory conclusion" to talks, and all Unilever products were now being supplied again to Musgrave.
Unilever had a similar recent spat with Tesco in the UK over pricing. The pair also eventually reached an agreement.