Thursday 20 July 2017

Prospect of 'hard Brexit' gives property market reasons to be fearful

Will Tesco be able to continue to be a large exporter of Irish goods to their UK supermarkets? Photo: PA
Will Tesco be able to continue to be a large exporter of Irish goods to their UK supermarkets? Photo: PA

Paul McNeive

The more I think about the prospect of a 'hard Brexit', the more questions I have about its possible implications.

There are scores of UK-based retailers in the Republic, who operate here as extensions of the UK and supply their shops directly from there. That model won't work with tariffs and border formalities. Will retailers change the way they are structured here and how they source and distribute their stock?

Tesco has a 75,000 sq m warehouse in north Dublin, plus a fresh food distribution centre in Ballymun and emphasise the amount of Irish produce they source; but can they continue to be a large exporter of Irish goods to their UK supermarkets? What will happen to Marks and Spencer prices?

Will Aldi and Lidl, who already seem to be becoming more 'mainstream' and less 'discounters', be handed a big price advantage over their UK rivals? Will we see an influx of new, European retailers? Will Lidl, Aldi and other European retailers still be able to supply their stores by truck from European ports? Will the UK charge port duties and tariffs for using their motorways? That all increases costs.

Will European retailers supply Ireland by ship and bypass the UK? That's more expensive than by containers on trucks. Will there be a switch to air freight? All of these outcomes will have implications for our ports and for the logistics sector in Ireland.

Where UK retailers with higher costs have dominant positions, should planning policy provide for more shops?

There are implications for all sectors and no matter how the negotiations go, it's hard to see anything other than the costs of business increasing.

Retailers Must Wake Up To Customer Service

One result of the recession was a return to the values of customer service, with retailers realising that their survival depended on getting their customers to come back. However, with the economy improving, it seems to me that many businesses have become complacent again, and the standards of service are often very poor.

The greatest threat to retailers is the growth of online retailing, and there is an ongoing rebalancing of the retailers' property mix, between high street shops and logistics centres. It was interesting to note that Retail Ireland, Ibec's retailing representative group, has identified a shift online in pre-Christmas retail sales, particularly for furniture, electronics and cosmetics.

One would have thought that high street retailers would be intent on dazzling their customers with personal service, but from my recent shopping experiences, they are sleepwalking into losing market share.

For example, I decided to buy a laptop as a Christmas present, costing €1,500. I would normally buy such items in a retail park, or perhaps in the city centre and would be nervous about buying goods of this value online. I was also worried that any delay in delivery, which could have left me too late for Christmas.

One retail park tenant's website showed the item as 'out of stock'. It was hugely frustrating trying to contact them over days to eventually be told they wouldn't have it in time. I then tried telephoning a retailer in a shopping centre and one in Dublin city centre to see if they had the laptop in stock. I spent hours over the Sunday before Christmas listening to automated answering machine messages, while the phone was picked up and instantly put back on hold.

Meanwhile, the Apple website on my phone told me that Sunday was the last day to order with guaranteed delivery before Christmas. So I bought the laptop online, and it was delivered from the UK, a day early.

The retailers above have no idea that they lost my business, nor how many hundreds of other sales they lost because they won't answer the phone. Even worse, they forced a customer, of a generation that is nervous about online purchases, and who would prefer to shop local, into buying online and discovering it works perfectly. It's easy to criticise, but many retailers ha ve no idea of what's going on in their own businesses, nor how many customers are deserting them in frustration.

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