Retailers in Republic are now smiling – but the hike in the price of booze has worried some of them, writes Jerome Reilly
What goes around comes around. Three years after the Republic lost €500m to cross-border shopping in the North, towns on the southern side of the Border, such as Letterkenny, are booming this Christmas.
It means more jobs for towns that took a hammering when Irish shoppers piled into Northern Ireland to pick up bargains.
Despite post-Budget blues, retail sales are healthy in the border towns.
Toni Forrester, chief executive of Letterkenny Chamber of Commerce, told the Sunday Independent: "From last May with the exchange rate going back in favour of the euro we have seen a steady improvement. It's not just people coming from the North to shop in the South but local people are staying. That's the important part really," she said
Shopping local is hugely important. New figures compiled by the Irish Small and Medium Enterprises Association (ISME), which represents small and medium-sized businesses, suggest that every €10 spent on Irish produced products generates €24 of benefit to the local economy.
The Budget included increased duty on beer, cider and spirits, with an extra €1 on a 75cl bottle of wine, but most big retailers and independent off-licences stocked up on wine pre-Budget so the hikes won't kick in until 2013.
The National Off-Licence Association (NOffLA) fears for the survival of the independent off-licence sector.
NOffLA chairperson Evelyn Jones said the decision was irresponsible and woulddrive retailing out of State.
"The excise duty on wine was increased in 2008 and the only thing that it achieved was to increase the flow of cross-border shopping. Wine sales this year have already dropped by 4 per cent and we can expect this figure to drop even further on the back of the Budget.
But according to Ms Forrester, the current boom in Letterkenny and other border towns is not being fuelled by cross-border "booze runs."
"I don't think the price of drink is a major player for us here in Letterkenny. We are lucky that we have all the big names in clothing retails as well as a really creative and innovative set of smaller independent retailers in men's and women's fashions. It gives people a big choice and that is what they want," she added.
"We have run a shop-local campaign for the last few years which has been successful. We wanted to get the message across that supporting local retailers is important for the whole community," she said.
The VAT rate is now similar on both sides of the Border and this has also helped stem the flow of money north. Between 2008 and 2009, half a billion euros was spent by southern consumers in Northern Ireland.
The ISME has called on Irish consumers to 'think local, think Irish' during the last two shopping weekends before Christmas.
Its chief executive, Mark Fielding, said: "Now more than ever we need a national effort to save and retain Irish jobs. By demanding quality Irish products we will at least give a fair chance to local producers and retailers to survive and serve the local community. Buying from locally owned businesses keeps money circulating closer to where you spend. Local shops use local services, accountants, insurance brokers, PR companies as well as employing local people. They also carry a higher percentage of locally made goods," he said.
In Letterkenny retailers have also cut prices.
"Shoppers, now much more price aware than they were during the Celtic Tiger era, have noticed that. Price is the big thing. These are tough times and people are looking for value," said Ms Forrester
"This year our retailers came up with the idea of actively promoting the exchange rate differential so people know what they are saving. Figures are pretty hard to come by at this stage because so many people are using debit cards for their purchasers. We won't really know [the effect of the promotion] until after Christmas but one woman retailer told me that her sterling take is up 30 per cent this year," she added.
"Nearly everyone from the smaller independent retailers to the larger multiples are saying the volume is up, which is very encouraging," she added.
Ms Forrester said another success story is on large ticket items, such as bathrooms, kitchens, high-end white goods and electronic goods where the sterling/euro differential makes a big difference. "You're looking at a 25 per cent saving, so on €1,000 that makes a big difference," she added.
Letterkenny retailers have also noticed more shoppers coming into the town from the Inishowen peninsula in the north-east of the county who in the past tended to gravitate towards Derry.
Meanwhile, Retail Excellence Ireland has warned that consumers intent on leaving their Christmas shopping until next weekend could face disappointment.
Retailers are concerned about stock shortages, especially for "hot products", including toys such as Password Journal, Furby, Monster High, Master Moves Mickey, Orbeez Foot Spa and Ninja Turtles.
Some electronic items are also in big demand, including tablets and e-readers. Some retailers are reporting a 1,000 per cent rise in demand for tablets while iPad Minis are in extremely short supply.
Mid-range smart phones, priced between €99 and €150, are also very popular, while console games such as Call of Duty and the new Wii U Console are in high demand and short supply.