Shoppers resume exodus North
Cross-border stores predict bumper Christmas as sector rots down south
Published 31/10/2010 | 05:00
The stampede of Irish shoppers north of the border has begun again -- at a time when retail in the Republic is on its knees and tens of thousands of jobs are under threat.
Record numbers of southern shoppers flocked to the North's biggest shopping centre specialising in high fashion last weekend.
But the flight of southern shoppers to the North comes at a price.
In all 38,000 retail jobs have already been lost in just two years in the Republic.
And industry experts estimate that the loss of 5,000 of those jobs in 2009 is directly attributable to cross-border shopping.
On Friday, Chartbusters, the video rental chain, confirmed it was closing all of its 16 stores, with the loss of almost 90 jobs.
Half the shoppers at The Outlet in Banbridge over the three-day bank-holiday weekend were from the south.
Management confirmed that customers from the Republic accounted for more than 60 per cent of sales on what was their busiest weekend of the year -- including the January sales period.
"The recent Republic of Ireland Bank Holiday weekend is traditionally a good indicator as to how we will fare with cross-border shoppers in the build up to Christmas.
"Figures are encouraging in that they are very similar to last year, when cross-border retail was at its peak," a spokeswoman said.
Last year, Finance Minister Brian Lenihan declared in an RTE radio interview: "When you shop in Northern Ireland, you're paying Her Majesty's taxes, you're not paying taxes to the state that you live in."
But now the economic haemorrhage north of the border has gained new impetus, and comes as retail sales in the south declined again in the third quarter of the year -- although September recorded the lowest monthly drop so far this year, according to the Irish Retail Industry Performance quarterly review.
Compared with the third quarter of 2009, sales were down more than 3 per cent.
September sales were marginally down on the same month last year, recording a decline of 0.21 per cent.
But significant drops of 5.24 per cent in July and 3.87 per cent in August contributed to a dispiriting decline.
Ladies fashion was the worst-performing retail sector in terms of sales, with a 5.42 per cent drop compared with 2009.
In contrast, The Outlet, where southern shoppers flocked last weekend, is dominated by high-end ladies and gent fashions including Armani, The Designer Studio, LK Bennett and Jaeger.
The grocery sector also continues to struggle, falling 4.97 per cent from the same quarter in 2009.
On Friday, more figures released by the Central Statistics Office showed that sales dipped across most sectors in September following a slight upward trend the previous month.
But the August figures were deceptive. The increase in new car sales, up 13.2 per cent, on the same month last year and department store sales, up 8.5 per cent, masked very poor overall figures.
Bars were down 11 .6 per cent, books and newspapers down 9.4 per cent and furniture and lighting sales were down 9 per cent.
Dave Fitzsimons of Retail Excellence Ireland told the Sunday Independent that it was vital that consumers in the Republic think about the consequences of shopping in another jurisdiction.
"More than ever before, it is crucial that as a nation we think about how and where we shop. While retailers do not have a divine right to dictate how consumers behave, it is important that we are aware of the impact of shopping in the North.
"The retail industry has lost nearly 40,000 jobs in 24 months," he said.
Mr Fitzsimons said that the primary contributors to these job losses had been the general economic conditions, excessive business costs in the south and untenable rent charged to retailers.
"But consumer spend leaking out of the country is also a big factor. The Department of Finance indicated that €700m was lost in cross-border shopping in 2009.
"The retail industry invests on average 15 per cent of total sales in salaries annually, thus our economy and our people missed out on a €105m investment in salaries by the Irish retail industry in 2009 alone.
"This equates to over 5,000 jobs lost from cross-border shopping in one year alone," he said.
Meanwhile, Declan Ronayne, managing director of PC World and Currys in Ireland, told the Sunday Independent that in the electronics sector there has been no migration of shoppers to the North.
"As an experienced retailer I have to say that I would never reproach a shopper for going where the value is.
"Our job in the south is to give them value here. You can advance an economic argument that we are giving Vat to George Osborne instead of Brian Lenihan but at the end of the day people behave rationally.
"We have to give them value. It is not easy but we should not whinge about it.
"I think every single retailer in Ireland is doing their absolute best to do that. It would be great to get support but to make sure we get that we have to make sure that customers get value.
"There is a supposition that everything in the North is cheaper but that is wrong when the sterling/euro rate is around the €1.20 mark. Once you get around the €1.10 mark then there is value.
"If you want to buy sterling at the moment you would have to put €1.16 or €1.17 on the table, when you factor in commission etc the notional rate may be €1.14 but people tend to forget about the cost of commission.
"At €1.15, €1.16 and €1.17 exchange rates retailers in the south are well able to cope," Mr Ronayne said.
He added that it was vital that the Government give the people of Ireland certainty in the Budget.
"People need to know how bad it is and then they will be able to get on with their lives. I would prefer it to be a tougher first budget. I don't think death by a thousand cuts serves any purpose. Let's get on with it," he said.