Friday 17 January 2020

€5bn Christmas splurge bigger than spend in Celtic Tiger boom

  • Boom-era spending to be eclipsed this Christmas

  • Shoppers here splurge a record €5bn - and average of €2,800 per household

  • Report predicts that online shopping, as well as cross-border shopping, will draw a 'substantial' amount of spending away from high street

(Stock image)
(Stock image)

Gabija Gataveckaite and John Mulligan

Boom-era spending will be eclipsed this Christmas as shoppers here splurge a record €5bn.

Fatter paycheques and the highest number of people ever at work here will see households spend an average of €2,800 each in December - twice the amount they did in the run-up to Christmas in 2007 as the Celtic Tiger was on the verge of extinction.

The amount of money spent this December is about €1.6bn higher than consumers spend during any other month of the year, according to a report published this morning by business lobby group Ibec.

But Arnold Dillon, the director of Retail Ireland, the Ibec division that published the findings, has insisted that the country hasn't yet returned to a boom era despite the spending surge.

"We're not in a boom economy, but we have almost full employment and rising disposable income levels lead into a strong economy," he told the Irish Independent.

He pointed out that a growing population had also spurred spending.

The latest figures from the Central Statistics Office show Ireland's population hit just over 4.9 million in April, 64,500 higher than a year earlier.

A record number of people working in the economy will help to boost Christmas spending, with 2.3 million now holding down jobs.

The €4.9bn that consumers in Ireland are expected to spend this Christmas is 3.4pc higher than in 2018.

According to the new Christmas Retail Monitor report, from Ibec's Retail Ireland unit, real disposable income here rose 5.8pc in 2018. That's the highest annual increase since 2007, with incomes having fallen between 2008 and 2012 as the country was hit by an economic recession.

But the spending surge this Christmas will be tempered for retailers by the knowledge that a big chunk of the cash will head online and out of the country.

Retail Ireland noted that recent figures from the Central Bank showed that in the first nine months of 2019, Irish consumers spent €15.9bn online, with online spending for the entire year expected to reach €21bn.

The Retail Ireland report predicts that online shopping, as well as cross-border shopping, will draw a "substantial" amount of spending away from the high street over the festive season.

"The growth of online and an increase in cross-border shopping as a result of the weakness in sterling will draw a substantial proportion of the extra spending away from our high streets and traditional brick and mortar stores," it said.

But Retail Ireland has also insisted that Irish stores are competing online, despite the massive outflows of cash to online giants such as Amazon.

"While the majority of this spending will leave the State, Irish retailers are meeting the online challenge," it claimed.

The report said that consumers also appear to have set aside lingering concerns about the UK's departure from the European Union and are "embracing the festive season with traditional enthusiasm".

"With the risk of an imminent 'no deal' Brexit gone, Christmas 2019 looks set to deliver a strong performance for the retail sector," Mr Dillon said.

"Rising disposable incomes, record numbers at work, and falling prices have all combined to give consumers greater spending power than ever before."

Mr Dillon said that Christmas remains "crucial" for retailers, with many generating more than 30pc of their annual trade in a six-week period in the run-up to the big day.

"Retailers have reported strong trading over the recent fortnight, making up for a slower start in some categories," he added.

"The spending power is there in the economy, but retailers are having to compete aggressively to attract consumers to their offering."

Irish Independent

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