Monday 23 April 2018

High street faces worst winter ever as VAT bites

More consumers shopping online

Barbara McCarthy

WE may have been spared an early winter, but retailers across Ireland could experience a Siberian front this Christmas. A frosty Budget, which will see a hike in VAT to 23 per cent, will curb spending among a frightened public while an increase in internet shopping will have shop owners shaking in their boots.

So could this be the worst winter ever? "Yes," says David Fitzsimons, chief executive officer at Retail Excellence Ireland. "It's the 45th consecutive month, where the industry is in decline -- 55,000 people have lost their jobs in retail since the downturn. The system, which will decide our upward rents, is corrupt. Banks are actively moving in on debt in the coming year."

With the Government lifting the cap on store sizes, thus wiping out local shops and businesses in favour of hypermarkets, things are bad.

Over 95,000 people are expected to shop online at eBay this Tuesday, so is there anything to be hopeful for on the high street? "ECB rates are falling. So if people have an extra €50 in their pockets, they will spend it on Christmas presents," he adds. But what do the retailers say?

"Revenue is down around 25 per cent since 2007," says the marketing director at Pamela Scott, Robert Barron.

"The VAT increase will hit business hard. The fact that there is no movement on the upwards rent is a disgrace. Rents have increased by 240 per cent since 2005.

"Our Pamela Scott store on Grafton Street has to pay twice as much rent as a new lease next door, because of the rental agreements from the Celtic Tiger age."

Susan Hunter, owner of Susan Hunter Lingerie in the Westbury Mall, has other concerns. "Sales are down around 60 per cent on 2007," she says.

"This year reminds me of 1984, where you would get one good day followed by four bad days. People don't have disposable income, so they will buy much more carefully. Retailers also get less stock in, so they don't have the same variety for the shoppers."

David McCormick, a manager at Weir & Sons, says it's going to be a late Christmas.

"We reckon people won't shop until December 20 to 24. They will look around first before they decide." That said there are still people with cash. "We stock items costing over €50,000 -- so there is still a demand for high-end products, but people don't necessarily want to flaunt them."

Leesa Kavanagh, Retail Director at Arnotts, agrees.

"The carefree days of spending money are in the past and customers are now making more considered purchases."

Liam Donnelly, a floor manager at Hodges Figgis, says reading becomes more popular during a recession.

"People can't afford to go out and books can be purchased for less than €20. December 23 is the busiest day, where we expect up to 5,000 people to buy gifts who spend an average of €30 each."

On the plus side, a survey by Deloitte on Christmas spending predicts that Irish consumers will be among the highest spenders in Europe forking out €943 a household.

Sunday Indo Business

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