Retail challenge: Changes to shopping habits mean there are testing times ahead
THE BIG PICTURE
SUPERMARKET sales rose by 5.3pc in the final three months of 2018, buoyed by rising employment and wages that helped contain the shift to online.
However, discounting in the run up to Christmas has slowed overall retail growth.
Grocery sales were the highest since 2007 as consumers splurged on food and drink over the festive period.
Department stores also reported an increase in sales - up 3.7pc in the three months to December 31 - according to the latest retail monitor from trade body Retail Ireland.
The increase in sales, over what is traditionally the most important period of the year for consumer spending, was affected by Black Friday sales in November, which have stretched and altered the traditional Christmas season.
While sales were up for the quarter, department stores reported a 7pc decline in the volume of sales in December last year compared to November. Black Friday is the informal name given for the day following Thanksgiving in the United States, which last year fell on November 22.
It is regarded as the start of the Christmas shopping season in the US, and many retailers in Ireland now also offer discounts and promotions.
On the back of the discounts, the price of cosmetics, skincare and beauty products fell by 4.4pc, while footwear prices dropped by 4pc.
Overall, the volume of all retail sales in December, historically the biggest shopping month of the year, grew by just 0.5pc when compared to figures for November.
"Deep discounting and promotional events in early November are central determinants of this low growth," said Tom Burke, the head of Retail Ireland.
The lobby group warned that the increase in sales masked declining customer footfall and a gradual softening in consumer sentiment and spending.
"While sales values held up reasonably well, there is consensus in the sector that footfall levels in traditional shopping hotspots are continuing to decline," Mr Burke said.
He added that the fall in traditional bricks and mortar shops was largely as a result of a move to online shopping, and changing shopping patterns.
"Retailers have reacted to that move and are now offering an increasingly compelling proposition in this space," Mr Burke said.
"This is challenging margins however as online fulfilment costs are high and there is intense price competition in this market."
Retail Ireland says 2019 will be "challenging" for the sector, with ongoing structural shifts requiring shop owners to rethink traditional ways of operating.
"Brexit impacts will likely require the re-imagining of supply chains, and depending on negotiations over the coming weeks, could impact consumer spending power," Mr Burke said.