WINTRY WEATHER and economic woes combined to punish the retail sector in December, with sales lower in both value and volume terms, according to the Central Statistics Office.
Excluding the motor trade, which was artificially boosted last year by the scrappage scheme, the volume of retail sales last month was 3.6 per cent lower than a year earlier, while the CSO’s value index fell by 3.3 per cent.
Monthly figures, again excluding car sales, show a 2.5 per cent decline in volume between November and December, and a value drop of 1.3 per cent. The monthly drop was the largest recorded since 2003.
Retail sales account for about half of all consumer spending and thus offer a reliable insight into national confidence and mood. As such, the CSO figures illustrate the divergence between the export economy, which is growing strongly, and the so-called domestic economy, which continues to struggle.
Analysts expect the downward trend in sales recorded last year to be maintained into the start of 2011, as the imposition of the Universal Social Charge on pay packets, coupled with continued economic worries, curbs discretionary spending.
Retail Excellence Ireland, a group representing the retail sector, predicted yesterday that 2,700 retail jobs would be lost this month alone. “There is no reason to believe that this trend will come to an end,” said chief executive David Fitzsimons.
The sub-sector feeling most pain last month was fuel, where volumes fell by 14 per cent on a monthly basis and by 21.5 per cent annually.
Weather was the main culprit here, with consumers making fewer road journeys and fuel deliveries delayed because of difficult conditions.
Other businesses under particular pressure included furniture and hardware shops, while bars suffered a 9.9 per cent annual volume drop but posted mild growth month-on-month.
Dermot O’Leary, chief economist with Goodbody, pointed out that bar sales have suffered “disproportionately” over the past two years and will probably continue to struggle. He expects retail sales as a whole to fall by about 2 per cent this year.
Dr Ronnie O’Toole, chief economist at National Irish Bank, shares this assessment, predicting that 2012 should bring an improvement as households’ “very elevated rate of precautionary savings” starts to fall.
Among the few winners last month were department stores, where the volume of sales rose by 5.3 per cent year on year and by 1 per cent on the monthly measure, probably due to Christmas shopping.
The annual increase owed something to price falls, however, with the value of sales rising by just 2.3 per cent year on year.
More encouragingly, the value of sales was ahead by 1.3 per cent in December itself.
Electrical goods also held their own in volume terms, with a 5.1 per cent annual increase, but this came only as the value fell by 2.3 per cent, again signalling discounting.
Goodbody’s Mr O’Leary said that while deflationary pressures appear to be easing generally, some retailers continue to battle against high fixed costs such as rents.
Motor sales, despite benefiting from the scrappage scheme, were 8 per cent lower in December than in the same month of 2010 on the volume measure, and 4.2 per cent weaker month on month.
THE NUMBERS
-21.5%Fuel volumes
-9.9%Pub trade
+5.1%Electrical goods
-8%December motor sales
