IRELANDS ELECTRICAL retailers could be among the next casualties of the recession without the help of their banks, warned Sushil Teji, general manager of Sony Ireland.
He said that shopping street outlets faced unprecedented challenges at a time when traditional financial support structures were failing them.
“We have already seen some closures and I fear there could be more. The level of support from banks has tightened up and threatens to bring down very good businesses,” he added.
Mr Teji, who is also chairman of Ibec body Ceda (Consumer Electronic Distributors Association), called on the Government to direct the banks to give the loans that are going to be required. “All of a sudden loan facilities that had been there are being severely restricted and potentially removed. It’s like taking oil out of an engine.”
Sony recently reported its first full-year operating loss in 14 years, highlighting a crisis in the consumer electronics industry that is compounded in Ireland, according to Mr Teji, by the high cost of retail space, a higher minimum wage and, more recently, the VAT reduction in the UK.
Mr Teji challenged the recent Forfás claim that the price differential between goods sold in Dublin compared to the UK and other countries should only be 5 to 6 per cent higher.
“An Irish retailer with a 1,000sq ft store can be paying upwards of €70,000 a year in rent. UK retailers do not have to pay that kind of money and have a much bigger customer base to cover their overheads. They can work on very small, single-digit margins.
“With a total population of less than five million, our retailers have a much lower chance of generating the volume of sales they need to survive.”
He said that consumer electronics already suffered from some of the tightest margins in retail – 10-15 per cent on IT products and typically 20 per cent on TV and video hardware. “When consumers see 60-70 per cent sale prices on other goods they wonder why they don’t see it in electronics. It is because the margins are just not there.”
The one piece of good news for Irish shoppers is that they may avoid the 5-10 per cent price hike that Japanese manufacturers are starting to impose to cover increased costs.
“Sony will look at it on a case by case basis but the price rises in Ireland may not be as extreme as the UK because of the fluctuations between sterling and the euro,” said Mr Teji.
