Irish retail sales decline by 8.2%

Retail sales in November 2009 fell 8.2 per cent compared with the same month a year earlier, the Central Statistics Office said today.

The data gives the first indication of trading in the run-up to the Christmas period for Irish traders, who have been hit by falling sales in recent months.

The volume of sales rose 1.1 per cent when compared with October. However, retailers saw the value of sales fall yet again, and more significantly than volume, declining 12.9 per cent compared to a year earlier. Sales value was static compared to the previous month.

"The value of sales fell in 10 of the 11 months in 2009 for which we now have data," said Davy analyst Rossa White.

"We do think that larger retailers had exceptionally fat margins heading into the recession, but the independent sector may well be struggling to cope. Rents were negotiated in many cases based on a revenue trend that is now unrealistic."

The struggling motor industry continued to prove a drag on sales, falling 24.5 per cent year on year. When it was excluded from the overall figures, retail sales fell 5.4 per cent on the year. However, there was also evidence of a gradual recovery in the sector, with the monthly figures showing a 3.5 per cent rise.

When motor trade was excluded from the general retail sales figures, the rise was cut from 1.1 per cent to 0.3 per cent on a monthly basis.

Ulster Bank economist Simon Barry said it was the 10th consecutive monthly rise for sales in the motor trade.

"Following a collapse seen in January last year, volumes have risen by a total of 32 per cent since then, contributing importantly to an improving trend in the headline measure of total retail sales over that period," he said.

"However, this improvement needs to be seen in the context of the fact that sales were still some 25 per cent below year-ago levels in November highlighting the ongoing difficulties facing the sector. The scrappage scheme announced in the Budget should help promote greater turnover in forecourts in the weeks and months ahead, albeit that the adverse weather conditions around the turn of the year amounted to a setback for early 2010 activity."

Bars were also hard hit in November, showing a decline of 12 per cent in sales compared with the same period a year earlier.

Sales of household equipment slipped 10.8 per cent, while clothing, footwear and textiles saw sales decline 2.3 per cent over the same period.

Bloxham economist Alan McQuaid said the bad weather could have both a positive and a negative effect for retailers.

"Anecdotal evidence suggests that consumer spending was quite robust in the run-up to Christmas, and again on the St Stephen's day sales," he said.

"However, the adverse weather conditions in the closing days of December and early January are likely to have impacted negatively on retail sales. That said, the icy road conditions are also likely to have deterred shoppers from going North, which may have worked in favour of retailers in the Republic."

Davy predicted most categories in the retail sector would bottom out in the first half of the year.

"By that point, most categories within the retail sector will no longer experience volume declines. Yet price discounting will continue for most of the year as margins return to sustainable levels," said Mr White.