The first quarter of 2024 has unveiled a complex landscape for retail. Despite a 3% increase in sales over the same period last year, the data is mainly a reflection of inflation. It tells a story of resilience in some sectors where retailers are experiencing growth.
Retail Excellence’s analysis reveals consumer priorities and emerging trends that are shaping the sector. Crucially, spending on essentials has not only held steady but grown, with grocery and pharmacy sales demonstrating the indispensable nature of these goods. A 5.2% rise in grocery sales and an impressive 7.6% surge in pharmacy purchases highlight where consumer priorities lie amidst cost-of-living pressures.
However, the picture is not universally rosy. While there are indications that inflationary pressures are easing, shifting from the 8% inflation of Q1 2023 to close to 2% currently, and grocery price inflation has markedly decreased, inflation continues to be a considerable factor behind the rise in sales values. The sector faces a dichotomy where higher prices contribute to growth figures, masking the more subdued rise in transaction numbers, which only exceeded 1% in four categories.
Particularly telling is the performance of homeware, hardware, and garden centres, which have seen spending contract by 2.5% against the same period last year. This decline noted consistently over the past three quarters, speaks to the broader challenges of high operational costs and the difficulty in passing these onto a global customer base. The clothing sector, too, reflects the impact of external factors like adverse weather conditions, evidencing a marginal decline in sales. Furthermore, department stores and sporting goods stores have fared better, leveraging a strong online presence to register growth. We are acutely cognisant of the significant pressures that Irish retailers are currently facing.
Although the strength of some key subsectors is encouraging, the pressure on margins for many retailers is a real challenge, as they grapple with rising wage costs and working conditions.
Although the strength of some key subsectors is encouraging, the pressure on margins for many retailers is a real challenge, as they grapple with rising wage costs and working conditions. As we look ahead, there is cautious optimism that consumer sentiment is more settled, and increasing, which could bring a stronger second half of the year.
Thinking about the future of retail, Retail Excellence Ireland’s recent Retail Retreat brought together Ireland’s most influential decision makers in the retail sector to network and share insights into the issues, opportunities and challenges facing the retail landscape going forward. Topics covered included trends in e-commerce, resilience in business and retail as a destination, a topic that is particularly pertinent for Dublin.
With the rise of online shopping and the shift in working practices towards more home working, one could argue there is little incentive for customers to engage in traditional retail. That is why it is so important to create a unique and engaging experience for customers. To create a destination, the property itself as well as the surrounding area must be attractive. This creates a welcoming and safe environment for customers. Reports from retailers is that Dublin City Centre is still 20% behind on footfall in comparison to 2019.
Research from CACI and P-THREE in the UK has found that shoppers who rated a physical retail environment a 5/5 spent 26% more than those who rated it a 3/5. This is why creating an attractive space is so important, as it can lead to customers spending more money. There is a strong signal in this research for how place management and good design can contribute to the viability of retail and city/town centres. Linked to creating a viable and vibrant retail offering is safety. Second to this is the role online plays in driving footfall back into our towns and cities with consumers using online as their shop window & then going instore to buy or choosing click & collect orders online. The consumer is shopping with a 360-degree approach to retail which gives opportunity to our towns and cities to align with the convenience of click & collect for consumers. In the US, the concept of ‘curb side pick-up’ is prevalent.
As we look ahead, there is cautious optimism that consumer sentiment is more settled, and increasing, which could bring a stronger second half of the year.
The statistics from the CSO, which report that theft and related offences have risen by 12% in Q4, with almost half of this increase due to retail thefts, back up what we are hearing from our members on a daily basis; that the retail industry is increasingly being targeted by criminals across the country. These actions by a small minority have a highly negative effect on retailers and their customers, and something needs to be done to reverse what is a very worrying trend. It needs to be recognised that these figures don’t take into account the daily instances of antisocial behaviour that retailers are experiencing. These have a knock-on effect on staff and customers, and will lead to less footfall at a time when retailers are struggling hugely with the myriad of costs of doing business. Addressing these issues is a crucial element in creating the space for retail to thrive. The issue is multifaceted but one thing that we believe is crucial in dealing with anti-social behaviour & theft in our cities is that there has to be a ‘zero tolerance’ approach.
Chief Executive, Retail Excellence Ireland
