Up to 40% of Irish shops could close by 2018, according to the CEO of Retail Excellence Ireland, David Fitzsimons, who said the sector is going through a period of upheaval due to over expansion in the boom and the challenge from e-commerce.
A report by the UK-based Centre for Retail Research predicted that the number of stores in the UK will fall by 22% as a result of shoppers migrating online.
However, Mr Fitzsimons said in an Irish context you could almost double that figure as Ireland is hugely over-shopped due to the explosion of out-of-town retail centres and shopping centres built in the boom.
“We are way, way over shopped, considering we have the same population as Manchester,” he said.
Yesterday, saw the release of the Central Statistics Office retail sales which records sales of shops in Ireland, including some online retail, but it does not capture the transactions of online retail heavyweights such as ASOS and Amazon as they are not based in Ireland.
The figures showed a decline in retail sales for the second month running. Investec chief economist Philip O’Sullivan said it was a worrying trend.
“Excluding the volatile motor trade, we see that core retail sales declined in both value (-0.7% m/m) and volume (-0.3% m/m) terms during April. On an annual basis core sales have now been in negative territory for two successive months, in stark contrast to the preceding seven months during which core sales had consistently been up on an annual basis in both value and volume terms,” he said.
He added that although the figures were hard to capture he believes that online sales are a factor undermining core sales.
“Disruption by the internet is exacerbating the weakness of the core sales. We have seen the demise of high street groups selling books and music such as HMV. I would expect those sort of industries that are vulnerable in particular to be pressed as people move away from bricks and mortar retailers,” he said.
Mr Fitzsimons said that the best estimate is that Irish consumers spent €4bn online last year and that figure was set to rise.
“We are in the midst of a recession, people are spending lessand more of that spend is going online,” he said.
There needs to be a large consolidation of the sector which will involve further closure of outlets due to the development of towns during the boom, he said.
“It’s not good, but a necessary pill to swallow. We have over-shopped towns, with large out-of-town centres and shopping centres. There was a lack of realistic approach to planning — most of the development was linked to rates,” he said.
Mr Fitzsimons singled Kilkenny and Limerick, in particular the Ferrybank centre in Kilkenny which has never opened, and the abandonment of Limerick city centre.
Isme chief executive, Mark Fielding, called on the Government to act to save jobs in retail by creating a strategy group to create a plan to save retail.
“It is unbelievable that the Government can ‘stick its head in the sand’ and let the largest sector in the economy slowly grind to a halt, with 44,000, mainly small businesses, in danger of closure and a further 240,000 jobs in jeopardy. A retail strategy group must be put in place to assist this out-of-touch Government,” he said.
Some town centres are not waiting for the Government. They are organising events in town centres like Tralee, where all the businesses have joined forces. This weekend the group is hosting a fashion show to try and encourage customers to spend in bricks and mortar outlets.
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