Bar sales rise but retailers struggle

IRISH people took to drowning their sorrows in a bid to escape the faltering economy and bad weather last month.

Bars saw a slight pick-up in December, jumping by 2%. This was much more than in previous Decembers when sales in 2009 only rose by 0.4%, while they fell in 2008 by 2%. Despite the pick-up last month, however, bar sales are still down almost 10% over 12 months.

Overall consumer spending weakened in December, with the volume of retail sales dropping 1.1% from November. The monthly drop was the biggest since January last year and followed two months of small increases.

When car sales were taken out of the equation, the fall was even bigger with sales diving 2.5% last month, according to the figures from the Central Statistics Office.

It said sales volumes were down 3.1% compared with December 2009.

Overall last year the CSO estimates that the volume of retail sales increased by 0.9% compared with 2009, but there was a 1.8% fall when car sales were excluded.

Ulster Bank economists Simon Barry and Lynsey Clemenger said the adverse weather contributed to renewed weakness in retail sales in December, following signs of stabilisation in October and November.

“Indeed, with the cold-snap clearly playing a role and consumer confidence taking a hit on account of Budget 2011 and the EU/IMF deal, it wouldn’t have been surprising to have seen an even larger drop,” they said.

With fewer motorists taking to the road petrol sales plunged 14% in December.

Consumers put buying on hold last month as well, shown by an 8% drop in furniture sales and a 1.6% fall in sales in the hardware, paints and glass.

NIB economist Ronnie O’Toole said 2011 was likely to be another difficult year.

The value of sales, which takes prices into account, fell by 0.9% from November, giving an annual drop of 4.1%. Sectors that saw rises in sales last month included department stores, electrical goods, and books, newspapers and stationery.

“While the annual drop for 2010, at 1.8%, was nowhere near as steep as the 6.8% plunge in 2009, the underlying momentum in non-car retailing is weak going into 2011,” said the Ulster Bank economists.

Employers group IBEC said that because the weather conditions were so exceptional, the December figures give no useful indication of the underlying trend in Irish retail sales or consumers’ reaction to the difficult budget and the IMF/EU loan deal.

However, chief executive of Retail Excellence Ireland (REI), David Fitzsimons said there is no reason to believe that this downward trend will come to an end and, as a result, they anticipate that January will see roughly 2,700 redundancies within the retail industry.

According to REI’s figures footwear was the strongest performing sector in the industry and the only one to record overall growth of just over 3% in the last quarter of 2010.