Department store sales fell by 12% last month

DEPARTMENT stores saw sales plunge 12% last month, despite massive discounting.

Figures from the CSO show the volume fell 3.8% in January from December but were up 4.6% compared with January last year.

Taking out car sales, which can record big swings, sales volumes rose 2.7% from December but are down 1.2% compared with a year earlier.

Furniture and lighting sales rose 9.3% in January, while hardware, paints and glass sales increased 1.2%. Bar sales rose 1.3% but they are down 7.5% over 12 months.

Motor sales fell 3.5% in January from the previous month, though they are up almost 24% in the year.

Bloxham analyst, Alan McQuaid, said the motor industry, which had a very good year in 2010, helped by the introduction of the scrappage scheme in Budget 2010 will see strong activity again in 2011, at least in the first half of the year, following the extension of the scheme until the end of June.

The value of sales, which takes prices into account, fell by 1.5% from December but rose 4% compared with January last year.

Mr McQuaid said the overall trend in retail sales points to muted personal spending outside of the motor industry.

Retail Ireland, the IBEC group that represents the retail sector, said the CSO figures show a weak start for retailing in 2011. The group said the new government must follow through on election commitments to support the retail sector, reduce business costs and get people back to work.

Retail Ireland director Torlach Denihan said: “The key challenge facing the incoming government is to restore consumer confidence and boost spending in the economy.

“To safeguard jobs in the retail sector urgent reform is needed to reduce key business costs, such as rent, labour costs and commercial rates, and improve access to credit.”

He said legislation to address unsustainable commercial rents is needed “urgently”.

“The next Attorney General should immediately review the issue of upward-only rent review clauses, with a view to clearing the way for new legislation to abolish them,” he said.

Davy analyst, Conall MacCoille, said the outlook for Irish consumer spending remains mixed, especially given the decline in consumer confidence and the forthcoming fiscal adjustment.