‘Black September’ for retail trade

RETAILERS have said it was a Black September as shoppers cut back spending on electrical goods, furniture and ladies fashion.

Irish retail sales levels fell at a faster rate in quarter three compared with quarter two, according to Retail Excellence Ireland (REI), which said consumers are “frozen with fear”.

Sales levels fell by just over 6% on an annual basis in the third quarter, increasing from a rate of decline of 3% and just under 6% in the first and second quarters respectively. September recorded the 43rd consecutive month of sales decline.

Sales of electrical goods fell 8.5% last quarter while furniture sales were down 8%. Ladies fashion sales were also hit, falling 7.5%.

For the second consecutive quarter, all retail sectors recorded falls in year-on-year sales levels. Even the best performing sector, grocery, recorded a fall of 3.5% in sales.

REI chief executive, David Fitzsimons said: “Whilst the general economy has benefited from growing exports and inward tourism in recent months, increased volatility and concern in the wider EU community has crippled consumer sentiment, leaving a very fragile domestic situation.

“Irish consumers are frozen with fear, resulting in increasing bank deposits and reduced spending.

“We hope that the Government is more aware of restoring domestic demand when finalising Budget 2012,” he said.

Sales fell by 5% in July and 5.5% in August. In September, they were hit with a 7% drop compared with the same month last year.

“Weather conditions did not help matters, with the country experiencing unseasonal adverse weather during July and August.

“The back-to-school and college period in late August and early September placed significant financial pressure on a large number of households,” said Mr Fitzsimons.

“The Average Transaction Value (ATV) continued to decline, with an average reduction of 3.5% across all retail sectors. The giftware and homeware sector experienced one of the most aggressive declines in annualised ATV erosion, having enjoyed an ATV of €28.05 in quarter three 2010 and now fallen to €22.38, a 20% drop.

“As a result of the 30% drop in sales, Irish retailers have had to reduce their investment in labour over the past four years, resulting in the 55,000 job losses. However, as a result of upwards-only rents, rent levels remain stubbornly high,” said Mr Fitzsimons.