Christmas trade up but profits in decline for retailers

Store wars over grocery pricing have contributed to Christmas profits slowing down even though trade is up, according to a survey by Retail Excellence Ireland.
Christmas trade up but profits in decline for retailers

It will be a poorer Christmas for retailers in 2016 compared to last year, REI said.

Its research found that current trading remains hugely volatile in some sectors.

Some sectors are reporting marginal gains, REI said, but the majority of retail sectors are experiencing like-for-like declines.

Groceries have been the focus of intense competition between Irish retailers in recent years and this Christmas period has borne that out.

The REI Christmas report said: “While trading is tracking slightly ahead of last year, margin is most definitely down. Intense competition has led to accelerated promotional activity with market share being fought hard for and margin being sacrificed.”

The consumer electronics sector is performing poorly with many shoppers doing their business via UK websites. Black Friday has exacerbated the struggling sector, REI said.

“While most operators enjoyed like-for-like gains over the Black Friday weekend, this simply ate into full margin sales in the weeks prior and after it,” it said. Brexit and incoming US president, Donald Trump, have contributed to consumer belt-tightening in Ireland, researchers found.

“It is clear that Trump and Brexit have created great uncertainty which in turn has delivered significant erosion in consumer sentiment. With spending down across the country it would seem that the Irish consumer is unsure of what the future holds and in turn have in recent weeks tightened their wallets,” REI said.

More consumers came to urban centres such as Cork and Dublin during this year’s Christmas season because of the mild weather compared to the same period in 2015, when torrential rain and storms around Christmas led to many shoppers staying home.

Despite this, footfall has not increased any overall spend.

Logistics companies were a big winner in November with some reporting 30% to 80% rises in parcel numbers being delivered from the UK into Ireland.

It has slowed somewhat with sterling rebounding in December.

There was still time for retailers to make up ground, REI said, with more emigrants returning home in the coming week than in previous years.

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