Retailers are unlikely to see any huge consumer spending boost until next summer at the very earliest — even though Christmas spending is expected to reach around €5.4bn — an industry group has warned.
Retail Excellence said Christmas spending this year should remain in line with what would normally be expected and even with the lockdown upheaval from earlier in the year, 2021 spending value levels, on a whole, should still be up marginally on both 2020 and 2019.
However, Retail Excellence chief executive Duncan Graham warned that consumer confidence is “fragile”, with a buoyant mood in November eroding after news of further Covid restrictions and the emergence of the Omicron variant. He said:
Arnold Dillon, director of the Ibec-affiliated Retail Ireland, said he expects up to €5.4bn being spent by consumers this Christmas, but that it is “too early to say” how spending patterns will recover next year.
“On consumer spend, the big question remains the Covid situation. How that pans out will have a significant bearing on confidence and how people plan ahead and spend their money,” he said.
CSO figures released earlier this week showed that retail sales volumes fell for the second month in a row in October. The 1.5% monthly decline was also the third fall in four months.
The figures supported a glut of sentiment surveys over recent weeks, all of which have come to the conclusion that Irish consumer confidence is on the floor due to a grim mix of rising Covid case numbers, mounting uncertainty over the pandemic, inflation, rising energy costs, and Brexit concerns.
Mr Graham warned that while Christmas spending values may be healthy this year, more of that spend is likely to be online, meaning more consumer money leaving the country:
He said that while retail performance this year — specifically the summer and early autumn months — has been good, sales have tailed off as the year has gone on and uncertainty is back.
Mr Graham said 2022 is likely to be characterised by ongoing supply chain issues and further inflationary pressures. There will likely be “noticeably” higher prices in shops and online from the start of 2022, he warned.
Many retailers who have been holding prices steady as much as they can, will “inevitably” have to filter rising input costs through to retail prices, he said.
Mr Dillon said inflation may lead to a change in consumer patterns, in terms of what people can afford and what they choose to buy. He said labour shortages remain a “very significant” issue for the Irish retail sector.
Both industry groups said that a lack of foreign visitors and a drop in office worker numbers have eroded sales in city centres due to a large decline in footfall.