Why the shutters are coming down on some British retailers in Ireland

A UK retailer expanding into Ireland always made sense due to the countries' proximity to each other but that has changed in recent years.

Debenhams is one of the highest profile casualties amongst the UK retailers in Ireland. Pic: Larry Cummins

IT IS set to be a difficult couple of days for staff at British retailers Argos and Iceland as one closes its doors in the Republic of Ireland for the last time and the other faces ongoing uncertainty over whether the business can continue to operate.

These two are just the latest, and some of the most high-profile examples, of some of the issues that British retailers have been facing in the last few years, but they are not alone. The abrupt exit of Debenhams from the Irish market during the start of the pandemic left staff reeling and fighting with the company for years over their redundancy.

Argos will close its stores in Ireland this weekend. Picture: Sasko Lazarov/RollingNews.ie

A UK retailer expanding into Ireland always made sense due to the countries’ proximity to each other, the shared language, similar culture, spending habits, and Ireland’s business-friendly environment, all of which made for a relatively easy transition.

The elephant in the room

However, in recent years, it hasn’t been all plain sailing, as strong competition from domestic firms as well as the additional headaches Brexit has caused has left UK retailers with a choice — whether to invest more into the market or not.

Melissa Moore, retail industry expert and host of The Retail Tea Break podcast, said the “elephant in the room” is Brexit which hasn’t helped UK retailers operating in Ireland with all the different legislation and paperwork that has come with it.

“We were finding before that, for an awful lot of the British brands around the country, it was easy," she said. "They literally just had to ship stock over, they would employ people here, it was very straightforward.

“It has just become so much more difficult for them,” she said, adding there are many more barriers now to trading, along with the cost of doing business here going up as a result.

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A retail industry source, who has experience working with UK firms here in Ireland, said Brexit has forced British companies to consider whether they should invest more into Ireland or not, because operations here can no longer function as simply an extension of their UK operations.

The source said that prior to Brexit, while there were some differences between the jurisdictions, UK businesses could essentially run the Irish side of the business as an “almost regional operation”.

“Now it becomes a bit more of a choice,” they said.

Either they invest in the Irish market or maybe they don’t. 

"A lot of companies have decided 'yes, the Irish market is good. The demographics are really good, the population is increasing, it is a wealthy economy'.”

Argos is one of the companies that had to make a decision whether to invest more into the Irish market or pull out altogether. When store closures were announced in January, the company said the money it would cost to develop and modernise the Irish arm of the business would be better spent elsewhere.

At the time of the announcement, the company had 34 stores in the Republic of Ireland and employed 580 staff. The remaining stores are all due to close on Saturday at 5pm.

The company has been operating in Ireland since 1996.

Argos was acquired by UK supermarket chain Sainsbury’s in 2016 who decided to shutter many of the standalone stores and replace them with outlets inside their stores. The lack of a Sainsbury’s presence in the Republic of Ireland was one of the deciding factors when it came to this decision, along with the cost of doing business here.

Food imports

Iceland has different issues, but nonetheless it is hampered by Brexit.

Last week, the Food Safety Authority of Ireland (FSAI) issued an order for Iceland — operated in the Republic of Ireland by Metron Stores Limited — to withdraw and recall all imported frozen foods of animal origin from all its stores brought into Ireland from March 3.

An empty product fridge unit in an Iceland store due to the product recall. Pic: Larry Cummins

The order came as a result of the food not having an EU veterinary certificate, only a UK one, which would not have been an issue if the UK was still in the EU.

According to the FSAI, any food coming from Britain into the Republic of Ireland must go through documentary, identity, and physical checks in order to make sure they comply with EU food law.

Additional checks need to be performed on food that could pose a risk to public health.

Just to import food into the Republic from Britain now requires someone to have an Economic Operator Registration and Identification number, the products classification code, the various requirements for each food type, register with the European Commission’s TRACES NT system, and ensure that these foods are easily accessible so checks can be performed without much hassle.

While Iceland stores in Ireland had been in difficulty for months — culminating in staff striking over payroll issues and working conditions in May — this order from the FSAI seemed to snowball quickly, and by Tuesday the High Court appointed an interim examiner to oversee the company.

The company claimed it was insolvent and unable to pay an estimated €36m in debt it owed. The company operates 26 stores across the country and employs more than 344 people.

On Wednesday, staff in the Coolock location staged a sit-in protest during the week after they arrived at the store to find it shuttered, leaving them potentially out of a job. Not all Iceland stores were closed.

Challenge for UK companies

While not all UK-based companies with Irish operations are facing the same difficulties, there have been some high-profile examples.

In recent weeks, it was revealed that British lingerie retailer Ann Summers has discontinued its direct-selling business in Ireland due to high operating costs associated with Brexit which made it unfeasible. The decision was made in September last year.

However, the company continues to operate its stores in Dublin and Cork, despite the closure of its direct selling arm.

British retailer Marks & Spencer (M&S) has experienced some difficulties as a result of Brexit. Profits at its Irish operations were down 7.8% despite sales increasing by 15.1%, largely being driven by clothing and homeware.

In its recently published annual results, M&S cited a 3.5% decline in food sales. Due to new import rules and additional paperwork as a result of Brexit, the company said it had to cut 800 product lines in its stores in the Republic of Ireland.

Profits at Marks & Spencer's Irish operations were down 7.8% despite sales increasing by 15.1%. Picture: Chris Ratcliffe/Bloomberg

Despite the issues faced by the company, Ms Moore cited M&S as a good example of British companies doing what needs to be done to keep a foothold in the Irish market, pointing to their revamped store in Liffey Valley in Dublin.

“Their food offering looks superb, they’ve been very savvy about doing what they need to do to still have the correct offering for the Irish public,” she said.

One of the earliest casualties of the pandemic was Debenhams which closed its Irish operations in April 2020 and never reopened, prompting former workers to protest over redundancy payments. It employed 2,000 people here at the time of closing.

However, Debenhams’ difficulties were not confined to the Irish market, as UK operations also went into administration.

In June that year, Mothercare Ireland announced it was entering its Irish franchise into liquidation, resulting in the closure of its 14 stores and the loss of 197 jobs.

The company said the business in Ireland was no longer sustainable following the impact of the pandemic coupled with issues they had in their supply chain. The business was expected to sustain significant losses for years to come before it closed.

Changing landscape

The retail industry source added that the UK retail landscape is going through a lot of changes — such as ownership changes, new market entrants, and companies getting into difficulties and needing to be rescued — all of which were going to have an impact on Irish operations anyway. 

“The sector is in a constant state of transition anyway because of digitalisation and because of changing consumer habits,” they said.

“What that ends up meaning is that companies that have a presence in Ireland are affected by that. What happens in the Irish market mightn’t necessarily be particularly relevant at all. It might be just some big corporate decisions being made in the UK.”

Ms Moore said it is an exciting time for Irish retailers as things here haven’t really changed and now they are treating the UK market as part of a global strategy.

“They are now seeing the UK market as part of this global market, whether it is the UK or the Middle East," she said. 

"I think it is a really exciting time for Irish brands really pushing outside our immediate neighbours, which can only be good for Irish retail and Irish brands.

“Irish retail will be fine out of this, but as for British retail, it has just become so difficult for them.

It is not just trading here in Ireland, it’s trading across Europe.” 

While some UK retailers have seen a few difficult years in Ireland, some are doing very well.

Tesco routinely has the second-highest market share of supermarket spending in Ireland, just behind Dunnes Stores. The Fraser Group has announced an expansion of its Flannels store into the Irish market, with three stores opening this year.

In addition, last month, British music retailer HMV announced a return to the Irish market seven years after shuttering its last remaining stores here.