Spend in stores falls 17% in Q1

SHOPPERS spent 17% less in Irish stores during the first three months of the year with fashion and jewellery sales particularly hit.

Figures released by Retail Excellence Ireland (REI) show January was the best performing out of the three months.

It said this is “alarming” as January is traditionally the weakest month of the year following the Christmas boom and this indicates how dire the situation is.

Average retail sales per square foot fell by a record 40% from quarter four 2008 to quarter one 2009, according to the REI figures which were based on feedback from 440 retailers representing more than 3,000 stores in Ireland.

Menswear saw the biggest drop in sales, while jewellery had the largest fall when it came to average transaction value from €125 in the first quarter of 2008 to €85.46 in quarter one 2009.

Average sales per square foot in the period dropped by 59% in giftware and homeware and 29% in footwear and jewellery.

REI chief executive David Fitzsimons said: “Not surprisingly, retail sales deteriorated dramatically across all retail businesses in the first quarter of 2009, although the near 40% fall in average sales per square foot from quarter four 2008 to quarter one 2009 was unprecedented.

“Fashion and jewellery were particularly badly hit and grocery still experienced its worst month in January as post-Christmas cross-border shopping intensified.

“Furthermore, the traditionally valuable holiday sales drivers of Valentine’s Day and Easter failed to boost consumer spending over the period.”

Mr Fitzsimons said that a majority of REI’s retail members have been trying to negotiate rent with their landlords in a bid to reduce their cost base as sales fall.

On average, rent as a percentage of sales is around 13%, but REI said the true extent of the problem is at the higher end where some operators face rent costs that are as much as 70% of their turnover.

“Our members have been doing everything in their power to improve business and respond to customers’ drive for value, including dropping prices to stimulate activity, which means that, amidst falling sales, margins deteriorated even further.

“And with the budget to take full affect in May, all indications suggest that this trend will continue through quarter two,” he said.


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