Shopping locally could unlock extra €500m for Irish retailers

While overall retail sales in the first 10 months of 2021 are higher than 2020, the strong performance of sectors like food and alcohol and motor sales hide the fact that many local non-food retailers are still struggling.

It is ‘make or break time’ for the Irish retail sector, and particularly for locally owned high-street stores, according to a new Champion Green report by economist Jim Power.

Given the current Omicron fears, some people are cautious about physical Christmas shopping, the economist says, so online purchases have become a more significant feature of the market.

“If this 39% of online shopping with domestic retailers was to increase just one-quarter, to around 50%, it would translate to €500m in extra online sales for Irish registered retailers”

Figures show that non-food retail sales, our expenditure on the likes of fashion and gifts, is the consumer spend most vulnerable to online purchasing from overseas retailers.

Power said that is vitally important for the domestic economy and for jobs and prosperity that Irish consumers now do their utmost to shop physically or to ‘click and collect’ with businesses local to them, the Champion Green report reads.

“For retailers, November and December are the two most important months of the year, when they typically earn 70 per cent of annual profit, and up to 50 per cent of revenue. This money goes back into local economies through jobs and taxation. Overseas purchasing is money that is lost to Ireland”, Jim Power explained.

€5bn Christmas spend in Ireland

In the month leading up to Christmas, consumers in Ireland will spend around €5bn instore and online, across both domestic and multi-national retail brands. 

With online buys now less of an option for Christmas shopping, Champion Green supporters are calling on consumers to visit their local High Street and to spend locally wherever possible.  Significant direct and indirect employment is dependent on this consumer spend, they say. 

In the first quarter of 2021, there were 213,000 people employed in the retail trade here, and 61,600 people in the wholesale trade.  These 274,000 jobs in wholesale and retail support another 135,000 jobs in the rest of the economy, in manufacturing and services. 

While the pandemic accelerated the shift to online shopping, this move also facilitated shopping spend leaving the country.

In 2020, it is estimated that online shopping with Irish registered retail businesses was valued at close to €2bn. However, online shopping estimates with overseas retailers totalled almost €3bn.

“If this 39% of online shopping with domestic retailers was to increase just one-quarter, to around 50%, it would translate to €500m in extra online sales for Irish registered retailers”, the report author says.

The latest CSO quarterly statistics chart the continued recovery in our domestic economy, which is supportive of consumer spending, Jim Power’s report reads.  

“Consumer spending is rebounding strongly, due to repressed demand on account of Covid-19 restrictions.  Household savings in September this year reached a record €138bn, while average earnings improved 5.4%”.

However, the downside is that, while overall retail sales in the first 10 months of 2021 are higher than 2020, the strong performance of sectors like food and alcohol and motor sales hide the fact that many local non-food retailers are still struggling.

Sales from department stores to date in 2021 were 2.4 per cent lower than in 2020, and 24.5 per cent lower than the equivalent period in 2019.  Similarly, sales of books, newspapers and stationery were 6.2%lower than in 2020, and 34.7% lower than 2019, according to the economist’s study.

“It is clear and very concerning that parts of the retail sector have been hit very badly by the pandemic and the restrictions put in place to protect the health of the nation”, Jim Power says.

“Irish consumers and policymakers must recognise the importance of domestic SMEs, retailers, producers and manufacturers, in terms of jobs, service provision and local investment, and especially in relation to the vibrancy of our villages, towns and cities,” Power urged.

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