Retail Ireland, the body representing the Irish retail sector, has today reported a strong start to the post-Christmas sales period but has concerns over the start of 2011.
An Irish debt crisis which led to Eire being bailed out by the European Union has left the country’s economy in tatters, meaning confidence is very low and people are becoming more careful with their money.
Over half of retailers surveyed by Retail Ireland said they expected sales to decrease over the three months from December to February whilst just over a quarter believe sales levels will stay the same.
Torlach Denihan, Director of Retail Ireland, said: “The strong post Christmas sales are some badly needed good news after the ten per cent fall in last week’s retail sales by comparison with the same week last year. Next year will be very challenging for the retail sector.
“Since the start of the recession there has been a massive fall in what customers spend, but the cost of running a shop has hardly fallen at all.
“Rents, hourly wages, REPAK fees and local authority charges have by and large not fallen. If thegovernment is serious saving jobs in the retail sector it should tackle each of these areas in turn.”
Almost no respondents surveyed by Retail Ireland said that they felt more confident then they did three months ago, and while most Irish retailers questioned (45 per cent) think customer numbers will stay the same between now an February, almost as many (39 per cent) believe they will go down.
Another looming problem for Irish retail is the compulsory pay increase of 1.25 per cent on the domestic grocery sector, adding another strain on Irish grocers’ margins.
Director of the Irish Business and Employers Confederation Brendan McGinty has called on the Irish government to halt the compulsory pay hike, abolish the current wage system and launch a national review.
“Most retailers simply cannot afford pay increases, especially as the Budget will reduce consumer spending power next year,” McGinty said.
“Higher labour costs, on top of the effect of bad weather on trade, will simply put more retailers out of business and cost jobs.
“Many of Ireland’s regulated wage rates are too high by international standards, particularly when compared with the UK, and are a major stumbling block to regaining competitiveness and creating jobs.
“This is simply not sustainable in the current economic climate. The regulation of the labour market has an enormous effect on competitiveness. Any system of administered wages must operate in a manner which underpins employment rather than hinders it.”