Big ticket spending driving ‘miraculous’ economic recovery; CMM report
'Big ticket' spending is driving major growth but food and supermarket sales are also up in value and volume terms, according to findings
16 November 2015 | 0
New findings from the quarterly Consumer Market Monitor (CMM), published today by The Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School, show that consumer spending is making a significant contribution to Ireland’s economic growth.
Much of this recent spending reflects pent up demand reflected in rapidly growing sales of ‘big ticket’ items – new cars, homes and home furnishings, electrical goods and other consumer durables.
Retail sales are also improving significantly with sales volume up by 7.2% in Q3, year-on-year, and by 6.2% for the year to the end of September. Sales of household goods have been particularly remarkable, with furniture and lighting up by 18.7% in volume in Q3 year-on-year, electrical goods up 13%, and hardware, paints and glass up 4.5%. This reflects the increasing number of property transactions and demonstrates the interdependence of these sectors.
Consumer incomes and spending
There are now 1.96 million people at work in Ireland, up by 130,000 since the low point in 2012. This improved employment level is beginning to have a positive effect on the amount of disposable income available in the economy, according to the report.
Looking ahead, consumer expenditure is expected to continue to grow due to sustained growth in employment and stronger consumer confidence. The Central Bank is predicting an increase of 3% in personal spending for 2015 as a whole, and a similar growth of 2.5% for 2016. Other forecasters are more optimistic, forecasting growth in consumer spending of over 3.5% in 2016 and onwards.
Following four years of decline, retail sales stabilised in 2012 and this upward trend has continued into 2015, with sales volume up by 6.2% for the year to the end of September.
Online retailing has become an important feature in recent years, accounting for as much as 15% of business for many retailers. It was worth €5.6 billion in 2014, up 30% on the previous year, and is predicted to grow to €21 billion by 2017.
All product categories in the CMM experienced growth in Q3 2015. Significant points for the grocery and FMCG industry include that food sales are up 5.1% in volume and up 3.4% in value, while non-specialised stores (supermarkets) are up 5.3% in volume and 3.5% in value. Meanwhile, fuel is up 2.5% in volume but down 6.3% in value. Household equipment is up 18.7% in volume and 12.6% in value, and pharmaceuticals and cosmetics up 6.7% in volume and 3.2% in value. Reassuringly for newsagents, books, newspapers and stationery are reportedly up 0.6% in volume and 2.1% in value
Overall, retail sales are back on a strong growth path, accelerating in each quarter of this year, according to the findings, which augurs well for continuing growth through the rest of 2015 and into future years.
To download the full report, visit https://mii.ie/.