Reeling in the year

2010

It’s been a challenging year in retail but there have been many positive developments too. We take a look back at the events that befell the sector in the past 12 months

News

15 December 2010

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JANUARY

Retailers suffer 38% drop in sales due to weather: Extreme weather for the first two weeks of the year caused major disruption and retailers reported a 38% loss in sales.

Claims that Tesco misled consumers rejected: The Advertising Standards Authority of Ireland rejected claims by RGDATA that Tesco advertisements misled consumers about the extent of its price-cutting campaign. RGDATA had complained that the adverts were inaccurate because many of the claimed price cuts related to items not previously stocked, but substitutes imported from the UK.

Code of Conduct to be introduced: The Government says it will introduce a statutory code of conduct for the grocery retail trade alongside an ombudsman to enforce its rulings. The code will be on a voluntary basis initially but will be put on a statutory footing when the National Consumer Agency and the Competition Authority merges into a single body.

Dunnes Plastic bag levy: Dunnes Stores claims the Revenue Commissioners miscalculated its tax assessments owed for the plastic bag levy. The supermarket disputes a tax bill of €36 million for uncollected and due payments arising from the levy. According to Dunnes, the levy applied to larger bags given to customers at point of sale to hold their shopping but the Revenue Commissioners’ assessments wrongly included other bags used for wrapping or hygiene purposes.

FEBRUARY

Retail Ireland calls for 10% rebate: The IBEC group asked local authorities to give businesses a 10% rebate on the previous year’s rates bill. According to director Torlach Denihan, a rebate would help avoid further redundancies in the retail sector, following 30,000 job losses last year.

Duke Street takes over Payzone: Private equity group Duke Street announces it will take over Payzone’s business in a move to safeguard 500 jobs and ensure all creditors get paid. Ernst & Young are appointed to Payzone and Duke Street invest €45m to give it a controlling stake in the business.

Children used as cigarette mules: Lobby group Retailers Against Smuggling say children are being used as mules by tobacco smuggling gangs to go door-to-door delivering packets of cheap cigarettes in housing estates.

SuperValu largest retail advertiser in Ireland: It is revealed that SuperValu spent €21.3m on press and TV ads in 2009, followed by Harvey Norman which spent €20.3m.

IFA says food chain is broken: The Irish Farmer’s Association claims the food supply chain is broken as a result of powerful retailers dictating uneconomic price levels to producers. The organisation calls on the Government and the EU Commission to introduce new regulation as well as enforcing existing competition laws to tackle anti-competitive conduct. According to IFA president John Bryan the new grocery code of conduct must provide the means for a more equitable sharing out of the consumer price across the food chain. The group has also demanded retailers be forced to reveal their profit figures.

Hughes & Hughes bows out: One of the country’s largest bookshop chains, Hughes & Hughes goes into receivership, with the loss of 225 jobs. In a statement, Hughes & Hughes said the exchange rate differential with sterling, internet competition and the fall off in passenger numbers at Dublin and Cork airports also contributed to its problems. The group also said an inability to negotiate sufficient retail rent reductions was also a difficulty. The seven outlets at Dublin and Cork airports were later taken over by Eason & Son retaining about 120 of Hughes & Hughes employees.

MARCH

Nama landlords force rent hikes of up to 400%: Landlords are said to be increasing commercial rents in order to boost the valuation of property assets ahead of their transfer to the National Asset Management Agency (Nama). Labour Party TD Ciarán Lynch said rent increases were “creating a situation whereby retailers across the country are now threatening to go on a national strike”.

Self regulation of alcohol sales works: More than 90% of shops surveyed by Responsible Retailers of Alcohol in Ireland are found to be in compliance with the code.

Aryzta shows fall in food business: Cuisine de France owner, Aryzta, unveils a 7.4% fall in sales at its food division in the previous six months of 2009.

APRIL

Bonus for M&S staff: Employees of Marks & Spencer share an £80 million bonus when the company beats its targets for 2009 despite the recession. The bumper payout is to be the second highest ever paid by M&S.

Superquinn not for sale: Superquinn chief executive Simon Burke says that the Irish-owned supermarket is not for sale and no one had come looking to buy it “in a long, long time”. He also says the well-publicised difficulties of some of his co-owners had no impact on Superquinn, and he had received assurances from his business partners that the retailer would not be drawn into Nama.

40% of retailers forecast layoffs: A Retail Ireland survey revealed that 40% of retailers expected employee numbers to fall over the following three months.

Cigarette smuggling costs retailers €692 million: It’s revealed that retailers were forced to write off €692 million in lost tobacco sales in 2009. Japan Tobacco International (JTI) found cigarette smuggling cost the Government €556 million euro in lost taxes. Earlier in the year, JTI took the “unprecedented” decision to cease trading with a midlands shop believed to be selling counterfeit product.

Tesco sales increase 15% following May price cuts: Tesco price cuts introduced in May 2009 are responsible for a 10% growth in the supermarket’s number of transactions, and a 15% rise in sales volumes and trading at Tesco’s 11 stores in border areas rose by an average of 33% year-on-year.

Retailers unveil plan to recruit 1,000 staff: Fifteen leading Irish retailers unveil plans to recruit 1,000 full-time staff over 12 months. Industry group Retail Excellence Ireland (REI) launched a campaign dubbed ‘Back to Work in Retail’, and enlisted Superquinn founder Feargal Quinn as the public face of the scheme.

Racy crisps ads not so Hunky Dory, say rugby chiefs: The Irish Rugby Football Union (IRFU) claims Hunky Dory’s racy rugby ads wrongly implied the company was a major donor to the game. “This advertising campaign is in very bad taste and one which the IRFU would not want to be associated with in any way,” said spokesman Padraig Power. IRFU solicitors subsequently requested Largo Foods withdraw the campaign.

MAY

RGDATA successfully appeals Castlerea superstore: RGDATA successfully appeals planning permission for a 20,000 sq ft food superstore on the outskirts of Castlerea. Plans for the new superstore had previously been given the go-ahead by Roscommon County Council. However, following RGDATA’s appeal to An Bord Pleanala, the board refused planning permission on the grounds that the superstore would “be contrary to the Ministerial guidelines set out in the Retail Planning Guidelines for Planning Authorities…which support the continuing role of town centres.”

Sir Terry Leahy retires from Tesco after 14 years with the retailer

Facilitator appointed for voluntary code of conduct: Former chief executive of Forfas, John Travers, is appointed as facilitator for the Grocery Code of Conduct. Minister Batt O’ Keefe describes Travers’ appointment as an important signal of the importance Government places on developing a fair trading relationship between retailers and their suppliers.

Asda to take over Netto stores: Asda announces it is acquiring the UK arm of discount retailer Netto in a move set to add another 193 stores to its estate by late summer.

JUNE

Sir Terry Leahy leaves Tesco: At 55, Sir Terry Leahy announces he will retire from Tesco after 14 years as chief executive to be replaced next March by Philip Clarke, his head of international operations.

Retailers call for dedicated cigarette taskforce: Lobby group Retailers Against Smuggling (RAS) calls for a specialist Garda taskforce to be introduced to counteract street sellers of smuggled cigarettes.

Third of requests to cut rent rejected: According to the IBEC lobby group Retail Excellence Ireland, one third of landlords rejected requests from retailers to cut rents with many retailers claiming their businesses would fail next year.

Big retailers oppose grocery code: In submissions to the Department of Enterprise and Employment, major retailers Tesco, Superquinn and Lidl all staunchly oppose the Government’s plans for a grocery code of conduct and ombudsman arguing that a code would add significant costs to the industry, risk further job losses and push up retail prices.

Irish spent over €2bn online in 2009: Irish adults spent €2.13bn on online purchases in 2009, a survey by Visa Europe shows. Women are the highest spenders online, with 25% spending more than €1,000 on internet shopping last year.

Grafton Street rents down more than Henry Street: A Lisney rental report says that rents on Dublin’s Grafton Street fell by 13.11% more than those on Henry Street since the market peaked in 2007. This was due to the “poor physical environment” of Grafton Street and the restrictions on the type of shops permitted.

JULY

€70m to be invested in motorway service sites: Applegreen, building contractor Pierse and Top Oil plan to invest €70 million in a public-private deal to develop a series of motorway service sites for the National Roads Authority.

Tesco creates over 700 jobs: Tesco creates 748 new jobs in a €113 million expansion, with the opening of seven new stores throughout Ireland. The chain will open the new stores over the next 12 months in Kinnegad, Oranmore, Swinford, Ballybeg, Naas, Kimmage and Dublin city centre.

Spar sales in decline for first time in 10 years: Sales across the Spar Ireland retail network fall for the first time in more than a decade last year.

Grocery market slumps by €500m: The Irish grocery market value fell by half a million or 5.7% to just under €8.78bn during the year ended 13 June. Kantar Worldpanel statistics show that the decline in sales value slowed following Tesco’s price cuts.

Profits up 12% to €3m at Barry group: The Barry Group announces an increase in pretax profits to €3 million for 2009; up 12% on 2008 results. The group says it plans to further expand its Buy Lo and Carry Out chains.

Founder of Aldi supermarket dies: Theo Albrecht, whose expansion of Aldi grocery stores made him Germany’s third-richest man, dies at 88. Albrecht passed away in the western Germany city of Essen on 24 July. The reclusive billionaire, who also owned Trader Joe’s stores in the US was buried in a private ceremony. Aldi’s global expansion resulted in the combined fortune of Theo and his 90-year-old brother Karl, topping $40 billion in 2010, making Theo and Karl the 31st and 10th richest people in the world.

AUGUST

Arnotts is taken over by Anglo: Arnotts department store in Dublin is taken over by Anglo Irish Bank, after it ran up debts of €260 million. The bank appoints three new directors to Arnotts’ board.

Dunnes urged to boycott Israeli goods: Dunnes Stores receives a petition signed by 6,000 of its customers calling on the supermarket to stop stocking Israeli products because of its policies on Palestine.

IFA wants National Consumer Agency (NCA) disbanded: The Irish Farmers’ Association (IFA) calls for the NCA to be disbanded after the consumer watchdog’s calls for planning regulations to be lifted – allowing even larger retailers to set up in Ireland.

Happy birthday Lidl: The German discounter marks its 10th year in the Irish market with nationwide competitions.

Superquinn executive likely to take Dunnes post: Rumours surface of Superquinn’s second-in-command, James Wilson, moving to rival Dunnes Stores. Superquinn had already lost its operational and development director Sheena Forde, who quit the retailer to become head of buying at Dunnes.

Payment on delivery is illegal, Noffla warns: Jim McCabe, national spokesman of the National Off-Licence Association, reminds retailers that accepting cash payments for delivering alcohol to the homes of customers is an illegal practice, as a result of the sale taking place outside licensed premises. An RTÉ Primetime investigation found off-licences in north Dublin were delivering alcohol to underage customers without identification.

SEPTEMBER
Consumer spending falls for third month: Consumer spending falls for the third month in a row, CSO figures reveal. However cars, fuel and the food business sectors recorded growth, while the biggest drops occurred in bars, department stores and pharmaceutical and cosmetic firms.

Marks & Spencer turns to brands: Marks & Spencer begins to sell big name brands across its Irish stores. The retailer put 450 non-M&S products on the shelves of its biggest stores.

Dublin city centre Aldi on market for €5.25m: Aldi’s Parnell Street branch in Dublin 1 goes on the commercial market. Savills agency quotes a guide price of €5.25 million for the outlet, which pays rent of €386,500 under a 25-year lease dating back to July, 1998.

Campaign to stop sale of alcohol to minors: Gardaí plan a major pre-Christmas clampdown on the sale of alcohol to minors by staging undercover operations in pubs, clubs and off-licences during which children will be sent by Gardaí to try to buy drink. Any licence holder found to be breaking the law will be prosecuted, fined up to €5,000 and ordered to close for up to 30 days.

Two-thirds of Londis retailers want JLC rates abolished: Almost two-thirds of Londis retailers call for the abolition of the Joint Labour Committee (JLC) mechanism for fixing wages in the grocery sector. The retailers highlighted the existing JLC system raises retail wage rates by up to 25% higher than the national minimum wage.

Sales rise for 75% of Love Irish Food members: The Love Irish Food (LIF) organisation announces that 75% of its members have seen sales rise since the initiative was started a year ago.

OCTOBER

Spar Ireland unveils cut-price product range: Spar reports that it will launch a new S-Budget line including 50 own brand products. The company is introducing the new line because its own brand label sales have grown 12.4% year on year.

Business lobby group wants commercial rates slashed: Retail Ireland calls for a 20% cut in commercial rates in 2011.

BWG launches ‘Glenmor’ range: BWG launches a €1m investment in the ‘Glenmor’ brand which will be used for own-brand pre-packed beef, ham, poultry and lamb.

Retail sales down over 3%: Retail sales decline again in the third quarter of 2010, according to figures from Retail Excellence Ireland. Sales are down more than 3% against the same three-month period a year earlier.

AIM group announces large investment through its Iceland franchised stores

NOVEMBER

Ireland nearly tops Tesco’s profit list: A report by stockbroker Shore Capital claims that Tesco makes greater profits in Ireland than in any other part of its global empire apart from South Korea.

Iceland to create 2,000 jobs: Budget supermarket Iceland is to create up to 2,000 jobs in Ireland with the opening of more than 40 stores over the next four years. The Iceland franchise in Ireland is held by the AIM Group which already operates stores in Finglas, Ballyfermot and Navan Road in Dublin.

Fear of more cuts as drinks trade sheds 25,000 jobs: A report by the Drinks Industry Group of Ireland (DIGI) reveals a quarter of jobs were lost in the industry in the last two years.

Cross-border shoppers spend €418 million: Shoppers from the Republic spent an estimated €418 million in the North over a 12-month period up to July. Although the level of overall cross-border shopping did fall by 4% over 2010, the Central Statistics Office (CSO) described this decrease as not statistically significant. The paper also states the number of households in Dublin who shopped in the North fell from 21% to 15%. Groceries remain the most popular item of expenditure, with 77% of all cross-border shoppers buying some food products.

Greencore and Northern Foods plan to merge: Greencore Group and Northern Foods Plc agree to merge in a transaction that will create a company with annual sales of about €2 billion. The new company is to be called Essenta Foods.

Development plan will curb new off-licences in Dublin area: The opening of new off-licences in Dublin city is to be severely restricted for the next five years under a new Dublin City Development Plan. A new outlet will only be allowed where there is a “compelling case” for one to be built in a particular area.

Superquinn selects Dunnes former chief as new CEO: Superquinn appoints former Dunnes Stores director Andrew Street as chief executive with Simon Burke becoming non-executive chairman.

DECEMBER

Retailers suffer big freeze in spending: The big freeze leaves the retail sector nursing losses estimated at more than €60 million a day. An IBEC survey of 400 businesses shows that snow-related losses in the retail sector will total €130m every seven days. Tesco also reports a 70% increase in online shopping.

Britvic’s €122.3m writedown pushes firm into loss: Drinks company Britvic writes down its Irish business by €122.3m amid a continuing deterioration of the Irish market. Chief executive Paul Moody states: “Both revenue and margin have come under severe pressure as retailers and manufacturers respond to the changing consumer environment,” Despite not ruling out further pay cuts and job losses, Moody reiterated that the group remains committed to Ireland and has “no plans to leave.”

No increase on alcohol but budget will reduce spending: Retail Ireland welcomes the fact that the Government did not increase the excise on alcohol in the budget. Director, Torlach Denihan said: “It is very positive that excise on alcohol has not increased as this could have reignited cross-border shopping.” However he did believe that the budget would reduce householders’ spending power and probably retail sales.

EU/IMF study should lead to axing of retail store size cap: The retail size cap will likely be finally lifted, after the Government conducts a new study on the economic impact of its removal as part of the EU/IMF bailout package.

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