Retail sales growth continues, but Brexit poses real threat; Retail Ireland
Retail sector concerned about the 'effect that recent currency fluctuations may have in the coming months', says Retail Ireland
29 June 2016 | 0
Retail Ireland, the Ibec group that represents the retail sector, has welcomed the continued growth in retail sales as evidenced by the May sales numbers released by the CSO. However, retailers cautioned that this strong momentum should not be taken for granted and that threats to continued growth remain, especially in the context of Brexit.
Retail sales values, excluding bars and car sales, increased by 3.7% in the year to the end of May, pointing to a strong performance over the first five months of 2016. There was also strong volume growth across the retail sector in the year to the end of May, with sales volumes increasing 6.6% in the last 12 months.
Retail Ireland Director Thomas Burke said: “Retail sales have been robust in recent months with sustained growth across most of the major retail categories. There is, however, significant concern within the sector at the potential impact that last week’s decision by the UK to leave the European Union will have on the retail trade over the coming months.”
The UK’s decision to leave the European Union will have both short term and long term consequences for retail trade in Ireland. The sector, which is characterised by a large number of UK-headquartered retail chains, holds significant fears over the effect that recent currency fluctuations may have in the coming months.
While short-term impacts centre primarily around the concern that those in border areas could choose to shop up north due to the devaluation of Sterling, Burke added that “in the longer term, concerns also exist around issues such as a potential return to customs controls and duties between the UK and Ireland and possible added logistical complications of moving products between the two islands, as well as between the north and south.” He described these potential additional supply chain costs as “bad news for Irish retailers who are still struggling with legacy costs and in more recent times increasing utility and labour costs”.
Burke added that government “must now do all in its power to address this increasing cost base for Irish retailers and ensure rising costs don’t out strip growth in this crucial part of the Irish economy”.