Retail sector sentiment in decline; survey

Feeling blue: Business sentiment poor in the Irish market at present

Retail Ireland survey reveals 50% of respondents rated the performance of their business as poor or very poor.

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A Retail Ireland survey shows a significant deterioration in business sentiment of member companies since early summer. The findings are based on responses from 106 retailers polled during September. Half of respondents rated the performance of their business as poor or very poor, one-third (32%) rated it as average and approximately one-fifth (18%) rated it as good.

Commenting on the survey results, Retail Ireland director Torlach Denihan said: “The recovery in retail sales, which was evident earlier in the year, has stalled. The domestic economy remains fragile and recent negative economic news is weighing on consumers. Retailers’ perceptions of the prospects for their own businesses in the period up to the end of November have become more negative.

“To help improve consumer spending the projected adjustments to the public finances need to be translated into specifics as soon as possible, so consumers know where they stand in terms of net disposable income. The savings ratio is running at 11% and many people have significant precautionary savings, however they will not start spending it until they have greater clarity about the future.”

Denihan said that the retail sector remained in survival-mode, and we will have to deal with a decline in sales and a very high cost base. “The amount of money retailers are taking in at the tills has fallen dramatically but rents, service charges, wages and commercial rates remain too high. Retailers have cut prices to survive, but more needs to be done. Government must take decisive action to get the Irish cost base back into line with the rest of Europe.”

Just 5% of respondents were more confident about their business than they were three months ago, just over half (53%) are less confident and 42% of respondents reported similar levels of confidence.

Some 45% of retailers expect sales to decrease over the three months September-November, one-third (32%) expect sales to stay the same and just over one-fifth (23%) expect sales to increase slightly during this period.

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