Retailers concerned by reduction in profit margin, AIB research finds
New research commissioned by AIB has found the main concern facing retailers (23%) is a drop in profit margin, yet half of retailers surveyed expect business to improve within the next three years.
Print22 April 2013
New research has revealed the significant changes in consumer behaviour as shoppers adjust to the new economic reality.
Close to three out of four retailers are now seeing customers buying more items on special offer, according to research carried out by Amárach Research on behalf of AIB. Retailers also said they are seeing an increase in customers visiting their store more often in an attempt to manage their spending more carefully through the week. Nearly two-thirds of retailers said that they are responding to customer demand by discounting more items.
The research forms part of a series of outlook reports for the SME sector launched on Friday (19 May) by AIB. The first report, in association with RGDATA, focuses on the retail convenience sector. The report highlights the importance of the independent retail sector to local economies around the country, pointing out that the sector is often the largest employer in many local communities.
Retailers surveyed indicated that they are keen to switch from survival mode to thriving mode. They said they are experimenting with new ways of engaging with customers and suppliers by combining the best of the ‘new’ (e.g. social media) and the ‘old’ (helpful customer service).
More than half of retailers surveyed said they are planning to expand their operations in the next three years while more than one in five said that they expect their business to eventually be taken over by a family member.
Despite the challenging economic environment, retailers remain optimistic with almost half of retailers surveyed around the country expecting their business to recover with the next one to three years.
More than half (57%) of retailers said they saw their turnover decrease between 2011 and 2012 while 16% reported an increase. The reduction in profit margin was the main concern facing most retailers (23%) followed by wage costs (22%) and competition from larger outlets like the larger supermarket chains (17%).
RGDATA director general Tara Buckley said the report contained the "stark message" that "there is no fat left to cut from any retail operation".
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