Irish households will spend an average of €2,654 in shops this December, a 2.6% increase compared to Christmas 2016, and €870 more than any other month of this year, according to analysts' forecasts.
The newly-released Christmas Retail Monitor 2017 from Retail Ireland has predicted an increase in total sales of over €100 million, with sales over the Christmas season expected to top €4.5 billion, up from €4.4 billion in 2016.
However, Retail Ireland says that Irish consumers now increasingly opt for foreign websites which will pose a challenge for local retailers to ensure that this sales buoyancy is felt and that they reap the rewards of the anticipated spending increase.
Low Prices
Several factors indicate that retail prices will remain low, including intense competition and favourable currency movements, according to the group.
Prices of consumer goods have fallen 2.2% in the first ten months of 2017 and by 8.4% over the last three years. This pattern is set to continue due to Black Friday and Cyber Monday sales, it said.
Retail sales were up 3.9% in the first ten months of this year in value terms on the same period in 2016. Additionally, gross disposable income was up 5.4% for the first half of the year compared to a 4% growth in 2016.
Overall employment grew by 2.9% during the first half of 2017 and the Irish labour market is now approaching full employment, with the country having the lowest unemployment rate since 2008.
Thomas Burke, director of Retail Ireland, said now that last week's uncertain political environment of a looming Christmas General Election has passed, things are beginning to look up for Irish retailers.
"Now that the uncertain political environment of recent days has passed, retailers are looking forward to the approaching Christmas period with renewed optimism,” said Burke. “Rising disposable incomes, more people at work, and falling prices will raise consumer spirits and enable greater spending power over the busy Christmas period.”
E-Commerce Trend
The online market is surging among Irish consumers too. According to Retail Ireland, the uplift in sales through online channels is running at six times that of traditional brick and mortar outlets.
Total e-commerce spend is likely too surpass €16 billion before the end of the year, according to statistics by the Irish Central Bank. This would represent an almost 50% increase since 2015, according to Retail Ireland.
“The growing migration by Irish consumers online over recent months is creating a challenge for Irish retailers,” said Burke. “Local traders have to date been unable to stem the flow of close to 75% of online consumer spending that currently leaves these shores.
“Irish retailers are reacting however, and the online consumer offer is stronger than at any point in times past. Irish retailers also continue to focus on getting their in-store activity right in these crucial trading weeks and will be seeking to capitalise upon an increasing willingness on the part of consumers to spend their greater levels of disposable income.”
Segmented Challenges
However, different retail categories will face their own particular set of challenges, said Burke.
Supermarkets and convenience stores will have to focus on the week beginning on 18 December, since Christmas Day falls on the following Monday. Because Black Friday has a minimal effect on food sales, keener competitive activity will make this period a make or break week, according to Burke.
Department stores expect this holiday season to be a bit of a nail-biter with last-minute shopping expected well into the week before Christmas, Burke said. He does not expect early sales or pre-Christmas price promotions within this category.
For 2017, the big focus in department stores is around personalisation, fragrance, champagne and chocolates. For men it will be about trainers, expensive branded and limited editions at mid-price, and as always, for women, luxury accessories and niche fragrance, according to Burke.
Pharmacies And Electronics
For pharmacies, footfall and sales were up for the start of Christmas compared to last year, according to Burke. Sales are expected in premium cosmetics, fragrance and Christmas gifts this year.
Online sales are forecast to grow in the lead up to Christmas Day, as companies slash prices to attract customers. Community pharmacies report slightly slower growth thus far, but hopes remain high for the weeks ahead, he said. The big winners of Black Friday and Cyber Monday sales were electronics stores. TVs, tablets and video game systems were key sales drivers with demand for them set to continue until Christmas.
While discounting and promotions were used to generate sales over the Black Friday weekend, there will be an renewed emphasis on margin retention on the run up to Christmas, said Burke.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: The European Supermarket Magazine.
