Retailers in Ireland experienced a growth in performance in the first quarter of 2017, according to the latest report from representative group Retail Ireland.
Retail sales increased by 3.1% compared to the first quarter of 2016, but the report says that falling prices and weak consumer confidence could put retailers under pressure.
"Sales data for the first quarter appear broadly positive on the surface, however some of the other key sector metrics are a cause for concern," said Thomas Burke, director of Retail Ireland.
Consumer confidence
The first quarter of 2017 saw significant deflation and heavy discounting across most retail categories, with consumer prices now back to 2009 levels.
"Consumer prices remain in free fall and profitability in the sector is now coming under real strain as Irish retailers cut prices in order to remain competitive, both with each other and with foreign based online retailers," said Burke.
"Irish consumers continue to be strongly motivated by price and value in 2017. This downward pressure on prices is particularly worrying given recent cost increases for retailers, in rents, rates and insurance."
"Such increases are likely to put further pressure on the wafer thin operating margins in the sector. With consumer confidence remaining shaky, retailers are bracing themselves for difficult trading conditions over the coming months," he concluded.
Trends
According to the data from Retail Ireland, department stores had a positive start to 2017 with online retail being 'the main driver of growth', and there was also a strong demand for electrical goods such as televisions and kitchen appliances.
Supermarkets and convenience stores, however, are currently experiencing an increasing gap between performance and growth in consumer expenditure, with deflation remaining a problem for retailers.
The late timing of Easter also had a negative impact on sales in the areas of pharmacy, fashion and footwear.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
