“How’s Dublin?” I asked the taxi driver on the way into the city from the airport. “There’s cranes springing up like mushrooms,” came the reply.
The ‘crane count’ – apparently there are 58 – is usually a good rule-of-thumb indicator of economic health.
In the case of the Irish capital, where Retail Week spoke to Primark boss Paul Marchant and other retailers, it reflects a bounceback from the ravages of the financial crash and subsequent recession.
Ireland’s economy grew by 5% overall last year, and the country’s central bank has just increased its forecast for this year from 3.5% to 4.5%.
So, after hard times that brought 40,000 retail job losses, Irish retailers can take heart from an economy on the up and demographic changes likely to encourage retail success.
Industry body Retail Ireland has flagged an anticipated population growth of 12%, and a 38% increase in the number of people aged over 65, as likely to support consumer spending growth of almost 12% over the next 10 years.
However, behind such statistics, the picture is more nuanced.
Retail sales by value are still 13% below pre-crisis levels, Retail Ireland points out.
Changing shopping habits driven by the shift online and value-conscious consumers are forcing the pace of change, while the UK’s Brexit decision is also influencing the fortunes of Irish retail and is a source of deep concern (see box below).
Primark’s nerve centre
Irish retail at its best – nationally and internationally – is epitomised by Primark.
The retailer, which trades as Penneys in its home country, has grown from a single store in 1969 to a multinational powerhouse that last year generated sales of £5.95bn.
In Dublin’s Northside, that original Penneys store on the Mary Street main drag remains the chain’s mothership.
It, and Primark’s head offices above and next door to the shop, represent the strength of the retailer’s heritage as well as the contemporary changes under way to ensure continued success.
Primark boss Paul Marchant proudly shows off the new headquarters – an airy, light building dominated by an atrium that is home to a café and restaurant area around which glass-fronted meeting rooms, buying teams and all the other departments are gathered over open-plan floors.
The offices represent a less hierarchical, globally minded Primark reflective of its presence in more than 11 countries, with stores from Berlin to Boston in the US.
“When I joined we were above the store – they were very traditional offices,” Marchant says.
“Now there are no offices at all, but plenty of meeting rooms and break-out spaces. There’s no boardroom – there was one but we took the sign down and anybody can use it.
“We [senior management] all sit out on the floor with the teams. The café is a great place to meet, share stories and talk about what’s going on in the business.”
From the offices, Marchant can go straight into the Mary Street shop, where he points out the latest developments.
The retailer’s own-brand PS cosmetics offer occupies a prominent space on the ground floor, indicative of the success and growing importance of the category. Launched two years ago, PS is now in all branches.
There is a café – one of 13 across Primark’s estate, run with Costa in the UK and Insomnia in Ireland.
“We’re looking to roll out more,” says Marchant. “If you’re doing family shopping you could be in the store for a few hours, you want somewhere to sit down and relax.”
The Mary Street store, Primark’s number one Irish branch and among the top 10 across its entire portfolio, serves 3.5 million customers a year.
“We’re a democratic brand – just look around,” says Marchant, as he surveys a diverse and eclectic crowd of customers.
“No other business allows managers to have such control over their inventory, therefore we attract, develop and generally retain the best”
That democratic attitude extends to empowerment of store managers, he continues. Other than about core product, they make key stock decisions.
“Our managers have huge autonomy,” he says. “No other business allows managers to have such control over their inventory, therefore we attract, develop and generally retain the best.”
The retailer has strengthened its leadership team with a variety of new appointments and promotions.
Former Lidl UK chief operating officer Martin Bailie joined in May as group sales and operations director, a role he shares with Stephen Regan, who was promoted to that post. They succeed Ben Mansfield, who is retiring mid-September.
David Paterson joined Primark as chief financial officer in May and Lorraine Culligan was promoted in June to group director of people and culture.
Marchant and chief operating officer John Lyttle complete the top team.
It is representative of wider continuity and change at the fashion powerhouse.
“The average age in Primark’s head office is now 34 compared to 44 10 years ago – and a lot of the people who were with us 10 years ago are still here,” Marchant says. “We’re definitely a young business.”
Eason writes a new chapter in bookselling
Around the corner from Primark, on O’Connell Street, bookseller and stationer Eason epitomises some of the changes going on in Irish retail.
Eason, which has traded from the O’Connell street flagship since the mid-19th century – rising phoenix-like after being gutted by fire during the 1916 Easter Rising – was buffeted by the winds of recession as well as by shifts in its market such as the rise of Amazon and ebooks.
But the retailer has adapted.
Managing director Liam Hanly, who took up the post earlier this year having been with Eason since 2010, and his predecessor Conor Whelan together developed a strategy to update the business to bring it renewed relevance.
The store has just undergone a €4m revamp and over the next three years Eason will spend €7m enhancing its digital business and rolling out changes to stores along similar lines to those introduced in O’Connell Street.
The ambition is for bricks and clicks to complement each other, to make the most of all channels and the relationship between them and to adapt the business to best cater for changed shopping habits.
Eason has put books back at the heart of its business, evident both in their prominence at the front of the shop and in the way they are ranged in order to reflect the strengths of physical retail and shopping habits influenced by online buying.
Often when consumers visit bookshops they are not sure of what they want, says Hanley.
So new releases and suggestions – books inspired by films, charts, book club recommendations – take pride of place at the front, helping customers make choices.
“The internet has conditioned people into very clear categorisation. They want what they want, in an engaging manner”
Equally, because online shopping is often driven by search and therefore shoppers are used to arriving fast at what they want, without being distracted by other products, the store sections are very clearly defined.
For that reason, says Hanly, there is very little cross-merchandising in the shop and the various departments – such as stationery – are clearly distinguished.
He explains: “The feedback we were getting was that the stores were getting a bit cluttered and the offer a bit confused.
“The internet has conditioned people into very clear categorisation. They want what they want, in an engaging manner.”
The online business is being developed apace – a click-and-collect service is being tested and is expected to be live in time for peak trading – and customers can order online in-store.
Hanly says: “We’re very excited about our strategy and backing ourselves on a great book experience. The growth of multichannel is a great opportunity.”
Hanly looks forward with confidence about a retailer with more than a century of heritage behind it. “I’m looking to keep it going for the next 100,” he says.
Other than the UK itself, perhaps no country more than Ireland has the implications of Brexit so front-of-mind.
The country has the only EU land border with the UK, so freedom of movement and the possibility of Britain adopting World Trade Organisation rules on tariffs are among its concerns.
From a retail perspective there are also worries about prospects for consumer confidence and a switch to shopping online with British retailers because of the decline of the pound.
According to Retail Ireland, 75% of online transactions take place outside the state, a trend “accelerated following Brexit and the subsequent fall in the value of sterling”.
“The impact of a hard Brexit is predicted to result in a significant fall in incomes and consumer sentiment in Ireland, which would lead to lower consumer spending”
Retail Ireland’s Shaping the Future of Irish Retail 2020 report states: “Brexit poses an ongoing threat to the retail sector.
“The drop in the value of sterling has had an immediate effect on Irish retailers and has already led to significant price deflation in the Irish market. It is predicted that retailers will face into a weak sterling and a volatile currency environment for the foreseeable future.
“The impact of an increasingly likely hard Brexit is predicted to result in a significant fall in incomes and consumer sentiment in Ireland, which would inevitably lead to lower consumer spending.
“From an economic perspective, this is the most imminent and significant downside risk faced by the retail sector.”
Changing property scene
Alongside such venerable Irish retail names, there are many new arrivals and Dublin’s bounceback from recession is making itself felt on the high street.
Big names are touching down – Victoria’s Secret will open soon near Brown Thomas on Grafton Street, where L’Oreal’s Urban Decay also opened its first Irish store, and Hotel Chocolat makes its Irish debut in Dundrum Town Centre in October.
And interest remains strong, according to CBRE senior director Bernadine Hogan, who says that Dublin features on the radar of many of retail and hospitality’s biggest names.
“There’s a lot of interest from international brands, and food and beverage continues to be strong,” she says.
There are only two vacant units on Grafton Street, where prime premises now attract a zone A rent of €6,300, versus 13 leases on the market in 2013, she adds.
However it is on the Northside where a lot of the retail property action is likely to occur in the coming years.
The Henry and Mary Street area, where zone A at present is about €4,000 at the top end, is home to most of the big high street names, and the famous Arnotts department store.
Property giant Hammerson and partner Allianz Real Estate last year took ownership of Dundrum Town Centre, which Hammerson boss David Atkins described as a “game-changing step”.
Hammerson also acquired Dublin Central, a five-acre development site in the city centre, facing on to Henry Street and O’Connell Street.
There is planning consent for 130,000 sq m with a mix of uses allowed, although some issues about the 1916-associated heritage of the site must be satisfactorily addressed for the scheme to go ahead.
“Consumers came through the collapse of the Celtic tiger. We’ve had a big influx of people because of the growth of the tech industry”
But such developments are likely to further turbocharge the city’s Northside, traditionally more working class than the more affluent Grafton Street and the Southside.
The two retail centres will soon be linked by the Luas light rail tram system, which Hogan says will encourage more shoppers into the north of the city. “The north will see bigger developments” she says.
While Irish retailers undoubtedly face some possible problems ahead, in particular any possible fall-out from Brexit, Dublin looks well positioned to thrive.
Marchant says: “Consumers came through the collapse of the Celtic Tiger. We’ve had a big influx of people because of the growth of the tech industry.
“In Dublin in particular there’s a real vibrancy – it’s a city on the up.”
A new generation of food retailers
Independent food retailers are making their mark on Dublin’s retail scene.
Grocers Fallon & Byrne and Donnybrook Fair blend foodservice and product. Impressive visual merchandising helps emphasise the quality and provenance of the retailers’ food and eating options range, from takeaway to wine bars and cafes.
Worth a look if visiting Dublin is Fallon & Byrne’s flagship store is on Exchequer Street. It also has a restaurant in Dun Laoghaire’s People’s Park.
Another inspiring food specialist is Donnybrook Fair, which has six branches in Dublin, including its flagship on Morehampton Road in the south of the city.
Similarly Avoca, a department store whose origins lie in throws and blankets, also offers food – much of it own-branded – and it has developed a strong reputation for its restaurants.
Avoca has 12 stores and cafes across the island of Ireland, including on Dublin’s Suffolk Street.