Online and catalogue retailing is being hampered by the lack of a postal code system in Ireland. Katie Kilgallen investigates how the country’s logistical challenges are affecting retailers

The Irish high street has experienced runaway success in recent years thanks to a booming retail scene, but home shopping and internet retailing have failed to achieve their potential. And there is one very good reason why: aside from Greece, Ireland is the only European member state that does not have an established postal code system, which means that offering a home delivery service is proving an extremely complex and often expensive challenge.

The introduction of a system has been on the cards for some time. In May 2005, the Irish government announced that postcodes would be introduced by January of this year. But by the end of 2007, it became clear that plans had stalled indefinitely.

Logistical nightmare

UK catalogue brand Freemans entered the Irish market last January. Freemans Ireland marketing director Jon Dobson admits there have been difficulties. “[The lack of a system] does make success harder,” he says.

Having to read addresses manually has proved a big issue for Freemans, as well as countless other retailers, especially because items are often ordered through UK call centres. Aside from the challenges posed by both the pronunciation and spelling of Irish town names, the sheer informality of addresses has caused countless logistical headaches, according to Dobson. “We might easily find a Mrs X on our database who submits her address as: “across from the garage” or “just down from the pub”. Whereas Mrs Y might supply a town and county only as an address,” he explains.

This doesn’t just affect the delivery of purchases, it also makes it more difficult and expensive to distribute targeted catalogues and communications to consumers. Dobson says: “I certainly believe there would be a far greater choice for Irish customers if there was a more efficient way of doing it.”

In the dark

Another issue is the use of a house number and postcode as a tool to collect information. Derek Hughes, chief executive of Irish bookseller Hughes & Hughes, says: “Data is a lot more difficult to get.”

Dobson warns it also increases the risk of fraud. “This is a problem in terms of identifying individuals in order to avoid multiple customer accounts and preventing fraudulent activity,” he says.

Home Delivery Network chairman Walter Blackwood says it can also be difficult to plan a delivery route without postcode data. “It’s quite a task for someone who has a relatively small number of parcels. Understanding how you are going to organise it is extremely challenging.”

Nevertheless, Hughes believes that while the postal system in the Republic of Ireland is not perhaps as efficient as it is in other countries, it is generally not an issue because all retailers are in the same boat and the population is small. “Everyone has the same issues to deal with and we don’t have the population of the UK,” he says.

Blackwood, however, still thinks there is a real appetite for an improved service. “People put up with it, but don’t regard themselves as having a world-class postal system. I suspect the retail environment is crying out for it. They can see the type of service available to people, even those in the North,” he says.

Hughes believes that rather than the absence of postcodes, it is the lack of broadband penetration that is the main challenge to the growth of online retail.

He says the entire country, particularly in rural areas, has suffered from a lack of investment in broadband. He adds: “The main phone provider was privatised and has since been sold five times. There is a frustration that we don’t have a national broadband system.”

Logistical problems affecting home delivery in Ireland look likely to persist and if retailers want to offer a world-class delivery service, they will have to work hard to come up with their own solutions. Blackwood says: “We have to have a more robust view about how we are going to tackle the problem.”

Given that effective government intervention looks unlikely in the short-term at least, retailers are going to have to take a proactive stance if they are to maximise the substantial financial gains to be achieved from home and internet shopping.