Dublin is well-served by department stores, but what are the prospects for growth in the city and beyond? John Ryan reports
With a population that stands at little more than 4 million, the Republic of Ireland has fewer inhabitants than the West Midlands. It has several cities, Galway, Limerick and Cork among them, but the primacy of Dublin, which harbours about a quarter of the country’s souls, has never been in doubt.
With the exception of the capital, you might be forgiven for thinking that Ireland would not be the most fertile of hunting grounds for department store operators. A small population, a quarter of which is concentrated in one largish city, might indicate that the only place worth setting up shop would be Dublin, allowing for the fact that department stores have a tendency to attract the relatively affluent – many of whom are found in the better areas of large cities.
And, to an extent, you would be correct. Arnotts, Brown Thomas, Clerys and Debenhams – which bought local player Roches in 2006 – pretty much make up the full extent of Dublin’s department store offering, along with a 32,000 sq ft (2,970 sq m), three-floor Harvey Nichols boutique, a multi-level House of Fraser and a Debenhams outpost on the edge of the city in the Dundrum Town Centre shopping development.
It may also seem reasonable to suppose that a city of not many more than 1 million people would mean intense competition for department stores keen to grab market share. And yet, the fact that the 300,000 sq ft (27, 870 sq m) Arnotts has been around since 1843 and Clerys and Brown Thomas also both date from the 19th century seems to indicate that department stores are very much part of Dublin’s retail fabric.
Talking about the health of the Irish department store sector, PJ Timmins, chief executive of Dublin landmark department store Clerys, says: “I would say it’s doing pretty OK. It’s ahead of the rest of retail.” This may be true, but the Republic has not proved immune to the downturn that has afflicted retailers across Europe and the US this year, so perhaps this should be considered in the context of the whole of the Irish retail panorama.
Surviving the storm
Nigel Blow, chief executive at the upscale Brown Thomas department store on Grafton Street, is not so sure. He said: “Last year was good for us, but this year it’s tougher. We’re not where we’d like to be, but it could be worse.” However, he is reassured by the fact that chain stores tend to look the same, whereas department stores have a much broader range, albeit under the one roof. “Sometimes, in times like this, it’s safer being a department store,” he says.
Timmins is more sanguine. “Department stores, by their very nature, have older customers who don’t have mortgages and are not subject to so many financial constraints,” he says, implying that the sector is well-placed to weather any storm.
Which is just as well: Clerys is midway through a brand repositioning that will see it become “more premium”. The grand old lady of Irish department store retailing has been given an enlarged beauty hall, at a cost of 2.2 million (£1.8 million) and other parts of the O’Connell Street store are being remodelled. This follows from the 22 million (£17.5 million) refurbishment completed in 2004.
At Brown Thomas, Blow has been busy too. The Grafton Street flagship has been undergoing a refurbishment for more than two years. Next month the first phase of remodelling will be complete, remodelling of the menswear floor in the basement, with phase two set to welcome shoppers in September. Blow says that if there has to be a time to carry out a revamp, then a period of modest business is better than one that interrupts trade in a store operating at full tilt. “If it’s a tough time, it’s a good time to have refurbishment done. If you’re going to have pain, you may as well have double pain,” he says.
There will also be upheaval at Clerys over the next few years as the store is connected with the city’s Metro system. The project is due for completion by 2012 and will, Timmins admits, involve “a certain amount of pain”.
Arnotts, meanwhile, appears to be in a period of stasis. In 2006, the store’s involvement in the Northern Quarter project was announced. Its developers say the 750 million (£600 million) redevelopment will make Arnotts and the Henry Street area the city’s primary entertainment district. However, the project appears to have been delayed in planning and, although work is scheduled to start this year, there is no definite start date. When work does start on site, shoppers may switch to other department stores in order to avoid the disruption, which could help offset some of the effects of a slowdown for other operators in the city.
It is also worth noting that the city’s branch of Debenhams and House of Fraser – the latter forming part of the Dundrum Town Centre scheme – both add to a strong sector line-up in the Irish capital.
Dublin, therefore, seems well set up for shoppers seeking everything from entry-level department store retailers to luxury players. A Harvey Nichols spokesperson says costly research was undertaken before the 2005 opening in Dundrum and that the location was deemed suitable because it allows easy access from outside Dublin, as well as being an ideal area for a luxury goods department store.
But does this mean that there is enough sector coverage for the population? Or rather that Ireland’s capital is overburdened with department store retailers? Of course, there are other cities in Ireland and the Dublin department store quartet has representation in some form in most of them.
Derek Adams, group director at Dublin-based design and architect practice Douglas Wallace, says: “I’d say it’s a competitive sector in the sense that people are continuing to invest and innovate in the market. The challenge is how do you take that beyond Dublin?”
Douglas Wallace client Brown Thomas has stores in Cork, Limerick and Galway, but they differ from the Grafton Street mothership. Adams says department stores that have extended beyond the capital have taken “signature” elements – the number of such features is entirely dependent on what kind of return the store is expected to achieve. Debenhams is probably the only department store operator with a country-wide reach. It achieved this by buying home-grown chain Roches in 2006 for 29 million (£23 million), giving it nine additional outlets, including the Henry Street store in Dublin.
As well as the former Roches stores, Cork has a new Debenhams outlet in Mahon Point Shopping Centre, an edge-of-town mall. As the development’s anchor store, it points to a good deal of confidence about the future of Irish cities – in contrast to the climate in the UK. Philip Topham, Debenhams sales director for Ireland, is bullish. “Our stores are smaller [than in the UK], with higher sales densities because the Irish consumer still puts more into the basket. We’re looking at a number of opportunities but, in Ireland, there are a huge number of retail developments so it’s essential to choose the right one,” he says.
So where does this leave the Irish department store sector? Is it robust and cash-rich, or is it teetering on the brink?
Timmins says the Irish property market is undergoing “quite a correction” and this has meant shoppers have been concentrating on consumables rather than big ticket items. However, Timmins is bullish. “In the current year, I’d be quite optimistic,” he says. “Generally speaking, department stores that are offering something different are doing quite well. Stores of this kind have a point of difference from other retailers.”
Taken in combination with Blow’s more cautious stance, it would appear that Ireland is not a bad place to be for a department store operator, even in these economically straitened times. The only question has to be how much room there is for expansion.
A small country on Europe’s northwestern fringe is never likely to be in the thick of it and the days of unbridled growth may be behind us, but there is still considerable consumer affluence. Department stores look well-placed to take advantage of the wealth that has been built up across Ireland over the past decade, but whether they should still be expanding there is not quite so certain.