Amid the gloom of retailing in the UK one area is bucking the trend. But Northern Ireland’s gain is the Republic’s loss. Charlotte Hardie reports from Belfast on why Northern Irish eyes are smiling.

All aboard Recession Bustours. For €30, the company ferries Irish shoppers north of the border to buy as much as they possibly can, and then delivers the wares direct to people’s doorsteps.

It’s no wonder. Got your eyes on a €3,000 kitchen in the Republic of Ireland? Don’t bother – in Northern Ireland you can buy the same one for£876. Fancy a flatscreen TV that costs €549? Then head across the border and it can be yours for£200. Having a party? Stock up on booze in the north, where a bottle of vodka will set you back just£11 instead of €23. And if you want to do the weekly food shop, a humble bag of spuds costs just 99p compared with a hard-to-swallow €6 in the south.

Why? Because a trip to Northern Ireland has become the Irish retail equivalent of England’s much-loved booze cruise to France. The falling price of sterling and lower VAT rates, combined with factors such as lower operational costs, have led to enormous price differentials between the two countries.

And we are not talking about a slight increase in cross-border shopping. We are talking about people flocking there in droves. Some stores are practically creaking under the strain.

Sainsbury’s regional operations manager David Davidson says that before Christmas, trade was so successful the grocer had to manage queues both inside and outside of its border stores. “We’ve been working closely with our partners in certain locations, such as The Quays shopping centre in Northern Ireland border town Newry, local authorities and the police to ensure we can handle the volume of shoppers at busy times of year,” he says.

With Ireland’s entire population at about 6 million, motorway traffic jams are a rarity. And yet at the end of November, the normally quiet M1 linking the south and north ground to a standstill as a mass exodus across the border caused an 11-mile tailback.

Last year, when Republic of Ireland ministers actively embarked on a media campaign to encourage people to support their own economy, it only made matters worse by highlighting the value in cross-border shopping, resulting in an even bigger turnout.

Euan Forbes, centre manager for The Outlet at Bridgewater Park, a shopping centre about 15 minutes’ drive north of Newry, says he arrived at work one day to find cars full of people camped out at 6am. Armed with flasks of coffee, they had left their homes in the Republic in the early hours in order to avoid the traffic.

On another occasion, Forbes greeted a bus load of women with suitcases. “I panicked for a minute that they were full of returns,” he jokes. “But it turns out they had brought them to carry all their purchases around, take them back to the bus, empty the suitcase, then go shopping for more.”

Unsurprisingly, these changes in shopper behaviour are having a dramatic impact on retail. Northern Ireland is, of course, in a recession like the rest of the UK, but many retailers in the province are trading well – particularly in border towns such as Newry, Enniskillen and Strabane. Claire’s Accessories chief operating officer for Europe Paul Mildenstein says: “Our two busiest stores in Northern Ireland are on the border. They’re streets ahead of our other Northern Ireland stores, even though those are doing well too.”

Similarly, Stuart Harris, leasing director for Multi Development, which owns Belfast’s Victoria Square shopping centre, says: “I’ve heard retailers say they are 70 to 80 per cent up in their Newry stores.”

Sharing the spoils

The grocers are benefiting in particular. Collectively, Sainsbury’s and Asda recorded 2.5 per cent of grocery market share in the Republic of Ireland in December. This may sound paltry, but not when you consider that neither has stores south of the border. Asda’s Enniskillen store is said to be a top 10 performer in Wal-Mart’s entire worldwide portfolio.

The Outlet’s car park is full of vehicles with Republic of Ireland number plates. A quick glance shows many have even travelled from Cork and Kerry in the south and southwest of the country. But the centre also has more sophisticated forms of measurement. Cameras capture the number plate of each car and technology automatically produces data on the origins of each vehicle. Forbes says the number of shoppers from the Republic was up 147.7 per cent in December. When it did its first research into shopper demographics in January last year, the Republic shopper average was one in three. By last May it was about one in two.

And border towns aren’t the only ones benefiting. Davidson says that while Sainsbury’s cross-border stores are significantly out-performing the main estate, “even our Belfast stores are seeing a pick-up”.

Paul McMahon, centre manager for Westfield’s Castle Court in Belfast, says it has definitely witnessed an increase in cross-border trade. “In particular, we’re seeing it with big purchases. For instance, if people need to buy a lot of things for a baby, they’ll come here, buy it in one go and make significant savings,” he says. “We believe we’ve held up better than other places in the UK.” Harris adds that Belfast’s Victoria Square is seeing a similar trend: “Pre-Christmas, as much as 20 to 30 per cent of the footfall was from the Republic,” he says.

Importantly, though, the recession is not the only reason why trade has been bolstered in Northern Ireland. McMahon says: “The retail scene is totally different to what it was, say, three years ago. There has been a lot of inward investment in Belfast and there has been an extensive programme of works, which has started to improve the streets and the roads.”

He adds that Victoria Square’s opening in March last year has helped other retailers and shopping centres, too. “It’s helped to establish a point of difference, and helps attract more people to Belfast, which helps everyone.”

Furthermore, the decades of conflict in Northern Ireland led to a surge in the creation of public sector jobs – the theory was that the more people who could be kept in work, the more it would deter people from active involvement in the troubles. The public sector accounts for about 60 per cent of the province’s economy. Given that this sector is more recession-proof, it gives rise to more job security and higher consumer confidence than might be found elsewhere in the UK.

Forbes also points out that an increase in cross-border shopping would have happened with or without a recession. “It may not have accelerated as quickly as it has, but The Outlet was built 15 minutes from the border in order to serve both markets. It was always our intention that we would get shoppers from the south,” he says.

Ultimately, says Forbes, Northern Ireland is becoming established as a retail destination in its own right. “It’s about getting that unique first visit north. That’s easier than it’s ever been before, and now that we’re getting more people here, they like what we have and they’re becoming regular customers,” he says.

What’s more, travelling north will be more straightforward than ever once the Newry bypass is opened. The new road will run alongside the existing M1, making travel easier and quicker.

However, there should also be a note of caution. Many might say the retail scene in Northern Ireland is doing well compared with elsewhere in UK, but it is not immune – not least to those businesses that are going bust. Two of the 15 empty units at Victoria Square – five of which are in legals – were once home to the now defunct Hardy Amies and The Pier. Harris says: “Northern Ireland is in a unique position because of the euro/sterling situation, but it is still tough. We have to be flexible about our terms, but the interest is there. The challenge is to get a deal that suits both sides.”

Colliers CRE property agent Jon Anderson says that vacancies in schemes in Northern Ireland are proving hard to fill. “Demand for space tends to come from retailers at the value and discount end of the spectrum and we’re focusing our attentions accordingly. We’re just not getting the higher-end retailers – it’s all about the Poundlands, the Poundstretchers and the Icelands.”

He adds: “The landlords are reflective about it. Cash flow is king for everyone, and getting rental income is the name of the game.”

Meanwhile life for retailers in the Republic is particularly bleak. “The boom associated with the Celtic Tiger has all but gone,” says Anderson.

Mildenstein agrees: “The Celtic Tiger bubble has burst and the backlash is being felt.” And while he says that Claire’s Accessories is relatively sheltered from the economic problems compared with other retailers, because of its younger shoppers who have more disposable income, “it’s very different to north of the border”.

Retail Excellence Ireland chief executive David Fitzsimons says: “Things haven’t gone downhill, things are catastrophic.” And it’s particularly bad in border towns in the south, such as Dundalk.

Supermarket chain Superquinn chairman Simon Burke says: “For a distance of about 20 to 30 miles south of the border, there is routine cross-border shopping across categories. Further away it’s more sporadic. It’s not the most serious problem we’re facing, but it’s the wrong sort of icing on the cake.”

What’s more, the political and media furore about the now oft-termed “Rip-off Republic” is making things worse. People are questioning why these huge price differences exist. There are cases whereby goods produced in the Republic of Ireland are still 30 per cent cheaper across the border.

Given the intensifying economic turmoil and the increasing amount of marketing budgets being spent on tempting shoppers north, the trend is only likely to continue. While the north continues to sparkle, the Emerald Isle’s lustre is fading fast.

The North/South Price Divide

Kitchen
Republic of Ireland:£2,650 (€3,000)
Northern Ireland:£876

Flatscreen TV
Republic of Ireland:£485 (€549)
Northern Ireland:£200

Vodka
Republic of Ireland:£20 (€23)
Northern Ireland:£11

Potatoes
Republic of Ireland:£5.30 (€6)
Northern Ireland: 99p