Over the past five years retail sales in the Republic of Ireland have decreased by around 30% as the fortunes of different operators have varied.
Over the past five years retail sales in the Republic of Ireland have decreased by around 30%. Obviously the fortunes of different operators have varied with non-discretionary categories such as pharmacy, fuel and food fairing best and DIY being hardest hit.
This point is best demonstrated by the examinerships of Atlantic Homecare, B&Q and most recently Homebase. Over the period the industry has lost 60,000 jobs and in effect most operators are now operating a skeleton labour model and hiring in for seasonal sales peaks such as Christmas 2012 when nine million seasonal temporary work hours were created.
Looking to the future I would be most concerned for three retail categories – those reliant on a functioning residential housing market such as DIY, flooring, furniture and white goods retailers; mid-market ladies fashion operators which has witnessed a mass movement of spend to value as borne out by the successes of Primark, Penneys and New Look; and thirdly categories which have migrated online including music, books, toy and games which is best demonstrated by the challenges faced by HMV and Xtravision.
We have worked hard to focus the attention of Government on the needs of Ireland’s largest industry – retail. This has borne some fruit in the form of such interventions as a more flexible social welfare system allowing job seekers to temporarily take up retail work opportunities and then not have to re-apply for State assistance when the work period ends.
We have also seen the introduction of JobsPlus which involves the Government paying the employer €7,500 for every worker hired who has been on welfare assistance for more than one year; the introduction of postcodes which will be launched in September 2014 and the establishment of a commercial leases database later this year which will bring much needed transparency to our commercial property market and the recent establishment of a Government group to review the needs of our industry.
Retail Excellence Ireland has also been busy assisting the industry by launching a town revival initiative, establishing eTail Excellence to support our members digital strategy and we will soon unveil a collative initiative to develop an All Island Retail Forum which will greatly benefit retailers who operate north and south of the island.
Where the Irish Government has principally failed the industry is in their roll-back on their pre-election pledge to unwind untenable rent costs. Between the years 2000 and 2007 commercial rents increased by 240% over the same period consumer prices increased by 30%.
This is obviously an untenable situation and the most frequent matter discussed at my meetings with industry chief executives. REI has not given up on this critical issue and as recently as last Tuesday we met with An Tánaiste, Eamon Gilmore to discuss two potential solutions. One is to modify the 2011 Bill, which was promised but viewed to be unconstitutional, to allow for some form of landlord compensation, such as allowing the landlord to break the lease in 12 months in return for tenant enjoyment of a market rent.
The second is to fast track an REI “examinership light” proposal which will significantly reduce the cost of the process and allow smaller retailers to use re-align onerous leases.
Only time will tell if our Government has the moral courage to act.
David Fitzsimons is chief executive of Retail Excellence Ireland