Ireland might be struggling but retailers can capitalise if they time it right, says Simon Burke
Since the news of Ireland’s rescue by the IMF, I’ve been getting lots of sympathy: “How are you Simon, and oh dear, Ireland, it must be awful…”
Naturally I’m very grateful for the support, but the irony is that sales trends at Superquinn in the last three months have been at their strongest for two years.
Retailers - and just about everyone else - in Ireland have been going through hell since late 2008. Between June and November 2008 Superquinn’s like-for-like sales needle moved from +5% to -12%, which was muted in comparison with the high street retailers.
Emergency measures including redundancies, closures, pay freezes and swingeing cost reductions saved us in the first quarter of 2009, but then we had 14% deflation in grocery prices into 2010, so further action was required. Keeping the hatches battened down since then has kept us alive and profitable.
So really, the last few weeks’ drama has simply served to make everyone else aware of what Irish people have known for two years. What everyone does realise now, though, is that the scale of problems is so great that it will take years to unravel. There will be no early or dramatic recovery, and the banking and property sectors are probably ruined for a generation.
David Fitzsimons, head of Retail Excellence Ireland, has been doing an extraordinary job representing retailers of all sizes over the past two years.
He is pessimistic about early 2011, describing January as likely to be “the worst in living memory”. After an election, if a new government can boost confidence, it might get a bit better.
All of this would put off anybody thinking of entering or expanding in the Irish retail market. I am certainly not about to disagree, but there are some other things to consider.
For a start, Ireland in the doldrums is nothing new. In fact, if you look at the country’s history since independence, poor economic times have predominated. The recent Celtic Tiger phenomenon was if anything an abnormality, and now it is seen more as a bubble than a real boom. But economic life will go on in Ireland, even if it is more at the traditional lower level.
And retailers have been able to earn good livings through the less good times. In the 1980s and early 1990s, before any tiger, many UK retailers made very good returns in Ireland.
Moreover, as you might expect, property is now very cheap. There is a massive over-supply of poor quality retail space, but even the good pitches are accessible at reasonable prices. Even labour costs, the perennial bugbear of the Irish economy, may moderate with the recent reduction in the minimum wage.
So for a retailer with sensible objectives, the time will come when cost items are cheap enough, and prospects reasonable enough, to make Ireland an attractive bet again. Timing will be important - it is not something to rush into, but waiting until everyone recognises the opportunity will be too late.
Simon Burke is chairman of HobbyCraft and Superquinn