The Grant Thornton REI Q2 Retail Productivity Review of retail sales paints a concerning picture as industry growth rates continue to flatline. Some sectors performed well, while others experienced like for like declines. The clement spell of weather in late May and early June helped agri and garden which saw over nine per cent growth for the quarter.
Other sectors were less fortunate, with fashion and footwear seeing a decline in the quarter, across women’s and children’s wear, as well as jewellery. Some home categories performed reasonably well with growth in large home appliances of 14 per cent and gift/homeware also up. Somewhat concerning is the like for like dip in furniture and flooring sales over the period which had seen a sustained growth over the last three quarters. The impact during the quarter of Ireland’s political instability and the Brexit determination most certainly contributed to a disappointing quarter overall.
Commenting on the quarter two data, Lynn Drumgoole, communications director, said: “There were winners and losers across the quarter two period, and weather and politics playing significant roles. A most definite concern is the reduction in growth rates across a number of sectors in the industry and an overall flat quarter after the lift of quarter one. While political instability and Brexit have had and continue to have a significant impact on trading, a greater concern is that underlying consumer confidence is eroding. It is for that reason that we need a real political focus on the needs of the domestic economy and the full implementation of the promised Employers PRSI reduction for low paid workers to enable employers sustain the national minimum wage (NMW ) increase of €0.50 per hour since January 2016 and a further likely increase of €0.10 in January 2017. Furthermore having an annual review of the national minimum wage does not allow for effective business planning and thus the NMW should be determined by the Low Pay Commission in three year cycles.”
Damian Gleeson, partner at Grant Thornton, commented: “The quarter two figures clearly demonstrate that it is time for Government to step up to the plate. With industry growth rates flatlining, the upcoming Budget represents a good time to put some cash back into consumer pockets and help alleviate the negative impact of early year domestic political uncertainty and more recently Brexit. It also gives Government an opportunity to assist employers who having been battered by eight years of recession are looking at further increases in the minimum wage. A reduction in Employers PRSI is necessary in order to counteract the minimum wage increase or we will see further business failure.”
