Sterling devaluation will lead to loss of retail sales along border.
Retail costs continue to creep up as margins tighten.
At the release of the CSO Retail Sales figures for May today (28th June), ISME, the Irish Small & Medium Enterprises Association, warned of the negative effect of the sterling devaluation on border county retailers and the continuing cost creep for business despite zero inflation figures. The Association demanded a rates rebate for border retailers together with a root and branch investigation into retail costs to be carried out by the National Competitiveness Council.
Commenting, ISME CEO Mark Fielding said,”With Sterling dropping to a 31 year low this week, retailers along the border are already experiencing the negative impact of Brexit. This increase in northbound cross-border shopping for everyday items such as groceries and fuel will place border county retailers in jeopardy. ISME is calling on Government to initiate a commercial rates rebate for the duration of the Brexit currency devaluation”.
Year on year retail sales figures showed an increase of 8.1% in volume and 5.3% in value. When the motor trade is excluded, sales were 6.5% higher in volume and 3.9% in value compared with 2015. It is worth noting that while the volume of sales has increased, margins are still under pressure due to deep discounting by retailers to encourage shoppers to spend.
“The retail sector continues to struggle. Despite strong economic growth, value for money is still the key determinant for Irish consumers. In addition, retailers face increasing cost pressures, from the knock-on effects of the minimum wage increase, bank interest and charges and insurance. In addition border based retailers have now to deal with the sterling devaluation and their shops and jobs must be protected”.
The main issues facing retailers are:
Very low margins, as evidenced by the CSO figures.
Negative cross border trade.
Excessive retail business costs, commercial rates, development charges, wages and insurance.
Town centre revitalisation.
Social welfare anomalies and inflexibilities.
Insufficient bank credit availability for retail SMEs.
The surge in the Black Economy.
Sector specific training.
“The SME retailer is caught between rising costs and reducing margins leading to continuing pressure on an already reduced bottom line. Border retailers have the added challenge of a sterling devaluation. With recovery in retail still fragile, any increased costs will further de-stabilise a sector which has endured a torrid eight years and remains significantly challenged. Government must address costs and assist border county retailers,” concluded Fielding.