Depressed margins and increasing wage costs put retail jobs at risk.
At the release of the CSO Retail Sales figures for November today (6th January), ISME, the Irish Small & Medium Enterprises Association, welcomed the positive figures and called on Government to prioritise the growth of the retail sector, particularly the small retailers outside Dublin who have yet to benefit tangibly from the recovery. The Association drew attention to the results of their recent Business Trends Survey (Q4 2015) which discovered a 13 point drop in the Future Employment Expectations of the sector.
Retail Sales figures for November show an annual increase of 9.3% in volume and 5.6% in value. When motor sales are excluded volume was up 8.9% and value was up 4.9% in the year. The monthly figures show an increase of 2.2% in volume and 1.6% in value in the month.
Commenting, ISME Chief Executive, Mark Fielding stated, “The value of retail sales may have increased but there are critical underlying issues affecting the sector at present. The weakness in the Euro, while beneficial to exporters and tourism is increasing stock costs for those purchasing in sterling or dollars. In addition, wage levels are becoming uncompetitive and still increasing, and high costs coupled with low margins are making it intensely difficult for small businesses to remain profitable”.
“The recent ISME survey for Q4, 2015 produced worrying signs for the retail sector showing that, while current employment, sales and investment are up in the sector, future employment expectations have decreased. Profitability expectations have also dropped dramatically from 20% to 5%, showing that retailers are really struggling to turn a profit, as costs continue to increase. The number one concern from 38% was Economic Uncertainty, with 19% citing Labour Costs. Furthermore, 43% of retailers believe that current conditions threaten the viability of their business over the next 12 months.”
This pessimistic outlook is in contrast to the jobs expectation of the other sectors, where a net 30% expect to employ more. It is now more imperative than ever that the Government pays attention to these warning signs and works with retailers to avoid a situation where we could have job losses”.
The Association called for:
Government action on commercial rates, unrealistic rents and uncompetitive labour costs.
Bank credit availability for SMEs.
Revitalise the Action Plan for Jobs through direct cash incentives for additional jobs created.
“Unfortunately, while our politicians gear up for the upcoming election, they are ignoring the real concerns of the retail sector. It is high time that the Government introduced policies to support the sector pivotal to the indigenous economy and secure the 250,000 jobs in the Retail industry,” concluded Fielding.