IBEC - Newsroom - Retail recovery loses some steam in second quarter

Thursday, 8 July 2010

IBEC, the group that represents Irish business, today said that despite some further modest recovery, trading conditions remained very difficult for Irish retailers during the second quarter of the year.

Commenting on the latest CSO retail sales figures, IBEC Senior Economist Fergal O'Brien said: "Following a fairly strong rebound in retail sales in the first quarter of the year, it now looks like the second quarter will disappoint. Core retail sales (excluding cars and bars) grew by just 0.2% in April and fell back by 0.6% in May. Price discounting is also continuing, although not as strongly as experienced during 2009, as evidenced by the fall in the value of core sales of 1.7% in May.

"The average fall in turnover from peak to trough right across the retail sector is now in the region of 25% and this provides a very difficult trading environment for retail businesses. Costs have not fallen by anything close to this and the viability of many retail businesses will remain under threat until a commensurate cost adjustment takes place in areas such as rent, commercial rates and labour costs.

"It is clear that although the Irish consumer is not as fearful as during 2009, the pace of consumption recovery will remain fairly modest until some headway is made in addressing the jobs crisis.

In relation to today's CSO inflation figures Mr O'Brien said: "It now looks like we will be back to positive observations in the consumer price index during the Autumn but prices will fall by about 1% on average in 2010. By the end of the year the actual price level in the Irish economy will still be about 6% below where it was two years ago."

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IBEC - Newsroom

Retail recovery loses some steam in second quarter

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