Store Wars: The fight for festive shoppers
With spending cuts looming retailers will be pulling no punches in the battle to keep the tills ringing this Christmas
It may be a cliche, but now that Halloween is out of the way, retail businesses across Northern Ireland and the Republic are looking ahead to Christmas.
With a recession and cuts in public spending creating tough trading conditions, all will be determined to make the most of the Christmas shopping frenzy ahead of 2011, which one retail expert predicts will bring one of the grimmest trading periods in recent history.
There will also be a battle for the affections of cross-border shoppers with shopping malls and outlet complexes vying for the custom of euro shoppers looking for the best deal for their cash.
While there have been job announcements with new store openings for bargain chains like B&M and Peacocks, 2010 has claimed many retail victims. High end retailers clothing retailer Esprit reached the end of the line in Northern Ireland and closed its Belfast store.
Scottish furniture chain Reids has held closing down sales in its Northern Ireland stores and in Londonderry, one of the city’s best-known family businesses, T&E Howie Lighting Designs, pulled down its shutters after trading for nearly 40 years on Strand Road.
Paul Howie said the company has been left with little choice because of the recession, the growth of internet trade, and the impact of multinational companies are making life almost impossible for family run independent businesses.
Those retailers won’t see this Christmas — but what opportunities are there for the survivors?
Donald McFetridge, retail analyst at the Ulster Business School in the University of Ulster, has identified who he thinks will be the winners and losers as Christmas approaches.
“This Christmas is going to be a tough one for retailers across all sectors and across all geographic regions in the UK and that includes Northern Ireland,” he said.
“I comfortably predict, however, that consumers will be doing their best to have the most enjoyable Christmas possible, albeit on shoestring budgets and in light of the recent cuts stemming from the Comprehensive Spending Review published last month.
“The real effects of the CSR will, however, really begin to bite hard in the New Year when — in addition to these — consumers will also witness the hike in VAT to 20%.”
Bricks and mortar stores will be competing not only against each other but also against their internet counterparts.
“Online retailing this Christmas is set to really soar,” Mr McFetridge said. “This is a continuing trend but this year online retailers are likely to witness unheralded success in this contemporary form of retailing. Consumers are price comparing and shopping around online more than ever and there has been a reported increase in consumers even clipping coupons and looking for special offers and discount on online retail websites.
“The food retail sector will, yet again, have another bumper Christmas — food and drink have historically performed well but this Christmas there will an added edge in the battle for the consumer's pound. It is expected the leading supermarket chains will actively engage in what some have predicted will be quite savage price cuts — ever aware, as they are, that hard-pressed consumers will be trying to make their pound or euro go further in anticipation of tough times in the year ahead.”
Their Taoiseach Brian Cowen will announce the Republic’s most draconian Budget on December 7, with cuts of €6bn to be made from public spending.
That Budget is likely to give rise to consumer penny-pinching, which could drive southern shoppers back into the arms of The Quays shopping centre in Newry which, along with the city’s Buttercrane Centre, has been a major beneficiary of cross-border trade (see panel).
The centre has one of the busiest Sainsbury’s stores in the UK — borne out by long tailbacks heading into the city on a regular basis — and the centre manager Cathal Austin said that while while most people are tightening their belts, The Quays is still very optimistic for a buoyant Christmas period.
“The last two years have been exceptional by any standard,” he said. “There are a number of contributory factors for this, not least the price differential in consumer goods between the north and south.
“Contrary to reports this still exists. This year, while we do not expect the same volume of shoppers as previous years we have already had some good indications it will be a busy Christmas for the centre.
“Both the Republic of Ireland bank holiday and the mid-term break were very busy with increased footfall on a regular week.”
But he added: “While the southern trade is a great boost to the centre and welcome we have been working hard this year on also keeping our local shoppers happy.”
Meanwhile Foyleside Shopping Centre in Londonderry is confident about its Christmas prospects, with recent new signings like men’s |fashion brand Blue Inc and a large Accessorize store to draw the crowds. The centre also claims the city's selection as the first UK City of Culture has already drawn additional tourism visitors. And it hopes to continue to attract southerners.
Genevieve O'Hare of property agents BTW Shiells said: “Foyleside has enjoyed record number of euro shoppers over the past couple of Christmases and that trend looks set to continue.
“Whilst retailers south of the border have adjusted their buying to attempt to be more competitive, there remains a very significant like for like price difference which is further widened by the exchange rates on the euro. As a result, cross border trade is expected to remain robust.”
And the Marshes Centre in Dundalk, Co Louth is also expecting a good Christmas trading period.
Centre manager Harry Traynor said footfall had been increasing and that the Marshes was holding
its own with discounts and incentives for people to shop local.
“We witnessed a 13.75% increase in footfall between August and September this year and are hoping that this trend continues into the festive season. The Experian Footfall Statistics indicate a 4.2% drop between August and September and in comparison it appears Marshes stores are holding their own and attracting spend”.
He added: “As Christmas approaches spend on consumer goods will remain local, with stores offering further discount and incentive to shop. Marshes boasts anchor stores such as Penneys and Dunnes Stores. Economically advantageous stores such as these are expected to retain footfall due to the exceptional offer.”
And even though retailers can expect to benefit from a pre-Christmas splurge, there are some things that wallets aren’t opening for.
Mr McFetridge said: “Two sectors which will be struggling this Christmas will be the independent furniture and electrical retailers.
“A recent survey published by Experian has indicated that 52% of consumers are not planning to make any big-ticket purchases, principally on white goods, electronics and furnishings. Even within the next six months only 14% are hoping to be able to make a big-ticket home improvement purchase compared with almost 20% recorded at this time last year.
“Consumers can expect a wide range of last minute bumper bargains, particularly in the drapery and footwear sectors.”