Belfast Telegraph

A mixed bag for the retail sector

By Symonn Ross

This time last year the retail sector was still booming, with shoppers celebrating the recent openings of Victoria Square and Ikea.

Both developments were seen as a sign of progress, of how far Northern Ireland’s economy had come since the days of the Troubles when few big chains wanted to set up shop in the province.

What a difference a year, and a slip into an official recession, can make.

As bank lending dried up, the housing market crashed and unemployment shot up, the disposable income of the Northern Ireland public shrank and retailers across the board began reporting falling sales. Government measures to get people spending and stimulate the economy — such as Chancellor Alistair Darling’s cut on VAT — had little impact.

But unlike other parts of the UK, Northern Ireland’s retailers got a much needed lift as a result of the perceived economic weakness — especially those in easy driving distance from the Republic.

As the pound slumped to new all-time lows against the euro, cross-border trade went up and up as Irish shoppers headed north to cash in on the euro’s strength.

Border towns such as Newry, Strabane and Enniskillen reported an increase in trade, while shopping centres and retail parks as far away as Banbridge and Belfast also saw an influx of shoppers as coach companies from as far away as Cork and Kerry put on special trips north.

Asda even reported in December that its Enniskillen store was one of the top two performing stores in its empire thanks to the steady stream of Irish shoppers.

Similarly a quick look around the Ikea car park at Holywood Exchange and on any given will reveal a huge amount of shoppers from the Republic.

Many stores in the border regions have been accepting payment in Euros for years and this trend became commonplace across the province in the past year.

Cathal Austin, centre manager for The Quays shopping centre in Newry, says while it has always targeted cross-border trade, footfall is up 40% on this time last year and many chain stores are outperforming other locations.

“Currency is an element of it but the biggest driver is the difference in the cost of living between north and south,” he says.

“It’s gone beyond the occasional, it’s now a weekly thing. That’s the main difference from three or four years ago. We have regular customers, shopping weekly from areas half and hour to 45 minutes away.”

Peter Murray, centre manager at the nearby Buttercrane Centre is also confident but isn’t taking anything for granted.

“In what is a very difficult high street situation border towns are picking up business. Newry is in a bit of a bubble in that regard,” he says.

“The question with the tightening recession in the South is will they be able to shop at all? Will they continue to look for even more value for money? If so we may see even more shoppers in Newry.”

Both The Quays and Buttercrane have plans to expand, with the goal of cementing Newry’s place as a regional shopping centre.

“The challenge for us is as costs equalise, which they will, we have to make sure we have an offer that still attracts customers from across the border. We have to make sure its not just based on an economic reality but that people enjoy their trip north. Shopping is still a leisure activity,” says Mr Austin.

On the flipside, the credit crunch has of course put many local and national retailers out of business.

With insurance companies unwilling to extend credit insurance and banks inflexible on loans, many household names have gone to the wall.

The demise of Woolworths was the most high profile, but a number of other firms have gone into administration. The lucky ones such as Adams childrenswear and Principles have been rescued, albeit with the loss of a significant numbers of jobs, but many others have not been so fortunate.

The Victoria Centre — opened to much fanfare last year has both benefited and suffered. While it had a busy Christmas period there are also concerns that vacant stores are opening up in the complex following the closure of Zavvi, The Pier and Hardy Aimes.

But centre manager Hugh Black says this isn’t a reflection on Victoria Square and is confident other retailers can be attracted.

“We’ve had a good year and an excellent Christmas with many retailers trading well above targets for December. The footfalls are still there but there are retailers out there as in every high street and shopping centre that are struggling,” he says. “Most people are more cautious with their spending, though they are spending, so its up to retailers to tick their boxes with what they’re offering.”

Big brands should be attracted to Belfast when they hear that House of Fraser in the Victoria Centre is the fifth best performing of its 65 stores, he said.

“The challenge in any scheme across the UK is to convince retailers this is the place to come,” he says.

Mr Black says Victoria Square had 10 million people through in its first year, £100m in turnover and average footfall of around 180,000 a week, a figure which is rising.

Around 30% of Christmas sales were from shoppers from the South and this has held up at around 10%-15%.

Specialist stores such as Mamas and Papas and Apple are seeing “phenomenal” business from the south because of the savings they can make on products like Apple iMacs.

“People are getting their heads around Victoria Square. It takes around two years for people to get into a scheme like this - that’s why we had a dip after out big opening,” adds Mr Black.

It’s also been slow going for those trying to emulate Ikea’s success in the retail parks.

Harvey Norman, the electrical goods and furniture retailer, opened a stone’s-throw from Ikea just as the Northern Ireland public were putting their collective wallets back in their pockets. On a conference call in November the CEO of its Australian parent Gerry Harvey admitted that, in hindsight, it was not a good time to be in the province or the Republic. Despite this, yet more big brands appear set to arrive in the province, downturn or no downturn.

The long talked about John Lewis at Sprucefield will be put to a public inquiry, and looks to have wide support after years of being held up in red tape hell.

With unemployment rising and many retail workers among those to have lost their jobs, the planning process could have a key role to play in the economy.

Supermarket giants Tesco, Sainsbury and Asda all have proposals for stores awaiting planning permission, each of which will provide a large number of jobs, according to the companies.

But whether the big stores provide a boost to areas decimated by the recession or heap more pain on the high street remains to be seen.

Belfast Telegraph