The Irish retail market is going from strength-to-strength, driven by the country’s unprecedented economic boom. According to Euromonitor International’s latest report “Retailing in Ireland,” store-based retailing has grown by over 30% since 1999.
In 2005, the estimated total retail spend reached an impressive €35,171 million as Irish consumers take advantage of rising incomes and larger amounts of disposable income.
A strong economy drives retail growth
High investment rates and strong consumer expenditure have seen GDP growth exceed expectations at a rate of 6% – the highest level recorded since 2000. High levels of employment are also reflecting the strength of the economy, and contributing to the increased level of disposable income now available to Irish consumers.
Euromonitor’s report highlights that department stores, furniture, lighting and hardware retailers in particular, have performed extremely well in light of this economic growth, as increased disposable incomes are being invested into home improvements.
Changes in the law enable retail developments to grow at an exceptional rate
Following the relaxation of strict planning legislation and maximum store size limitations, retailers in Ireland are investing heavily in floor space, which is contributing to the strong performance of the industry. Shopping centre floor space increased by 17% in 2005, although this was over-shadowed by the phenomenal 25% growth of retail park floor space in the same year.
This equates to almost 250,000 sq m of shopping centre space and 180,000 sq m of retail park space being constructed during the year. This has been particularly beneficial to DIY stores, which have doubled in size over the past 3 years, according to research from Euromonitor International.
The changes in legislation have also allowed many large retailers to enter the Irish market, such as Ikea who are applying for planning permission for a superstore project on the outskirts of Dublin. Operators are also now able to drive growth organically and through new store openings, rather than through the traditional approach of mergers and acquisitions.
Tesco expands in Ireland
Tesco is continuing to expand its presence in the Irish market by drawing on its strength as the UK’s leading retailer and taking advantage of more relaxed retail laws in Ireland. Euromonitor International’s research shows that Tesco increased its market share in Ireland from 6.4% to 6.9% over the past year, affording it the position of the country’s third largest retailer.
Tesco’s strengthening market position comes at a time when retail laws are being relaxed in favour of modernisation, allowing the company to focus on developing its successful large store format. While Musgrave, the largest retailer in Ireland generates its market share from its network of 547 stores, Tesco is not far behind in terms of market share with only 97 stores.
Internet sales take a slice of the pie
While currently making up a very small percentage of total market share, retailing via the internet is also starting to take hold in Ireland. Non-store retailing in general, which includes home shopping, direct selling and mail order, has grown very strongly at 93% since 2000, with internet spend increasing four-fold over the same period.
A number of retailers are taking advantage of this growth by transferring from non-store vending to online retailing. For example, Oxendales, has driven the growth of its business by transferring sales from its traditional mail-order catalogue to the Internet. Euromonitor International predicts even stronger growth for internet sales when broadband infrastructure is successfully rolled out throughout the country.
The future looks bright
Thanks to positive predictions for the Irish economy over the next five years, the retail industry is expected to continue booming. According to Euromonitor International, the value of the retail market will increase by a further 18% by 2010, bringing its total value to €41,405.9million.
The high consumer demand will be further supported by an expected injection of government savings into the retail sector in 2006-2007. Although growth will be constrained in the coming years as the market matures and employers are faced with labour shortages, the outlook for the industry remains positive as population size and consumer spend continue to grow.