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9th January 2017
09:10am GMT
I dreaded going Christmas shopping last minute, but I didn’t have a choice as there was no other opportunity for me to go.
I expected to have to battle through the crowds and stand in enormous queues to pay.
I was surprised to find that the only place that was difficult to navigate was the bottom of Grafton Street, and even that was manageable. The rest of town was no busier than your average work day.
After Christmas was the same. Everyone I have talked to commented on how quiet town was, both north and south of the Liffey, despite the sales.
This trend has not gone unnoticed by the shops in the city centre, with Retail Ireland stating that they have faced “challenging trading conditions.”
Thomas Burke, director of Retail Ireland, paints a picture of shops starting sales weeks before Christmas in order to try and encourage footfall. Prices were apparently down to those from 2000. Yet even as Christmas came and went, they never saw the expected level of purchases to make up for the shortfall.
Burke suggests that there has been a “significant slowdown” in sales.
Why the fall in sales?
It’s not to do with a lack of money. Our unemployment rate is down to 7.2%, the lowest it’s been since 2008. Despite Brexit, consumer sentiment remains relatively high. Disposable income grew by nearly 25% since 2014.
It’s also not to do with a lack of choice. Between Henry Street and Grafton Street you have pretty much every major high street store, as well a quirky independent shops and boutiques and everything in between. We also have a number of shopping centres and flagship stores.
Retail Ireland believe that the slowdown is due to a few factors, including:
While mild weather and the fall in Sterling may have improved by next year, the rise in online shopping is here to stay and will probably increase.
It was not just Ireland that had poor holiday sales. In the US, Macy’s has cut 10,000 jobs as a result of lost seasonal profits. Sears and Kohls also took significant hits in their profits and their stock prices have fallen sharply.
Amazon, by comparison, made $135 billion in sales in 2016, up from $107 billion in 2015 and $89 billion the year before.
It’s a lot easier to make a profit selling online than it is as a physical shop. While both have to pay for warehouses, workers and delivery, the latter also has to include the wages for sales clerks and rent on shops, which can significantly eat into their profits.
Although Amazon is experimenting by opening physical book shops and grocery markets, their main selling point is that you never have to interact with a cashier, using an app to pay instead.
Consequences
As online shopping increases, it will become harder and harder for shops to survive.
The advantages of online shopping are too numerous to ignore. There is more selection online, making it easier to get hard-to-find items. Because the costs of doing business are lowering, it’s usually cheaper. There is also no requirement to physically go out, walk around the shops, and carrying your purchases home.
The Amazon Bookstore in Seattle, Washington
The big question is whether there are some types of shops that are better in person than online.
Despite guarantees from shops like Tesco that choosers will always get the freshest item with the latest sell-by date, many people still prefer to go to a supermarket and pick their own produce. Others like to physically try on clothes before buying to make sure the fit and colour are right for them.
Hopefully, there will be a middle-ground, with people still buying some of their items in person.
In the meantime, we’re likely to see lay-offs, shops shutting and the city centre becoming more hollowed out. Perhaps something else will rush in to fill the gap, like restaurants and cafés. But creative destruction never runs smoothly.
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