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REI Irish Retail Industry Productivity Review Q1 2012.

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Presentation on theme: "REI Irish Retail Industry Productivity Review Q1 2012."— Presentation transcript:

1 REI Irish Retail Industry Productivity Review Q1 2012

2 REI Irish Retail Industry Productivity Review Q TABLE OF CONTENTSQ INTRODUCTION: The Retail Excellence Ireland Quarterly Productivity Review provides the most in-depth retail industry and sectoral analysis available today. The Review monitors overall industry performance, sectoral performance, average transaction value data, retail space productivity and labour and rent cost ratio analysis. The Review aggregates and analyses data from over 3,500 retail stores in Ireland. COPYRIGHT: It is an offence to distribute this report to third party organisations or individuals without the express agreement of Retail Excellence Ireland. This information is compiled exclusively for use by members of Retail Excellence Ireland, and cannot be reproduced without the prior written permission of Retail Excellence Ireland. DISCLAIMER: Although every effort has been made to ensure the accuracy of the material contained in this document, complete accuracy cannot be guaranteed. Neither Retail Excellence Ireland nor the author(s) accept any responsibility whatsoever for loss or damage occasioned or claimed to have been occasioned, in part or in full, as a consequence of any person acting or refraining from acting, as a result of a matter contained in this document. 3 Like for Like Sales Q vs Q Footwear Sales - Q Furniture & Flooring Sales - Q Garden Centre Sales - Q Gift & Homeware Sales - Q Grocery Sales - Q Hot Beverage Sales - Q Jewellery Sales - Q Ladies Fashion Sales - Q Menswear Sales - Q Pharmacy Sales - Q Average Transaction Values (ATV) / Sales per Sq Foot - Q Wage Cost as Percentage of Sales - Q Rent Cost as Percentage of Sales - Q1 2012

3 Retail Industry Like for Like Sales Q REI Chief Executive David Fitzsimons comments: “Having experienced marginal like for like growth in December 2011 the Irish Retail industry returned to declines in January and February 2012, in some part due to postponed spending being expressed in January and February 2011 following the white Christmas of March 2012 returned to like for like growth helped by a spell of good weather. The big ticket discretionary sectors remain in greatest distress borne out by a disappointing -9.83% Q1 decline in sales recorded in the Furniture and Flooring sector. The Hot Beverage sector growth recorded of 1.36% indicates that consumers are still active however they remain cautious and seek out value at every turn. While both the premium and value ends of the market are performing reasonably, the middle market remains highly competitive with further failure anticipated.” LIKE FOR LIKE SALES Q V Q Industry Average-2.56% Footwear-0.40% Furniture & Flooring-9.83% Garden Centres-0.62% Gift & Homeware-3.92% Grocery-1.43% Hot Beverages1.36% Jewellery-3.64% Ladies Fashion-4.04% Menswear-4.22% Pharmacy1.61% Like for Like Sales Q v Q (Industry Average) REI Retail Industry vs CSO & CSI Figures Mar 2011-Mar 2012 CSO REI CSI ** Source: CSO Figures published March 2012 & ESRI/KBC Indices Report published March 2012 ** REI Irish Retail Industry Productivity Review Q LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) January -4.72% February -1.68% March +0.73% Q %

4 Footwear Sales - Q Comparable with Retail Industry Average Commentary from Keith Rogers – Head of Retail – Ecco Footwear: “2012 started as 2011 finished with less footfall and more effort required to close sales. The mild weather in Jan & Feb did not help boots and other seasonal footwear which forced us to discount more than we budgeted for. March had a difficult start but finished very strong with high demand for casual and summer footwear when the fine weather came. All footwear retailers are currently doing a sun dance to ensure a good Q2 with strong sandal and other summer product sales before we get to the sale period in June.” Commentary from John Walsh – MD – Walsh Brothers Shoes: “The 2% VAT increase to 23% has made retailing difficult and makes it hard to achieve last years targets. Constant negative media commentary surrounding household charges and water charges is worsening consumer sentiment. Fine weather has suited some areas more than others and footwear is very susceptible to weather.” 2012 FOOTWEAR SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-5.31%-4.72% Feb0.11%-1.68% March5.38% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Footwear Sales REI Irish Retail Industry Productivity Review Q

5 Furniture & Flooring Sales - Q Comparable with Retail Industry Average Commentary from Blaine Callard – CEO – Harvey Norman: “Furniture retail continues to be severely depressed and is possibly deteriorating further. Other large ticket categories benefit from the break- down & replacement market whilst furniture purchases can be in theory deferred indefinitely when discretionary spend is tight. Erosion of average price continues as furniture and flooring retailers continue to liquidate stock to generate cash-flow. Rents a major burden on furniture retailers with large floors.” Commentary from JP Kennedy – MD – TileStyle: “Sales continue to decline during the first quarter of 2012 and it is still unclear when the true bottom will be reached. Flooring and furniture require large display footprints and high levels of sales knowledge and customer service. Labour and rent represent 34% of total overheads and controlling these continues to pose significant challenges to the sector while at the same time providing a positive customer experience and meeting ever increasing levels of expectation from the customer.” 2012 FURNITURE & FLOORING SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-12.13%-4.72% Feb-7.45%-1.68% March-8.01% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Furniture & Flooring Sales REI Irish Retail Industry Productivity Review Q

6 Garden Centre Sales - Q Comparable with Retail Industry Average Commentary from Fergal Doyle – Director - Arboretum: “Weather is a huge factor in our business and we have been spoilt in April for the past three years with an early summer start coupled with consumers replacing plants following the harsh winters. Q2 is make or break for garden centres, with a poor and cold April start we are hoping for a more traditional summer in May and June. “ Commentary from Mairead Horkan – Personnel Mgr. – Horkan Group: “It’s been a disappointing first quarter in the garden centre industry. Having Paddy’s weekend and Mother’s day on the same weekend did not help in March as two normal busy weekends were put into one. The cold weather recently has slowed the season down but we are hopeful that the Q2 period will help improve the overall year’s figures.” 2012 GARDEN CENTRE SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan 0.51%-4.72% Feb 0.18%-1.68% March -1.37% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Garden Centre Sales REI Irish Retail Industry Productivity Review Q

7 Gift & Homeware Sales - Q Comparable with Retail Industry Average Commentary from Jonathan Stanley – CEO – Homestore + more: “Consumer sentiment has improved as a result of the consumer adjusting to the current economic climate however money does seem to be tighter. Consumers are not buying frivolous purchases and are very careful about what they are buying. I feel we are very close to the bottom across all retail sectors. I think that the CSO figures will report like for like growth by Q ” Commentary from Olive Donovan – MD – Howards Storage World: “Generally the first quarter started negatively but March was somewhat positive with an increase in footfall and slight increase on this time last year even though things are still quite distressed. Consumer sentiment has improved slightly.” 2012 GIFT & HOMEWARE SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-5.44%-4.72% Feb-1.49%-1.68% March 1.84% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Gift & Homeware Sales REI Irish Retail Industry Productivity Review Q

8 Grocery Sales - Q Comparable with Retail Industry Average Commentary from Kevin Jephson – Director – Ardkeen Quality Food Store: “The economic outlook remains challenging with spending and sentiment weak. It is noticeable that the consumer will only respond to value. Occasions such as St. Patrick’s Day and Mothers Day have become very important as such events provide good reason to spend as borne out by the March 2012 data, however such growth is hard won.” Commentary from Eoin Warner – Retail Director – The Butler’s Pantry: “After a strong Christmas, the start of 2012 was slow. We experienced strong sales around Valentines Day and Easter. People are saving more for celebrations and continue to demand value for money coupled with good quality. I predict minor growth towards the end of 2012.” 2012 GROCERY SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-3.33%-4.72% Feb-3.38%-1.68% March 2.76% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Grocery Sales REI Irish Retail Industry Productivity Review Q

9 Hot Beverage Sales - Q Comparable with Retail Industry Average Commentary from Paul Candon – Marketing Director – Topaz: “Hot beverage sales were flat for Q with discretionary spend way down. We face a difficult year ahead – consumers do not have money to spend. Any growth will be from increasing store numbers, sizes or concept change, which requires investment.” Commentary from Owen Doorly – MD – Il Valentino: “January was a bit milder this year which drove footfall comparable with Consumer sentiment was strong around Valentines week and Mother’s day in March was a welcome addition to the calendar. I feel that minor growth would be optimistic for the remainder for 2012.” 2012 HOT BEVERAGE SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan 0.64%-4.72% Feb 2.06%-1.68% March-0.15% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Hot Beverage Sales REI Irish Retail Industry Productivity Review Q

10 Jewellery Sales - Q Comparable with Retail Industry Average Commentary from John Moore – MD – Moores Jewellers: “Certainly the year got off to a slow start. Average transaction value is dropping but volume is holding up with consumers continuing to move away from gold and focusing on lower price points such as charms instead. I would hope to see a lift in sales volumes for Q3 and Q ” Commentary from Stephen Fitzpatrick – Director – Pandora: “Mothers day was a bigger event for us than Valentines Day in I feel that consumers were shopping for “thank you’s” for mothers perhaps helping out with child-minding and other luxuries that the consumer cannot afford in this day and age. Footfall is on par with last year. The rest of 2012 will be rocky but we hope that Q4 will bring some positive results particularly with Christmas trade.” 2012 JEWELLERY SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-4.99%-4.72% Feb-0.59%-1.68% March 0.68% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Jewellery Sales REI Irish Retail Industry Productivity Review Q

11 Ladies Fashion Sales - Q Comparable with Retail Industry Average Commentary from Robert Barron – Marketing Director – Pamela Scott: “The Ladies Fashion sector is very difficult. Footfall is on par with 2011 however consumers are reluctant to spend as a result of media scaremongering around the Household charges and other austerity measures. Consumers are unsure what the remainder of 2012 will bring. I do not foresee like for like growth until consumer sentiment improves in Ireland.” Commentary from Jean McCabe – MD – Willow Boutique: “We are focusing on excellent customer service and engagement. Cash flow is quite poor with consumers giving purchases serious consideration – they are slower to buy. Footfall is strong and I feel that 2012 could experience a mild increase in sales volumes provided overly negatively media commentary abates.” 2012 LADIES FASHION SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-5.97%-4.72% Feb-3.47%-1.68% March-1.33% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Ladies Fashion Sales REI Irish Retail Industry Productivity Review Q

12 Menswear Sales - Q Comparable with Retail Industry Average Commentary from Louis Copeland – MD – Louis Copeland Menswear: “The last couple of months have been difficult. However, consumer sentiment has improved in recent months and I feel that by mid May 2012 we could experience like for like growth in Menswear sales. “ Commentary from Richard Doody - MD – Counter Propaganda: “In Menswear there has been a clear improvement in consumer sentiment since the start of the year. We feel this is mainly due to better news on the global and domestic economy with several large job announcements in Ireland and an improvement in the US economy as well as a steadying in the Euro zone. There could be some decent growth in Q2 if the economic momentum can be kept up.” 2012 MENSWEAR SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-7.26%-4.72% Feb-1.91%-1.68% March 0.84% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Menswear Sales REI Irish Retail Industry Productivity Review Q

13 Pharmacy Sales - Q Comparable with Retail Industry Average Commentary from Cormac Tobin – MD – DocMorris | Unicarepharmacy: “One of the strongest quarters for Pharmacy in the last number of years, driven by strong flu category sales in March and Mother’s day falling earlier than usual. Prescription items and sales remain strong however the IPHA agreement will impact negatively on sales in Q ” Commentary from Rachel Gubbins – MD – Medicare: “It is great to see a return to growth in the pharmacy sector, albeit very slight. This is, however, tempered by the potential effect of the ongoing IPHA negotiations” PHARMACY SALES LIKE FOR LIKE SALES Q (INDUSTRY AVERAGE) Jan-0.89%-4.72% Feb1.12%-1.68% March3.78% 0.73% Q %-2.56% Like For Like Sales Q (Industry Average) Pharmacy Sales REI Irish Retail Industry Productivity Review Q

14 Average Transaction Value/Sales per Square Foot - Q REI Irish Retail Industry Productivity Review Q AVERAGE TRANSACTION VALUE - Q SALES PER SQ FT - Q Q SECTOR AVERAGE TRANSACTION VALUE SALES PER SQUARE FOOT Industry Average€48.06€ Footwear€47.35€ Furniture & Flooring€173.99€38.40 Garden Centres€24.78€42.86 Gift & Homeware€27.48€67.14 Grocery€12.67€ Hot Beverages€3.71€ Jewellery€69.69€ Ladies Fashion€49.59€90.26 Menswear€57.19€57.63 Pharmacy€17.56€259.23

15 Wage Cost as a % of Sales - Q Commentary from Tommy Smyth – MD – Tom Smyth HR Advisors: “Pay freezes continue as strongly as ever, with very little union activity seeking pay increases. One area being considered by employers are more creative bonus or commission based schemes to reward increased employee sales. Base salaries are static and I don’t foresee this will change in 2012.” Commentary from Barry Whelan - MD – Excel Recruitment: “We have seen an erosion in wages since December 2008, when wage freezes came in very quickly and have not lifted since. Many executive wages have not risen in four years. It is felt that employees are taking voluntary pay decreases of on average 10% across all sectors. Job applicants are now more realistic then ever before.” REI Irish Retail Industry Productivity Review Q Q SECTOR WAGE COST as a % OF SALES Industry Average16.57% Footwear15.48% Furniture & Flooring18.70% Garden Centres15.48% Gift & Homeware14.92% Grocery12.43% Hot Beverages23.21% Jewellery19.24% Ladies Fashion15.73% Menswear16.34% Pharmacy15.43%

16 Rent as a % of Sales - Q Commentary from Jack Devlin – Director - GVA Donal O’Buachalla: “At this stage, given the very depressed economic climate, long standing lease (UORR) retailers are not getting the benefit of market change where rents are falling between 50% and 60% from the peak levels in Both secondary and provincial locations and indeed retail parks where vacant units stand are remaining vacant year on year. New leases offer advantages such as reduced rents, store fit outs and other enticements however long standing lease holders do not see the benefit of these changes.” Commentary from David Fitzsimons – CEO – REI: “The rent investment ratio recorded over the Q period indicates a very distressed situation for many operators. In Q the rent % investment ran at 12.21%, this has now grown to 12.70% indicating that while sales activity has eroded further over the past 12 months large scale rent reductions are not forthcoming. The unwillingness of NAMA to apply meaningful rent reductions to a significant cohort of tenants has further exasperated the rent crisis.” REI Irish Retail Industry Productivity Review Q Q SECTOR RENT COST as a % OF SALES Industry Average12.70% Footwear15.06% Furniture & Flooring14.74% Garden Centres4.77% Gift & Homeware15.92% Grocery4.91% Hot Beverages14.57% Jewellery18.06% Ladies Fashion15.04% Menswear14.95% Pharmacy6.88%

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