Retail sales could plummet 40% more after initial reopening boost
Retailers could suffer a further drop in revenues of up to 40% after the expected initial sales boost from reopening dies off, an industry body has warned as part of its call for more wide-reaching government support for the sector.
Retail Excellence has said a “two-step economic journey” will follow the gradual easing of restrictions and reopening of non-essential shops.
The industry group has said the initial reopening of shops could boost certain retailers’ revenues by up to 10% over the first two-to-three weeks of recommencement.
However, revenues could ultimately fall by between 15% and 40% once the initial consumer burst wears off and recessionary effects kick in.
“As retail reopens, it is likely that consumers will demonstrate pent-up demand in certain product categories, and will shop very functionally and cautiously off-pre-decided shopping lists. There will be no browsing,” said Retail Excellence CEO David Fitzsimons, who warned that consumers’ shopping experiences will become less sociable and more functional.
After the initial demand eases, sales are expected to fall with consumers returning to “hibernation”.
“This is the subdued demand phase,” said Mr Fitzsimons. “Due to health and safety and financial prudence, consumption decreases exponentially,” he said.
Around 1,500 retailers will be allowed to reopen from Monday, with the likes of garden centres, hardware stores, opticians, office equipment outlets, electrical goods stores, and bike shops included in the first wave – although, significantly, not homeware stores such as Ikea.
However, Retail Excellence has warned that the retail sector could see around 100,000 job losses.
It wants the Government to introduce a 12-month waiver on local authority rates, a Covid-19 compensation scheme, a commercial rent grant equivalent to 60% of the rent payable during the period of emergency, and 0% loans for all impacted businesses.
Ibec body Retail Ireland said that the focus must be on protecting viable, but vulnerable, retailers.
“Significant additional interventions will be needed to safeguard retail businesses and jobs. This must include measures to address the issue of commercial rent liabilities accrued during the shutdown, which many businesses will simply be unable to pay,” said director Arnold Dillon.
