Retail round-up
Local retailing stays dynamic but new opportunities are limited after a decade of growth.
Few things illustrate the recent transformations in Northern Ireland’s fortunes better than retailing. Following 25 years of stunted growth, and coinciding with gathering momentum in the peace process, the sector expanded rapidly from the mid-1990s onwards with many of Britain and Europe’s biggest retailing names opening stores across the region.
From a standing start, the three main multiples – Tesco, Sainsbury’s and Asda – now have more than 50 stores between them and are keen to extend their presence further. German discount supermarket Lidl also has a significant slice of the grocery market.
But after more than a decade of continual growth, and against a background of economic uncertainty, new opportunities are limited. Nevertheless, Northern Ireland retailing remains dynamic, largely buoyant, and a major source of employment in the region.
While high street spending among Northern Ireland’s citizens inevitably slowed as the recession took hold, the retail sector has remained stronger than in the Republic or the rest of the UK.
“The retail sector has been insulated from the recession more so than any other service sector, outside of the public sector,” says Ulster Bank economist Richard Ramsey. “In terms of employment growth, it has significantly outperformed the wider Northern Ireland economy over the last decade and following the downturn, the level of job losses has been less marked than in other sectors.”
A large public sector with a degree of recession immunity and cross-border shopping have helped insulate Northern Ireland from the worst ravages of the downturn, but these factors are expected to change, though not necessarily in the immediate future.
It was the comparatively high cost of groceries in the Republic, coupled with a weakened pound, which drove the surge of southern shoppers north, enabling towns and cities such as Newry, Enniskillen and Strabane to enjoy something close to a bonanza.
Cross-border shopping was estimated to be worth around £700 million to Northern Ireland economy in 2009. However, Richard Ramsey warns that the flood of southern shoppers may soon ease thanks to a weakening euro and fiscal changes on both sides of the border.
“Northern Ireland’s retail sector will once again become more reliant on the beleaguered domestic consumer, who is facing an increasing number of headwinds in the form of domestic rate rises, pay freezes or cuts, a probable VAT increase and inflation on the rise again,” he says. “Essentially, its retail sector has become larger than its economic fundamentals can support in recent years, therefore a notable re-adjustment is set to occur over the next couple of years.”
Brian Lavery, managing director with commercial property agents CB Richard Ellis, also forecasts a slowdown in the number of shoppers from the Republic.
“There’s no doubt that for a number of reasons, including the Dublin Government’s lowering of duty on alcohol and the UK Treasury’s VAT increase, Northern Ireland is likely to become less enticing to southern shoppers,” he says.
A notable attraction for shoppers on both sides of the border has been Belfast’s £320 million flagship shopping centre Victoria Square. The 800,000 square foot complex, which opened in March 2008, is anchored by department store House of Fraser and features a host of other names new to Northern Ireland.
Another development in retailing that is expected to prove popular with shoppers north and south is the opening of a John Lewis store at Sprucefield near Lisburn. However, since first announced in 2004, this project has continually stalled and will be the subject of a public inquiry in June. Nevertheless, the upmarket retailer, which ranks as Britain’s favourite department store, remains fully committed to opening at Sprucefield and creating 700 jobs.
According to Glyn Roberts of the Northern Ireland Independent Retail Trade Association (NIIRTA), the problems John Lewis is encountering stem from the lack of a clear retail planning framework. After more than a decade of drafting, PPS5, the regional retail planning blueprint, has yet to be published and remains at the centre of an ongoing High Court case.
“The continued absence of proper retailing planning policy creates ambiguity and is of no use to anyone,” says Roberts, who is keen to see the legislation provide safeguards for town centres.
NIIRTA’s cause has been boosted by the rejection of plans for Ireland’s largest supermarket at an out-of-town site near Banbridge, County Down, but again it may be another planning wrangle that ends up in the courts.
Perhaps on a brighter note, outlook among consumers in Northern Ireland is improving for the first time since the height of the credit crunch, according to Northern Bank’s consumer confidence index. Whatever the future holds, it certainly looks interesting.
