Irish consumer market remains in very weak state
The Irish consumer market is still in the throes of the economic downturn and remains in a very weakened state, according to a new quarterly report released today.
The Consumer Market Monitor, compiled by UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland (MII), shows there has been a steady, albeit modest, lift in consumer confidence from April to June, with June showing the highest level in more than 12 months. However, this has yet to feed through into sales, as consumer spending in all retail categories continues to decline, with cars and property hit hardest.
The report, which tracks key indicators of confidence and activity in the Irish consumer market on a quarterly basis, shows consumers have reacted cautiously to the ongoing economic problems by increasing savings and curtailing expenditure.
Consumer spending has fallen by 14pc from the final quarter of 2008 to the first quarter of 2009, while personal savings have increased from 3pc of disposable income in 2007 to 10pc in 2009.
According to the monitor, the retail sales index has reported record losses across all sectors, further compounded by the collapse of the motor trade and rise in cross-border shopping.
Retail sales value, excluding the motor trade, decreased by 43.9pc for the year ending May 2009. Some of the hardest-hit sectors in value terms have been the motor trade down 42.5pc for the year to the end of May; household equipment down 27pc; clothing and footwear down 26.2pc; department stores down 17.6pc; fuel down 21.5pc; and newspapers/stationary down 14.3pc.
However, the report shows bar sales have held up better than might be expected with a decline of 11.4pc in volume and 9.8pc in value, and not surprisingly, the monitor said, of all consumer spending categories food has held up best, down just 4.6pc in volume and 6.5pc in value.
As consumers tighten their spending, credit-card debt has seen a corresponding fall. Overall, payments on credit cards have exceeded indebtedness in every month of 2009 to date, with a net reduction in indebtedness of €23m in May.
According to the report, consumer confidence has improved slightly in recent months, which it said hopefully presages a gradual resumption in sales activity. However, a fall in consumer confidence of 5pc is still predicted for 2009, with a further decline of 3.4pc in 2010.
The Consumer Market Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources.
It aims to bring key data together and present it in a way that is easy for marketing practitioners and business planners to interpret and use for market analysis and sales planning.
To download the full report visit www.mii.ie/cmm.