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2013

Q1

UCD Michael Smurfit Graduate Business School

Consumer Market Monitor


Table of Contents Executive Summary

1

Consumer Confidence

4

Consumer Incomes & Spending

6

Personal Spending on Goods & Services

7

Personal Savings

9

Personal Borrowing

10

Number of Mortgages Issued

11

Ownership Status of Borrowers

13

Number of Credit Cards in Circulation

14

Credit Card Debt

15

Retail Sales Index

17

Sales of Private Cars

19

Retail Sales- Department Stores

21

Retail Sales-Food

23

Retail Sales- Pharmaceutical, Medical & Cosmetics

25

Retail Sales- Books, Newspapers & Stationary

27

Retail Sales- Bars

29

Retail Sales- House Equipment

31

Retail Sales- Clothing, Footwear & Textiles

33


CONSUMER MARKET MONITOR The Consumer Market Monitor is a publication provided by the Marketing Institute of Ireland in collaboration with the UCD Michael Smurfit Graduate Business School. It is designed to track key indicators of confidence and activity in the Irish consumer market as a resource for marketers and the wider business community. The consumer market accounts for 63% of GNP so it is an important indicator of the health of the overall economy. It relies on a model of consumer behaviour which sees economic variables such as income levels, taxes, interest rates and exchange rates influencing consumer confidence which, in turn, influence consumer behaviour including spending, saving and borrowing.

It is based on data from the Central Statistics Office (CSO), the Central Bank, the European Commission, and other secondary sources. The added value rests in the fact that the information is brought together in a single location and presented in a way that is easy to use for market analysis and sales planning. The accompanying editorial also highlights important trends and linkages that point to emerging opportunities and threats. It is published on the MII website and the UCD Smurfit School website and is updated every quarter. This edition covers quarter three of 2013.


1

EXECUTIVE SUMMARY Introduction Consumer spending accounts for over 60% of GNP in Ireland and is therefore a critical factor in driving any recovery in the economy. Consumer spending is affected by the combined influences of how much money people have available to spend—their disposable income, coupled with their confidence in spending it. Conditions in Ireland over the past five years have seen the amount of disposable income declining steadily due to a combination of rising unemployment, reductions in pay, and increases in taxes and other essential costs. Not surprisingly, this has seriously damaged confidence, and consumers have responded by taking a cautious approach, increasing their savings and paying down debt. This response has seen borrowing levels reducing steadily, helping to restore household finances, but has resulted in a marked reduction in spending, particularly of nonessential items such as cars, electrical goods, and fashion clothing. This has had a very serious effect on retailers and other providers of consumer products and services which have seen their sales revenue reduce by up to half over the last five years. Fortunately, there is some evidence that this vicious spiral may have reached its nadir in 2012 and there are some signs of recovery this year, especially in the second half. 2013 has seen a significant increase in consumer confidence, reaching a level in September that hasn’t been seen since 2006, attributed to positive news in the job market and the property market. Household expenditure has not yet reflected the increasing confidence level; it showed a very small increase in 2012, from €78.2bn to €78.3bn, but has actually picked up a bit more this year, up 2% in the first half compared to 2012. However, some spending categories have begun to show signs of life in recent months. Car sales, in particular, which are a leading indicator of economic growth, have picked up in the third quarter. Sales of new cars rose significantly in July, with the new registration system, but the number of new cars sold continued to increase in August (up 21% to 4,504) and September (up 17% to 3,257) year-on-year. Sales of used cars have also been buoyant, with 37,437 sold in the first three quarters of 2013, up 32% from 2012. 4,735 used cars were sold in September alone, an increase of 60% on September last year. There is also some evidence of greater activity in the property sector, with 10,900 residential properties sold in the first half of the year (up 13% on last year), and in the sale of building materials (up 7% on last year), both of which should boost activity in the consumer economy. Retail sales have continued to be weak but stable in 2013, up by a very modest 0.6% in volume in Q3 year-on-year, and down by just -0.3% in value. It would be nice to think that the final quarter of this year should be stronger as consumer confidence is relatively high, and the government budget is now out of the way. Against that, however, is the fact that disposable incomes are still very weak, and the property tax is also a concern that may curtail spending. Official forecasts are for retailing and consumer spending to be down by -0.4% for the year as a whole, with a small increase of 0.4% forecast for 2014.

UCD Marketing Development Programme ©2013


2

Consumer Confidence Confidence picked up slightly in the first half of 2012 but turned downwards in the latter part of the year. This reflects an annual trend whereby confidence falls each autumn in expectation of a harsh budget. 2013 has seen a much stronger increase in consumer confidence reaching a high in September that hasn’t been seen since 2006.Consumer confidence was up 5 points in the first half of 2013 compared to the same period of last year. July did see a drop in confidence, but this recovered in August, and confidence reached a six year high of -3 in September, attributed to positive news in jobs and property market. The fact that the government budget was brought forward to October this year, and that employment data continues to be positive, should help to ensure that confidence stays upbeat in the final quarter of the year. Mirroring the Irish trend, consumer confidence in the UK has also picked up in recent months. Confidence reached -0.3 in September, equal to the peak in 2007.

Consumer Incomes and Spending Following growth of 60% in household disposable income from 2002 to 2008, there was a steady decline in recent years, down by -16% from the peak to the end of 2012. This period corresponded with a reduction in employment, from 2.13 in 2008 to 1.82--a net reduction of 310,000. This downward trend has continued in 2013, with disposable income down -3% in the first half year compared to the first half last year. It seems likely that the public sector pay cuts and property taxes which took effect recently have put further downward pressure on disposable income. However, improving employment figures suggest the possibility of a modest increase in gross disposable income in 2014 and 2015. Household spending closely mirrors the income trend, increasing by a record 48% between 2002 and 2008, from €62bn to €92bn. Spending has since declined in line with incomes, to a low of €78 billion in 2011, as households continued their efforts to repair their finances, resulting in five consecutive years of decline, which saw net consumption contract by a cumulative -7.5% in real terms. Household expenditure showed a very small increase in 2012, from €78.2bn to €78.3bn, and has actually picked up a bit more this year, up 2% in the first half compared to 2012. However, official forecasts suggest that the best that can be expected is for household spending to stabilise for this year as a whole, with a modest increase beginning from 2014 onwards.

Consumer Borrowing Borrowing by Irish consumers grew at a record level from 2000 onwards. Total household credit peaked in March 2008 at €150 billion, but declined steadily since then, down to €111 billion by December 2012, a reduction of -26% from the peak. Total household lending is continuing to fall in 2013, down by -4.5% in the first half, and by -4.3% in the third quarter. Loans for house purchase account for over 70% of lending to households. Total outstanding loans for house purchase peaked in May 2008 at €127 billion but reduced to €79 billion by December 2012, a drop of -33%. However, loans for house purchase actually increased by 8% in December, in a rush to avail of mortgage interest relief before it ended. UCD Marketing Development Programme ©2013


3

Borrowing for house purchase increased further in 2013, up by 4% in the first half of 2013 year-on-year. Lending for house purchase stayed steady in the third quarter, but was up by 2% in September compared to the previous month. Other consumer lending peaked in Q1 2008 at €24 billion but had declined to €12 billion by December 2012, a drop of -50% from the peak, and of -5.5% for the year. This category is continuing to fall fastest of all, down -11% by the third quarter of this year.

Retail Spending Following four years of decline, retail sales stabilised in 2012, with volume decreasing by just -0.2%, and value increasing by 0.4% for the year. Retail sales have continued to be weak but stable in 2013, up by a very modest 0.6% in volume in Q3 2013 year-on-year, and down by just -0.3% in value. It would be nice to think that the final quarter of this year should be stronger as consumer confidence is relatively high, and the government budget is now out of the way. Against that, however, is the fact that disposable incomes are still very weak, and the property tax is also a concern that may curtail spending. Official forecasts are retailing and consumer spending to be down by -0.4% for the year as a whole. The picture is very different in the UK where retail sales increased by 2.7% in volume and 4.3% in value in Q3, year-on-year. Online retail sales climbed 12% in Q3,compared to the same period of last year. Forecasts suggest growth of retail in volume terms of 2.4% in 2013; 1.6% in 2014; and 1.6% in 2015.

Recent Trends Sales through the motor trade have also been difficult for several years but recent months have seen some relief, with a significant uplift in sales. There were 66,570 new private cars licensed in the year to the end of September 2013, a fall of -7% compared to the same period in 2012. However, there was a peak in July, with the new registration system, and the number of new private cars continued to increase in August (up 21% to 4,504) and September (up 17% to 3,257) year-on-year. Sales of used cars have also been buoyant, with 37,437 sold in the first three quarters of 2013, up 32% from 2012. 4,735 used cars were sold in September alone, an increase of 60% on September last year. Retail sales excluding the motor trade are also up very slightly in 2013 -- by 0.6% for the third quarter of the year, with value sales just about steady. Essential products including food and other groceries held up well in the third quarter of 2013 and household equipment showed significant growth: • • • •

Food sales up 0.7% in volume and up 1.3% in value; Non-specialised stores (supermarkets) up 0.8% in volume and 1.2% in value; Clothing, footwear & textiles up 3.4% in volume but down -0.3% in value; Household Equipment up 4.3% in volume and up 0.0% in value;

All other retail categories experienced declines in Q3 year-on-year, although the rate of decline is less than in previous quarters: • • • • •

Fuel down -0.4% in volume and down -3.1% in value; Department stores down -1.2% in volume and down -3.8% in value; Books, stationery etc. down -2.7% in volume and -1.9% in value; Bar sales down -2.9% in volume and -0.3% in value; Pharmaceuticals and cosmetics down -5.5% in volume and -4.2% in value.

UCD Marketing Development Programme ©2013


4

CONSUMER CONFIDENCE – ANNUAL

2002 - 2012 Europe

United Kingdom

Ireland

5.00 0.00 -5.00 -10.00 -15.00 -20.00 -25.00 -30.00 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Consumer confidence reached an all-time low in Ireland in 2008, following the financial crisis, and this was mirrored in the United Kingdom and the rest of the European Union. Confidence improved all over Europe throughout 2009 but Ireland continued to lag both the UK and the rest of Europe, by margins of 54% and 47% respectively. The average level of confidence for 2009 in Ireland was just 4% better than 2008. Consumer confidence recovered steadily through the first half of 2010 but this trend reversed in the second half of the year coinciding with the IMF bailout. This downward trend continued in 2011 with confidence falling by 21% compared to 2010, and remained low throughout 2012. Confidence levels in the UK reached an all-time low in 2011, down 62% from 2010, due to a combination of higher living costs and a weak jobs market. Consumer confidence in the rest of Europe also fell in 2011 (down -16%), although not as significantly as the UK. Economic sentiment in the euro area improved in 2012 among consumers and across all sectors except the retail trade. All countries measured in this index remain well below the average confidence level experienced in the growth years preceding 2007. For example, the UK is averaged -20 in 2012 compared to a long-term average of -5. The US index averaged 65 in 2012 compared to a long-term average of 97. Historically, US consumer confidence averaged 93 reaching an all-time high of 145 in January 2000 and a record low of 25 in February 2009.1

1

http://www.tradingeconomics.com/united-states/consumer-confidence UCD Marketing Development Programme Š2013


5

CONSUMER CONFIDENCE – MONTHLY

Jan 2007 - September 2013 Europe

Ireland

UK

5 0 -5 -10 -15 -20 -25 -30 -35 2007 Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov 2008Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov 2010Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov 2011Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov 2012Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov 2013Dec Jan Feb March April May June July Aug Sept

-40

Confidence picked up slightly in the first half of 2012, rising to -20 in June, but turned downwards in the latter part of the year. This reflects an annual trend whereby confidence falls each autumn in expectation of a harsh budget. Confidence dipped again in the final quarter of 2012, but did not fall as low as in previous years. 2013 has seen a much stronger increase in consumer confidence reaching a high in September that hasn’t been seen since 2006.Consumer confidence was up 5 points in the first half of 2013 compared to the same period of last year. July did see a drop in confidence, but this recovered in August, and confidence reached a six year high of -3 in September, attributed to positive news in jobs and property market. The fact that the government budget was brought forward to October this year, and that employment data continues to be positive, should help to ensure that confidence stays upbeat in the final quarter of the year. Mirroring the Irish trend, consumer confidence in the UK has also picked up in recent months. Confidence reached -0.3 in September, equal to the peak in 2007. Consumer confidence in the US has seen a decline in the third quarter of this year. The second quarter saw the highest level of confidence since 2008, reaching 81 in June. However, confidence fell to 75 in October, the lowest figure since January largely due to the government shutdown that occurred from 1 st -16th October.

UCD Marketing Development Programme ©2013


6

CONSUMER INCOMES AND SPENDING

120,000

Disposable Incomes and Household Spending €Billions - Current

100,000 80,000 60,000 40,000 20,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Disposable Incomes

Household Spending

Disposable income in Ireland increased from €65bn in 2002 to €104bn in 2008– an increase of 60%2. This was due to the combined effects of more people in employment and rising income levels. This trend reversed in 2009, however, when disposable incomes declined by -7.6%, to €96bn. Incomes declined further in 2010, 2011, and 2012, down to €87 billion, a net decline of -16% from the peak. This period corresponded with a reduction in employment, from 2.13 in 2008 to 1.82--a net reduction of 310,000. This downward trend has continued in 2013, with disposable income down -3% in the first half year compared to the first half last year3. It seems likely that the public sector pay cuts and property taxes which took effect recently have put further downward pressure on disposable income. However, improving employment figures suggest the possibility of a modest increase in gross disposable income in 2014 and 2015. Household spending closely mirrors the income trend, increasing by a record 48% between 2002 and 2008, from €62bn to €92bn. Spending has since declined in line with incomes, to a low of €78 billion in 2011, as households continued their efforts to repair their finances, resulting in five consecutive years of decline, which saw net consumption contract by a cumulative -7.5% in real terms. Household expenditure showed a very small increase in 2012, from €78.2bn to €78.3bn, and has actually picked up a bit more this year, up 2% in the first half compared to 2012. Positive signs in the retail sector suggest that this improvement may be gaining some momentum, but official forecasts suggest that the best that can be expected is for household spending to stabilise for this year as a whole, with a modest increase beginning from 2014 onwards4.

2

CSO Institutional Sector Accounts CSO Institutional Sector Accounts, Q2, 2013. Central Bank of Ireland Quarterly Bulletin, Q4 2013. UCD Marketing Development Programme ©2013 3 4


7

PERSONAL SPENDING ON GOODS & SERVICES – ANNUAL

2002 - 2012 Current Personal Spending of Goods and Services 100,000 91,948 90,000

93,863 84,173 82,591 81,101 80,000

83,979 76,927

80,000 70,899 67,203

70,000 62,114 60,000 50,000 40,000 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Millions of Euro

There was a steady rise in personal spending in Ireland from 2000 to 2007, with a record increase of 8.6% in that year. Spending growth slowed in 2008, and declined steadily over the next four years; there was a record decline of-7.2% in 2009. In sum, personal consumption fell by a cumulative -7.5% in real terms over the five years from the peak in 2007 to the end of 2012.5 This downward trend continued in 2012, but at a slower pace, real consumption declining by -0.3%. The pattern of consumer demand during 2012 was one of significant weakness in the early months of the year, followed by recovery by mid-year, but with renewed weakness in the final quarter. A recent household budget survey provided evidence of the financial strain that has inhibited consumer spending6. Overall, 82% of households claimed to have reduced their spending on at least one category of expenditure as a result of the economic downturn. Nearly a quarter of all households indicated that they had cut back on five or more categories of spending. Over 40% of households indicated that they had experienced difficulties in keeping up with their bills and debts.

5

Central Bank of Ireland, Quarterly Economic Bulletin, Quarter 1, 2013. CSO Quarterly National Household Survey, Q1 2013 UCD Marketing Development Programme Š2013 6


8

PERSONAL SPENDING ON GOODS & SERVICES – QUARTERLY

2007 - 2013 Current Personal Spending on Goods and Services 27,000 25,000 23,000 21,000 19,000 17,000 15,000 Q1 2007

Q3

Q1 2008

Q3

Q1 2009

Q3

Q1 2010

Q3

Q1 2011

Q3

Q1 2012

Q3

Q1 2013

Millions of Euro Personal spending peaks each year in the fourth quarter, in the run up to Christmas. This peak reached an all-time high in the final quarter of 2007 but has been on a steady downward trend since then. The volume of personal consumption in Ireland declined in real terms by -7.5% from the peak in 2007 to the end of 2012. There was a slight easing in the rate of decline in 2012 with consumption down by just -0.3% for the year. This weakness accelerated in Q1 of this year, when consumer spending declined by -3%, a greater rate of decline than expected. Some recovery is expected for the remainder of this year due to a gradual improvement in labour market conditions and a pickup in consumer confidence. It is still expected that consumer spending will decline by -0.4% for 2013 as a whole. For 2014, improved labour market trends and a smaller fiscal adjustment than in recent years point to a modest increase in consumption of about 0.4%7. Consumer spending in the UK is also weak; it fell -6% in the 2008 and 2009 recession and has been broadly flat since the end of 2009 8. Consumer spending has rallied in recent months, with an increase of 3.0% in September, year-on-year, suggesting that consumers may at last be feeling more confident. US consumer spending seems well on the road to recovery; it rose 2% in 2012 for the year as a whole, and is continuing that trend in 2013, rising 0.3% in September, following increases in each of the five previous months9. The rise in spending was largely attributed to the increase in earnings.10

7

Central bank of Ireland Quarterly economic Bulletin, Q4, 2013. Bank of England Quarterly Economic Bulletin, Q1 2013. http://www.reuters.com/article/2013/09/27/us-usa-economy-idUSBRE98M0KO20130927 10 http://www.marketwatch.com/story/consumer-spending-bounces-back-in-august-2013-09-27 UCD Marketing Development Programme Š2013 8 9


9

PERSONAL SAVINGS – ANNUAL

2002 - 2012 Current

Net Personal Savings as a % Disposable Income 12% 10% 10%

9%

9.5%

9%

8% 6% 6% 4% 2% 2%

0%

0% -2%

2002

1% -1% 2003

2004

2005

-1%

0%

2006

2007

2008

2009

2010

2011

2012

The level of net personal saving in Ireland increased dramatically over the past five years, from a low of -1% of disposable income in 2006 to a high of 10% in 200911. The average for the past decade has been 3.5%. Household saving peaked at €15.3bn in 2009 and has since fallen back to €8.8bn in 2012. The net savings ratio has remained very high since 2009, as consumers tried to pay down debt to restore their finances. In fact, over 80% of this saving represents repayment of loans12. 2012 was the first year in which savings fell slightly, and this decline has continued in the first half of 2013, with the savings ratio averaging 8.6%. The longer-term net savings ratio consistent with economic recovery should be in the range of 5-7%. Despite the increase in savings, the net worth of Irish households (the difference between total assets and liabilities) fell by -37% from its peak value at Q2 2007 to the end of 201113. Significantly, Q2 2012 saw the first rise in the net worth of Irish households since Q1 2008. At the end of December 2012, the net worth of Irish households stood at €462 billion, or €100,674 per capita14. The UK savings ratio declined from the mid-1990s until 2007 when it reached 1.4%. It rose again following the financial crisis and reached a peak of 8.6% in Q2 2009 but has since fallen back to a more normal level of 5.9% in 201315. The US Personal Saving Rate is currently at 4.6%, which compares to the long- term average of 6.9%16.

11

CSO Quarterly Institutional Sector Accounts. Central Bank of Ireland Central Bank Quarterly Economic Bulletin, Quarter 3, 2012. 14 Central bank Quarterly Financial Accounts 15 Office of National Statistics 16 US Department of Commerce UCD Marketing Development Programme ©2013 12 13


10

PERSONAL BORROWING – QUARTERLY

Total Credit

House Mortgage Finance

Other Personal Loans

160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '07 '08 '09 '10 '11 '12 '13 Billions of Euro Borrowing by Irish consumers grew at a record level from 2000 onwards. Total household credit peaked in March 2008 at €150 billion, but declined steadily since then, down to €111 billion by December 2012, a reduction of -26% from the peak17. Total household lending is continuing to fall in 2013, down -4.5% in the first half, and by -4.3% in the third quarter. Loans for house purchase account for over 70% of lending to households. Total outstanding loans for house purchase peaked in May 2008 at €127 billion but reduced to €79 billion by December 2012, a drop of -33%. However, loans for house purchase actually increased by 8% in December, in a rush to avail of mortgage interest relief before it ended. House mortgage finance increased further in 2013, up by 4% in the first half of 2013 year-on-year. Lending for house purchase stayed steady in the third quarter, but was up by 2% in September compared to the previous month. Other consumer lending peaked in Q1 2008 at €24 billion but had declined to €12 billion by December 2012, a drop of -50% from the peak, and of -5.5% for the year. This category is continuing to fall fastest of all, down -11% by the third quarter of this year. Despite the rapid reduction in credit, Irish households remain among the most indebted in Europe, with debt averaging 212% of gross disposable income. This compares with 157% in the UK and 123% in the US.18

17

Central Bank of Ireland, Money and Banking Statistics. OECD Factbook UCD Marketing Development Programme ©2013 18


11

NUMBER OF MORTGAGES ISSUED – ANNUAL

2005 - 2012 Current Number of Mortgages Issued 90000

84,639

80000 70,179 70000

63,333

60000 50000 40,390 40000 30000

22,079 17,152

20000 10000

9,700

11,548

2011

2012

0 2005

2006

2007

2008

2009

2010

The number of new loans paid out for house purchases is a good indicator of the number of homes being bought and sold in the market. This number peaked in 2005 with a total of almost 85,000 new loans issued, but has fallen dramatically since then, from 40,390 in 2008 to 9,700 in 2011, a net reduction of 76%. This trend reversed slightly in 2012, with a 19% rise in the number of new mortgages issued, for a total of 11,548, suggesting the beginning of a recovery in the housing market. This trend reflected the number of new house completions, which reached almost 137,000 in 2006, the peak year of the Irish property bubble. In contrast, there were 26,820 house completions in 2009, 21,772 in 2010, 15,800 in 2011, and 7,500 in 2012. The total number of properties sitting on the market fell from just under 50,000 in mid2012 to just over 40,000 in mid-2013, the second successive year where it’s fallen by 10,00019. This is down from approximately 60,000 in 2008-2011, and from 53,000 in mid-2012. The total number of transactions registered in 2012 was 21,000, compared to 17,621 in 2011 and 19,000 in 201020. There were almost 6,000 transactions in the second quarter of 2013, compared to just over 5,200 a year previously.

19

Daft.ie Property Report Q3, 2013 MyHOme.ie Property Barometer Q2, 2013 UCD Marketing Development Programme ©2013 20


12

NUMBER OF MORTGAGES ISSUED – QUARTERLY

2007 - 2013 Total 18,000 16,830 16,426 15,738 16,000 14,339 14,000 12,000

First time buyers

Movers

12,459 11,038

9,498

10,000

7,395

8,000

6,105 5,805 5,627 4,864 4,663 4,542 3,839 3,786

6,000

5,402

3,381 2,841 2,752 2,702 2,563 2,502 2,186 2,084 1,698

4,000 2,000

Q2

2013 Q1

Q4

Q3

Q2

2012 Q1

Q4

Q3

Q2

2011 Q1

Q4

Q3

Q2

2010 Q1

Q4

Q3

Q2

2009 Q1

Q4

Q3

Q2

2008 Q1

Q4

Q3

Q2

2007 Q1

0

Mortgage lending increased by 110% in Q4 2012 compared to Q4 2011 due to the desire to obtain mortgage interest relief before it ceased on the 31st December 2012. There were almost 6,000 transactions in the second quarter of 2013, compared to just over 5,200 a year previously, an increase of 13%21. In contrast, there were 2,752 new mortgages issued in Q2, suggesting that half of all purchases were for cash22. The first quarter in any year is traditionally the weakest, with recovery in the second quarter. Mortgage lending increased by 62% from Q1 to Q2 of this year, with 2,752 new mortgages issued. This is up less than 2% up on the same quarter last year but this is the first time any growth has been recorded year-on-year since 200623.The outlook looks positive for the rest of the year with several banks having announced increases in their mortgage funding, coupled with evidence of strong demand in the market, particularly in the Dublin area. The UK mortgage market rose again in the third quarter of 2013. The level of mortgage lending was at £49 billion, up 17.6% compared to the previous quarter and a 32% increase year-on-year.24 New-home sales in the US are 38% higher compared to one year ago; reflecting an ongoing recovery in the real-estate market after sales fell to a record low in 201125.

21

Daft.ie Property Report, Q3, 2013. IBF/PWC Mortgage report, Q2, 2013. http://www.ibf.ie/Libraries/Research_Statistics/IBF_PwC_Mortgage_Market_Profile_Q2_2013.sflb.ashx 24 http://www.jjtresidential.co.uk/property-news/buying/mortgage-lending-hits-5year-high-in-q3/801651908 25 http://www.marketwatch.com/story/sales-of-new-us-homes-highest-in-5-years-2013-07-24 UCD Marketing Development Programme ©2013 22 23


13

OWNERSHIP STATUS OF BORROWERS 2012 First Time Buyers

2011

Movers

Buy-to-Let

First Time Buyers

5% 37%

Buy-to-Let

6% 38%

58%

Movers

56%

2009

2010 First Time Buyers

Movers

Buy-to-Let

First Time Buyers

Movers

Buy-to-Let

12%

7%

51%

35% 58%

37%

The most notable change in the composition of mortgage lending has been the reduction in buy-to-let lending, from 25% in 2008 to 5% in 201226. Other categories which experienced declines were mover purchasers, and the re-mortgage and top-up segments. The only sector which has shown some buoyancy is first-time-buyers. First-time buyers remain the single largest segment of the market accounting for almost 60% of the total in terms of number of transactions, and 55% in terms of monetary value. The mover market has held relatively steady in percentage terms from 2007 to 2012, but this conceals a dramatic reduction in the number of transactions, from 32,864 in 2007 to 6,533 in 2010 4,241 in 2011, and 4,750 in 2012.

26

IBF/PWC Mortgage Report Q3, 2012. UCD Marketing Development Programme Š2013


14

NUMBER OF CREDIT CARDS IN CIRCULATION – ANNUAL

2006 - 2012 Personal Credit Cards on Issue 2,300,000 2205000 2,200,000

2198000 2131000

2098000

2,100,000 2,000,000

2024083 1936000

1975000

1,900,000 1,800,000 1,700,000 1,600,000 2006

2007

2008

2009

2010

2011

2012

There was a steady rise in the number of credit cards in circulation in Ireland from 2003 to 2008, peaking at 2.2 million, an increase of 393,000 over five years, which equates to a rise of 22%. This trend levelled off in 2009 when the number of personal credit cards on issue steadied at 2.2 million. The number of personal credit cards in circulation in 2012 was 1.94 million which represents a decline of -9% on 2010. The number has continued to fall in 2013 reaching 1.85 million in September of this year, an annual decline of 4%, and a decline of -16% from the peak. The number of credit cards in circulation in the UK has also fallen by some 1.5 million from 2009 to 2010, and by a further 2 million in 2011 and 201227, to a total of about 60 million, the lowest level since 200328.Total outstanding credit card debt dropped by 5% in 2011, leaving the average credit card balance at about £1,000. American credit card debt is holding fairly steady, with the average consumer owing $7,072 on their credit cards.

27

Credit Cards in UK, Euromonitor International Jan 14th 2013 Precious Plastic, PWC UCD Marketing Development Programme ©2013 28


15

CREDIT CARD DEBT – ANNUAL

2006 - 2012 Constant 31000 29000 27000 25000 23000 21000 19000 17000 15000 2006

2007

2008

2009

2010

2011

2012

Millions of Euro

There was an increase of 31% in credit card debt from 2005 to 2008, or approximately 10% per annum. Growth continued into 2008 but at a slower rate of 8.2%, and reversed altogether in 2009 with a decline of -1% for the year. Total repayments exceeded new spending for ten of the twelve months in 2009 and this trend continued throughout 2010. This decline accelerated in 2011, with net outstanding credit card debt down -5% in December year-on-year. Total outstanding debt on personal credit cards peaked at €3 billion in December 2008; it was down to €2.47 billion at December 2012, a drop of -18%. Credit card spending in the UK was also down – average unsecured credit (credit cards and personal loans) fell by -6% in 2010 and by -5% in 2011, with a small recovery of 1% in 2012. This equates to a reduction in unsecured borrowing of about £500 out of an average of around £8,000 per household. US consumers have also been reducing their credit card debt, down by 10% in 2010, and 11% in 2011, but remaining flat in 2012. The average credit card balance was 29 $7,072 in 2012.

29

US Department of Commerce. UCD Marketing Development Programme ©2013


16

CREDIT CARD DEBT – MONTHLY

January 2007 - September 2013 Current Outstanding Indebtedness on Personal Credit Cards

2007 Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov 2009Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2010Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov 2011Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec 2012 Feb Jan Mar Apr May Jun Jul Aug Sept Oct Nov 2013Dec Jan Feb Mar Apr May June July Aug Sept

3,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000

€ millions The spike in credit card debt that occurs each December corresponds to the Christmas season. Having grown at a dramatic rate for several years, the level of debt levelled off in 2009 and began a steady decline through 2010 and 2011, with repayments exceeding spending every month for the past three years. Debt fell by -6% in December 2012 compared to December 2011. Credit card debt has continued to decline in 2013, down -10% in Q3, year-on-year, reflecting reduced consumer spending. Outstanding indebtedness on credit cards stood at €2.24 billion in September 2013, down from €3 billion at the peak in 2008, a drop of -26%. Despite the rapid reduction in credit, Irish households remain among the most indebted in Europe, with debt averaging 210% of disposable income. This compares with 157% in the UK and 123% in the US.30 Plastic card spending in the UK rose for the fifth consecutive month by 5% in September, with debit cards growing by 7% and credit cards by 3%31. The plastic card share of total retail sales was 74%, split 51% debit and 24% credit.32 US consumer credit has been increasing steadily since 2010, up 4% in 2011, and 6% in 2012. It has continued to increase in 2013, up by 6% in the second quarter, and by 5% in September33.

30

http://www.kbc.ie/businessnews/consumermoodupbutlesscashtospend http://www.theukcardsassociation.org.uk/wm_documents/May%202013.pdf http://www.theukcardsassociation.org.uk/wm_documents/August%202013.pdf 33 http://www.federalreserve.gov/releases/g19/Current/ UCD Marketing Development Programme ©2013 31 32


17

RETAIL SALES INDEX ANNUAL

2005 - 2012 Value 120

115.8 115 108.1 107.6

110

Volume

114.9 111.7 104.2 102

100 100 100

102 97.4

99.8 95.7

99.65 96

90

80 2005

2006

2007

2008

2009

2010

2011

2012

Retail Sales Index, Base 2005 = 100 Retail sales, excluding the motor trade, grew exceptionally strongly from 2000 to 2007, with a 32% increase in volume and a 52% increase in value. This was facilitated by a huge increase in shopping space over the 10 years from 2000 -- from 500,000 square metres to a current level of 3.3 million square metres. Retail sales have fallen each year since 2007. The decline in volume from the peak in 2007 to the end of 2012 was -10%, while value declined by -16%. Retail sales stabilised in 2012, with volume decreasing by just -0.2% for the full year, and value increasing by 0.4%. 2012 was a tale of two halves, however, with sales volume down by -2.1% in Q1 and by -1.1% in Q2 year-on-year, but increasing slightly in the third (0.6%) and fourth quarters (1.5%). Retail sales in the UK have also been affected during the recession but not to the same extent. In fact, the index of volume sales in 2012 was more or less the same as in 2007. Retail sales in the US rebounded quite strongly in 2012, up 5% from 2011 which, in turn, increased 8% from 2010. Sales are estimated to rise 3.4% in 2013, their slowest rate since 2010.34

34

All Businesses Excluding Motor Trade 2005 - 2011, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie CBRE Richard Ellis Retail Reports Central Statistics Office ONS Retail Statistics December 2012 US Census Bureau Wall Street Journal January 28, 2013. UCD Marketing Development Programme Š2013


18

RETAIL SALES INDEX MONTHLY

January 2007 - September 2013 Value

Volume

160 150 140 130 120 110 100 90

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

80

Retail Sales Index = Base 2005 = 100 The seasonal peak in spending that usually occurs in November and December recovered somewhat in 2011 and 2012, although still a long way below 2007. Following four years of decline, retail sales stabilised in 2012, with volume decreasing by just -0.2%, and value increasing by 0.4% for the year. Retail sales have continued to be weak but stable in 2013, up by a very modest 0.6% in volume in Q3 2013 year-on-year, and down by just -0.3% in value35. It would be nice to think that the final quarter of this year should be stronger as consumer confidence is relatively high, and the government budget is now out of the way. Against that, however, is the fact that disposable incomes are still very weak, and the property tax is also a concern that may curtail spending. Official forecasts are retailing and consumer spending to be down by -0.4% for the year as a whole. The picture is very different in the UK where retail sales increased by 2.7% in volume and 4.3% in value in Q3, year-on-year. Online retail sales climbed 12% in Q3 compared to the same period of last year36. Forecasts suggest growth of retail in volume terms of 2.4% in 2013; 1.6% in 2014; and 1.6% in 201537. US retail sales increased even more; up 5% in Q3 2013 compared to last year. In fact, September 2013 was the 47th consecutive month of growth, with most retail categories benefitting38.

35 36

37 38

http://www.finfacts.ie/irishfinancenews/article_1026754.shtml http://www.stockmarketwire.com/article/4690906/Online-retail-search-volumes-up-12pct-in-Q3.html

http://www.retailresearch.org/retailforecast.php

http://www.forbes.com/sites/maggiemcgrath/2013/10/29/no-iphone-bump-for-september-retail-sales/ UCD Marketing Development Programme Š2013


19

SALES OF PRIVATE CARS ANNUAL

2006 - 2012 New Private Cars

Secondhand Private Cars

Total

300000 250000 200000 150000 100000 50000 0 2006

2007

2008

2009

2010

2011

2012

Sales of Private Cars, 2006-201239 Car sales are a leading indicator of activity in the wider consumer market. In Ireland, the motor industry grew strongly during the economic boom, peaking in 2007 with 180,754 new cars sold. Sales of new cars have dropped steadily since then, with the most dramatic fall from 2008 to 2009, when just 54,432 new cars were sold, a drop of -63%. The market rebounded in 2010, with 84,907 new cars sold, influenced by the scrappage scheme which accounted for 20% of sales. 2011 saw a further slight increase in the sale of new cars, to 86,932, up 2.4% on the previous year. Sales in 2012 resumed a downward trend, with 76,256 new cars sold, a -12% decrease from 2011, and that trend has continued in 2013. The second-hand car market also increased in the boom years, to a peak of 60,000 in 2008. This figure dropped back to 49,464 in 2009 and 39,103 in 2010. Sales rebounded slightly in 2011, to 41,149, but dropped again in 2012, to 38,469 (-6.5%). In contrast, 2012 saw a 5.3% increase in the sale of new cars in the UK, with over 2.04 million new vehicles registered, the highest level since 2008. US auto sales peaked in 2005 and bottomed out at 10.6 million vehicles in 2009. Growth resumed in 2010(+22%) and 2011(+10%), and 2012 was up by a further 8.6%, to 14 million vehicles -- still 2 million off the peak.

39

30 CSO Vehicles Licensed for the First Time by Type of Vehicle Registration and Year, 2006-2012. 31. (http://www.irishtimes.com/newspaper/breaking/2013/0109/breto king37.html). 39 (http://useconomy.about.com/b/2013/01/17/december-retail-sales-encouraging.htm ). UCD Marketing Development Programme Š2013


20

SALES OF PRIVATE CARS MONTHLY

January 2007 - September 2013 New Private Cars

Secondhand Private Cars

Total

40000 35000 30000 25000 20000 15000 10000 0

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

5000

Private Vehicles Licensed for the First Time, Number of Units40

The variance in car sales over each twelve months is due to seasonality, with new car sales traditionally concentrated in January and February. The recent introduction of a new registration system with the year divided into two halves (131 and 132) is intended to help even out the sales across the year. There were 66,570 new private cars licensed in the year to the end of September 2013, a fall of -7% compared to the same period in 2012. There was a peak in July, as expected with the new registration system, but the number of new private cars continued to increase in August (up 21% to 4,504) and September (up 17% to 3,257) year-on-year. This suggests that there is an increasing momentum in the motor trade which would be very welcome for the dealers and distributors who have been experiencing a very tough time over the past five years Sales of used cars have also been quite buoyant, with 37,437 sold in the first three quarters of 2013, up 32% from 2012. 4,735 used cars were sold in September alone, an increase of 60% on September last year. Sales of cars in the UK were up 10% for the first half of the year, as the new car market there saw the 16th successive monthly rise 41. Car registrations continued to rise in Q3, up by 12% year-on-year. US car sales also continued to grow in 2013, up 7% for the first half year. The third quarter saw a further increase, with sales value up 11% year-on-year42.

40

Vehicles Licensed for the First Time (Number) by Month and Type of Vehicle Registration, New and Second Hand Private Cars, www.cso.ie. https://www.smmt.co.uk/members-lounge/member-services/market-intelligence/vehicle-data/monthly-automotive-data/ http://www.bbc.co.uk/news/business-24744814 UCD Marketing Development Programme Š2013 41 42


21

RETAIL SALES – DEPARTMENT STORES ANNUAL

2006 - 2012 Value 113.6

112 110

Volume

116.1

120

108.5 107.1

113 111

110.15 106.3

107.1

100 90.1 90

87.8 85.1

85.7

80 2006

2007

2008

2009

2010

2011

2012

Retail Sales Index – Department Stores, Base 2005 = 10043

In line with general retail trends, sales through department stores increased continuously over the period from 2000 to 2007, with an overall growth of 42% in volume and 49% in value. Sales revenues have declined every year since then, down -23% to the end of 2012, reflecting regular price discounting used to stimulate sales. Sales volumes held up much better, down by just -4% over the five year period. Department store sales continued a downward trend in the first and second quarters of 2012, down by -5.3% in volume in and by -5% in value compared to 2011. Sales rallied significantly in Q4, with the seasonal peak up 7.4% in volume and 7.5% in value yearon- year. For the year as a whole, sales volume and value ended up more or less the same as in 2011. Department store sales in the UK experienced a large drop in 2012, down -8.4% in volume and -6.6% in value. This was partly due to depressed consumer sentiment,but was also affected by the continuing growth in internet shopping which accounted for 9.1% of sales in December 2012.44 In the US, department store sales increased strongly in the first half of 2012, up 9%, due to an increase in incomes and good employment numbers. However, sales decreased in Q3 and Q4 resulting in a slight reduction in sales of -1% for the year as a 45 whole.

43 44

Department Stores 2006 - 2011, Retail Sales Index, Value and Volume Unadjusted (Base 2005=100), www.cso.ie ( Hamilton, S. (2013, January 18). U.K. Retail Sales Unexpectedly Decline Around Christmas. Retrieved January 28, 2013, from Bloomberg: http://www.bloomberg.com/news/2013-01-18/u-k-retail-sales-

unexpectedly-fall-in-key-christmas-period-2-.html) 45

U.S. Census Bureau UCD Marketing Development Programme ©2013


22

RETAIL SALES INDEX – DEPARTMENT STORES MONTHLY

January 2007 - September 2013 Value

Volume

250 200 150 100

0

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

50

Retail Sales – Department Stores, Base 2005 = 10046

Department stores have a marked seasonal pattern, which peaks each year in the preChristmas period and with a smaller increase in July coinciding with summer sales. This peak was somewhat subdued during the recession years but has been recovering recently, with 2012 reaching a new peak compared to the previous one in 2007, with sales volume in Q4 up by 7.4% year on year, and value up by 7.5%. Department stores were one of the worst performing sectors in Q3 of this year. Sales fell by -1.2% in volume and -3.8% in value on last year’s figures reflecting the discounting trend becoming more widespread 47. This negative trend was even more pronounced in September when sales volume fell by -3.7% and value by -6.6%. Sales in the final quarter will be particularly important for this category and will be a real test as to whether moving the budget makes a positive difference. In the UK, sales in non-specialised stores enjoyed growth in the third quarter, with volume and value increasing by 3.9% and 3.2% respectively. However, spending levels are still behind the pre-recession peak of 200748. In the US, sales through department stores have been subdued this year, down -4.9% in the first half, and down -5.7% in the third quarter. This is due to more consumers

choosing discount retailers over department and speciality stores, as well as online retailing49.

46

Department Stores 2005 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ie *Visible data labels refer to value of sales. 47 http://www.finfacts.ie/irishfinancenews/article_1026343.shtml *Visible data labels refer to value of sales. 48 http://www.sas.com/offices/europe/uk/downloads/retail/retail-predictions2013.pdf 49 http://www.wwd.com/business-news/government-trade/department-store-sales-fall-in-september-7254630 UCD Marketing Development Programme ©2013


23

RETAIL SALES – FOOD ANNUAL

2006 - 2012 Value

Volume

130 124

125 119.5

120

116.5

119.4 115.9

116

115 111.4 110

113112.5

113.5 112

2010

2011

113.4

109.7 108.9

105 100 2006

2007

2008

2009

2012

Retail Sales Index – Food, Base 2005 = 10050

Food sales increased steadily in the period between 2005 and 2008 along with most other retail categories. The volume of food sold from 2005 to 2008 increased by 16%, an average annual growth rate of 5.3%. The value of food sales increased even more, by 24%, an average annual rate of growth of 7.9%. As an essential item, sales of food have held up relatively well in the current recession. From the peak in 2007 to the end of 2012, volume declined by just -0.3%, and value by -4%.The volume of food stayed steady in 2010 while value declined by a relatively modest -2.6%. 2011 saw very little change in either the volume or value of food bought in this country when compared to 2010 figures. In 2012, sales of food increased 1.3% in volume and 2.5% in value. The grocery sector is currently worth about €9 billion in Ireland and average weekly spend is €104.51 Branded goods account for 54% of spend, down from 58% in 2007, and own labels 35%. The discount chains, Lidl and Aldi, are continuing to grow their share of the market, reaching a combined share of 14.5% of the grocery market this year.52 The food sector accounts for 42% of all retail spending in the UK. In 2012, food sales volume decreased by 0.9% while value increased by 1.9%. Food sales in the US performed well over 2012 increasing by 3.3% in value.

50

CSO Retail Sales Index Value and Volume Unadjusted (Base 2005=100). NCA/Kantar Worldpanel Presentation, March 2012. Irish independent April 30, 2013 UCD Marketing Development Programme ©2013 51 52


24

RETAIL SALES – FOOD MONTHLY

January 2007 - September 2013 150

Value

Volume

140 130 120 110 100

80

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

90

Retail Sales Index – Food, Base 2005 = 10053

Sales of food are normally steady throughout the year with a small peak in the preChristmas period, followed by a return to trend in January. For 2012 as a whole, food sales increased by 1.3% in volume and by 2.5% in value. The grocery sector remained steady in the first half of 2013, up by 0.1% in volume and 0.8% in value. The third quarter saw a further increase in food sales, up 0.7% in volume and 1.3% in value. Sales through supermarkets, which account for most food sales, were up by 0.8% in volume and by 1.2% in value in the third quarter. This positive momentum should carry through to make for a strong final quarter, traditionally the peak sales period of the year. The UK food retail sector has seen sales grow this quarter; increasing 0.5% in volume and 4.0% in value against the same period of last year. The outlook is positive over the coming months with sales expected to continue to grow over the festive period54. In the first half of this year food retail sales in the US rose by 2.3% on 2012 figures. 55 This positive trend continued in the third quarter, up 3.38% with sales increasing for a fourth month straight in July 201356. This growth is likely to continue into the holiday season in advance of both Thanksgiving and Christmas.

Visible data labels refer to value of sales. 53 Food 2006 - 2010, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie 54 http://www.fdf.org.uk/industry/FDF-Business-Snapshot-Q3-2013.pdf 55 US Census Bureau advance monthly sales for retail and food services March 2013 56 http://www.joc.com/economy-watch/us-economy-news/us-retail-sales-growth-slows_20130813.html UCD Marketing Development Programme ©2013


25

RETAIL SALES - PHARMACEUTICAL, MEDICAL & COSMETICS ANNUAL

2006 - 2012 Value

Volume

125 118.8119

120

121 119.9

118.8 116.5

118

115 110.9

110.3 110

111.1

112.7

110 105

102.4

102.7

100 95 90 2006

2007

2008

2009

2010

2011

2012

Retail Sales Index – Pharmaceutical, Medical and Cosmetic Articles Base 2005 = 10057

Like other retail categories, sales of pharmaceutical, medical and cosmetic goods increased steadily in the period between 2000 and 2008. The volume of sales during that time increased by 50%, an average annual growth rate of 6%. The value of sales increased even more, by 79%, an average annual growth rate of 10%. Like all other categories, this sector suffered a decline in the recession years since 2008 although, as this category includes essential medicines, it suffered less than some other categories. Sales volume fell by just -7% from the peak in 2008 to the end of 2012, an average annual drop of -1.5%. Value declined by considerably more, at-15% from peak to the end of 2012, an average annual drop of -4%. Sales of this category stabilised in 2012, up by 1.4% in volume and 0.3% in value. Pharmacies in the UK have also been under pressure in recent years, partly due to falling consumer spending, but also due to government cutbacks. Average pharmacy revenue decreased by -21.3% from 2008 to 2012, an annual decline of -5%58.

54 Pharmaceutical, Medical and Cosmetic Articles 2006 - 2010, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie 58 http://www.fitzgeraldpower.ie/uploads/publications/2012_Retail_Pharmacy_Benchmarking_Study.pdf UCD Marketing Development Programme Š2013


26

RETAIL SALES – PHARMACEUTICAL, MEDICAL, AND COSMETICS MONTHLY

January 2007 - September 2013 170

Value

Volume

160 150 140 130 120 110 100

80

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb March Apr May June July Aug Sep

90

Retail Sales Index – Pharmaceutical, Medical and Cosmetic Articles Base 2005 = 10059

Sales of Pharmaceutical, Medical and Cosmetic products are normally steady throughout the year with a significant increase in December, reflecting gift buying of cosmetics and toiletries. This peak was much reduced in the three years from 2009 to 2011, but December 2012 saw a reversal of this trend, with an increase of 4.6% in volume and 3.3% in value year-on-year. That rally was not sustained, however, with a significant drop in sales again in 2013 Sales of pharmaceutical, medical and cosmetic articles continued to fall in the first half of the year, and this trend has continued in the third quarter of this year with sales down -5.5% in volume and -4.2% in value, year-on-year. This negative trend was even more pointed in September with sales volume down by -6.5% and value by -4.6% Pharmacies in the UK have also been under pressure in recent years, partly due to falling consumer spending, but also due to government cutbacks. Average pharmacy revenue decreased by -21.3% from 2008 to 2012, an annual decline of -5%60. However, sales are strengthening again; the third quarter of 2013 saw an increase of 14.1% in volume and 14% in value compared to the same period last year. The US pharmaceutical sector has shown an increase in sales of 3.6% year-on-year. Healthcare costs are expected to rise further in the near future, despite the newly introduced Obamacare health care system 61.

59

Food 2006 - 2010, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie http://www.fitzgeraldpower.ie/uploads/publications/2012_Retail_Pharmacy_Benchmarking_Study.pdf http://www.forbes.com/sites/tomasphilipson/2013/10/31/obamacare-or-not-healthcare-costs-are-set-to-soar/ UCD Marketing Development Programme ©2013 60 61


27

RETAIL SALES – BOOKS, NEWSPAPERS AND STATIONERY ANNUAL

2006 - 2012 Value 120 104.5 101.6

107.8 102.3

100

Volume

102.1 93.5

87 79.8

80

80.3 72.5

72.4 65.9

67.9 61.5

60 40 20 0 2006

2007

2008

2009

2010

2011

2012

Retail Sales Index – Books, Newspapers and Stationary Base 2005 = 10062

The books, newspapers and stationery sector which includes specialist book stores as well as newsagents has been one of the hardest hit sectors during the past five years. Sales volume has declined by -40% from the peak in 2007 to the end of 2012, an annual decline of -8%, and value has declined by -37%. This is partly due to the recession, but is also evidence of a fundamental shift towards digital media which has been causing a steady decline in sales of all print media. Irish newspapers began to lose circulation over a decade ago but the trend has accelerated since the recession. Circulation of the three main dailies fell -18% in the three years to the end of 2012, and the total decline from peak is almost -30%63. This is part of an international trend which has seen newspaper circulation decline by -25% in Europe and 13% in the US over the past five years. Book sales have also fallen dramatically, mainly due to the effect of the internet. In the UK, 38% of book sales were online in 2012, and that figure is forecast to increase to over 50% in the next year or two 64. In 2012 in the US, online channels accounted for more book purchases than bricks-and-mortar retail, for the first time ever 65.

62

CSO Retail Sales Index Value and Volume Unadjusted (Base 2005=100). http://www.independent.ie/opinion/columnists/colm-mccarthy/newspapers-must-not-be-hindered-by-careless-policy-29453952.html http://www.emarketer.com/Article/UK-Book-Sales-Move-Online-Even-Ebooks-Stall/1009770 65 http://www.digitalbookworld.com/2013/e-retailers-now-accounting-for-nearly-half-of-book-purchases-by-volume/ UCD Marketing Development Programme ©2013 63 64


28

RETAIL SALES INDEX – BOOKS, NEWSPAPERS & STATIONERY MONTHLY

January 2007 - September 2013 Value

Volume

180 160 140 120 100 80 60 40 0

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

20

Retail Sales – Books, Newspapers and Stationary Base 2005 = 10066

Sales of books and stationery have two peaks in the average year, one in August/September coinciding with back to school time, and a second in the preChristmas period. A review of the graph above shows that these peaks have been on a steady downward trend since the end of the boom period in 2007. Sales of books, stationery and newspapers have continued to fall in 2013, down -2.7% in volume and -1.9% in value in Q3 year-on-year, although the rate of decline has slowed. This positive direction has been maintained in September when sales volume was down by just -0.9%. Sales of books and stationery in the UK declined by -9.4% in volume and -8.1% in value in Q3 2013 year-on-year. It is expected that online will overtake bricks and mortar retail sales in the book sector in 2013, accounting for 52.9% of all sector sales. In the US, book store sales actually increased slightly in Q3 of 2013, up by 0.3% yearon-year. Newspapers have contributed to this rise, having seen a rise of 0.7% in circulation of the major US dailies in the first half of the year 67.

66

Books, Newspapers and Stationary 2005 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ie *Visible data labels refer to value of sales. 67 http://online.wsj.com/news/articles/SB10001424052702304050304577377812281217548 UCD Marketing Development Programme ©2013


29

RETAIL SALES – BARS ANNUAL

2006 - 2012 Value

Volume

120 103 100.5 100

105

98.9

101.8 92.1

92.8 82.8

80

80.6 74.1

76.2

70

73.1 62.2

60 40 20 0 2006

2007

2008

2009

2010

2011

2012

Retail Sales Index – Bars, Base 2005 = 10068

The bar trade in Ireland has been in decline for the past decade as a result of a combination of factors including the introduction of the smoking ban and random breath testing, and changing consumer lifestyles. The volume of bar sales decreased by -26% from 2000 to 2010, with a regular annual decline of around -2.5%. The value of bar sales decreased by slightly less, by -19.4% in total, or -1.9% per year, due to increases in prices and taxes. From the peak in 2007 to the end of 2012, volume sales through bars decreased by 37% and value by -30%. Over the same period, the number of pub licences reduced from 9,500 to 8,300, a drop of -13%. This downward trend continued in the first half of 2012, with sales volume and value down about -8%, year-on-year. This trend reversed in the second half, and sales in Q4 of 2012 were down just -0.4% in volume, while up by 1.5% in value. All in all, sales volume and value were down by just less than -5% for the year. A similar trend has been experienced in the UK, with sales down by an average of -5% each year since 2008.69. There are currently 51,178 pubs in the UK, down from 60,000 in 2000, and from 58,000 in 2005.

68

Bars 2005 - 2010, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie,All figures relate to on-trade sales. British Beer and Pub Association UCD Marketing Development Programme ©2013 69


30

RETAIL SALES – BARS MONTHLY

January 2007 - September 2013 Value

Volume

140 120 100 80

40

2007Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

60

Retail sales Index – Bars, Base 2005 = 10070

Bar sales follow a seasonal pattern with a peak in the run up to Christmas followed by a trough in January each year. This conceals a long-term decline in the pub trade which is showing little sign of abating. Sales volume was down by about -5% in 2011 and by the same amount in 2012. However, the rate of decline slowed in the latter part of 2012 and sales were particularly strong in December 2012, up by 2.4% in volume and by 5.4% in value, compared to 2011. Unfortunately, this positive trend did not continue into 2013. Bar sales in Q3 fell -2.9% in volume but remained unchanged in value year-on-year. The recent increase in taxes in beers and spirits is expected to negatively affect the industry 71. However, both volume and value figures are expected to rise in Q4 later this year in the lead up to Christmas72. UK beer sales have been boosted in Q3 2013 up 5.2%, the biggest quarter-on-quarter increase this century. This boost follows the hot summer weather as well as optimism over the Chancellor’s popular Beer Tax cut.73 In the US, restaurants and drinking places reported an increase of 3.7% in Q3 2013 in value, year-on-year. There has been a broad shift from lower and mid-priced beverages to more premium quality beverages, showing an increase in consumer confidence74.

70

Bars 2006 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ieall figures relate to on-trade sales. http://www.independent.ie/business/pubs-are-pivotal-to-society-and-the-economy-but-we-tend-to-run-ourselves-down-29712680.html http://www.thedrinksbusiness.com/2013/02/december-boost-for-pub-sales/ 73 http://www.beerandpub.com/news/big-boost-for-british-beer-as-q3-sales-rise-by-5-2-per-cent 74 http://business.time.com/2012/01/31/cheers-increase-in-liquor-sales-bodes-well-for-economic-recovery/ UCD Marketing Development Programme ©2013 71 72


31

RETAIL SALES HOUSEHOLD EQUIPMENT – ANNUAL

2006 - 2012 Value

Volume

140 120

108.5111.5

125.3 116.8

115.9 103.3

100

98.3 81.5

80

96.7 75.8

99.1 71.5

103.1

70.6

60 40 20 0 2006

2007

2008

2009

2010

2011

2012

Retail Sales Index – Household Equipment, Base 2005 = 10075

Household equipment is the sum of three retail sub-categories: furniture and lighting; hardware, paints and glass; and electrical goods. All of these items are highly dependent on the housing market, particularly on the number of new homes. Sales of household equipment grew rapidly in line with the boom in housing construction, reaching a peak in 2007, following the year in which 90,000 new homes were built. However, sales declined just as rapidly, falling by -18% in volume and -40% in value from the peak in 2007 to the end of 2012. The rate of decline slowed, however, through 2010, and again in 2011. In 2012 household equipment actually increased by 8.5% in volume and by 3.1% in value. However, individual categories within household goods displayed considerable variations in their sales. Furniture and lighting decreased by -6.7% in volume and by 10.9% in value in Q4 2012, year-on-year, hardware, paints and glass were flat, while electrical goods increased by 17.1% in volume and 11% in value. Sales of household goods have also been weak in the UK, down -3.6% in volume and 0.9% in value in 2011, and were virtually flat in 2012, with an increase of just 0.1% in volume and a 0.2% in value compared to 2011. 76 Sales of household goods in the US increased by 7.7% in value in 2012, while electrical appliances decreased by 0.7%.77

75

Household Equipment 2006 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ie (ONS) (US Census Bureau) UCD Marketing Development Programme ©2013 76 77


32

RETAIL SALES HOUSEHOLD EQUIPMENT – MONTHLY

January 2007- September 2013 Value

Volume

200 180 160 140 120 100 80

40

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

60

Retail Sales Index – Household Equipment, Base 2005 = 10078

Sales of household goods are quite seasonal with a small peak in June/July each year, and a bigger peak in the pre-Christmas period. The annual peak in sales volume reached the highest level in December 2012, since its previous peak in 2008. However, sales value was significantly lower, reflecting the extensive discounting that has occurred. Sales volume of household equipment decreased in the first half of 2012, down -7.5% in volume and -3.9% in value. In a significant turnaround, however, it increased by 5.6% in Q3 and by 10.3% in Q4, while value remained steady (0.8%). This positive momentum has continued in 2013, with sales up by 2.8% in volume in Q3, year-on-year. Sales value has remained steady this year although Q3 has seen a decline in value of -1.9%. The sectors with the largest volume increases in Q3 were Electrical Goods, up 2.0%, Furniture and Lighting up 5.3%, and Hardware, Paints and Glass up 7.1%79. This seems to suggest some acceleration in building activity which would be a very welcome development. Sales of household equipment in the UK are continuing to be weak, down -0.7% in volume and -1.3% in value in Q3 2013, year-on-year. However, sales volume increased in the month of September with the furniture and carpet sector seeing an increase in sales. In the US, sales of household equipment increased by 2.9% in Q3 2013 year-on-year, attributable to house sales and remodelling.

78

Household Equipment 2006 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ie http://portal.cbre.eu/portal/page/portal/RRP/ResearchReportPublicFiles/Ireland_Retail_Marketview_Q3_2013_.pdf UCD Marketing Development Programme ©2013 79


33

RETAIL SALES CLOTHING, FOOTWEAR AND TEXTILES– ANNUAL

2006- 2012 Value 140 120

121 107 109

115

Volume

121

92

100

118

114

109

87

116

85

113

82

80 60 40 20 0 2006

2007

2008

2009

2010

2011

2012

Retail Sales Index – Clothing, Footwear and Textiles, Base 2005 = 10080

Clothing and footwear purchases are price and income elastic which means that they tend to fluctuate along with the health of the economy. Sales of clothing and footwear grew strongly during the boom years and then dropped back just as quickly when economic conditions deteriorated. Sales volume grew by 89% from 2000 to 2007 which is equivalent to 13% per annum, while value increased by 46%, or 7% per year. Sales declined dramatically in 2009, down by -5.6% in volume and by -16.2% in value. Sales of clothing and footwear rallied somewhat in 2010, up 3.5% in volume although down -5.4% in value. Sales stabilised further in 2011, down by just -0.9% in volume and -1% in value, compared to 2010. In sum, sales volume was down by just -4% from peak to the end of 2012, while value was down -26%. Sales of clothing and footwear stabilised further in 2012, down by just -1.4% in volume and -2.1% in value in Q4 year-on-year. Sales of clothing and footwear in the UK were also weak in 2012, with sales value falling by -2.8% for the year. Online sales in these stores were up 26.3% in December 2012 compared with December 2011, accounting for 10.3% of sales. Sales of clothing in the US increased by 4% in Q4 2012 from the same period in 2011, 81 and by 5.5% for the whole year.

80

Textiles and Clothing 2005 - 2010, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ie US Department of Commerce, Apparel Retail Sales in December 2012 UCD Marketing Development Programme ©2013 81


34

RETAIL SALES CLOTHING, FOOTWEAR AND TEXTILESMONTHLY

January 2007- September 2013 Value

Volume

200 180 160 140 120 100 80 40

2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Jan Feb Mar May Jun Jul Aug Sep Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sep

60

Retail Sales Index – Clothing, Footwear and Textiles, Base 2005 = 10082

Sales of clothing, footwear and textiles have a marked seasonal pattern with a large peak in the pre-Christmas period. From 2006 to 2009, sales volume increased by 57% on average from November to December each year. Following a dramatic decline in 2009, sales of clothing and footwear stabilised in 2010 and 2011. Sales decreased further in 2012, but at a fairly low rate. Sales volume was down by about -2% for the year, and value by about -3%. In contrast to the normal seasonal boost, sales were particularly weak in December, down -2.6% in volume and 3.9% in value, possibly a reaction to the tough budget. Sales of clothing and footwear are showing signs of recovery this year, up -3.4% in Q3, with value steady, year-on-year. Sales volume increased by 4.6% in September, showing further evidence of strength in the market. Clothing and footwear sales are also strengthening in the UK, up 1% in volume and 2.9% in value in Q3 2013 year-on-year. It was reported that heavy discounting in the clothing and footwear sector contributed to boosted sales during this period. Sales of clothing in the US are also doing well, up 3.5% in the first half of 2013 compared to the same period in 2012.83 This positive trend continued into the third quarter with clothing sales up 3.73% in Q3 year-on-year.

82

Textiles and Clothing 2006 - 2011, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie US Department of Commerce, Apparel Retail Sales in December 2012 UCD Marketing Development Programme Š2013 83


2013 The Consumer Market Monitor is published by: The Marketing Institute of Ireland The Marketing Institute is the professional body for marketing people and has been the voice of marketing in Ireland for the last 50 years. It acts with its members as one voice to promote, support and elevate marketing as a key strategic business tool and facilitates networking amongst the senior marketing community. It also offers training solutions, marketing insights, and resources, and has access to the best in class experts, reports and publications in the marketing profession. The Marketing Institute is based in their own full-facilities headquarters in Dublin with a network of members all over the country, drawn from all business sectors and reaching from young marketing graduates up to business leaders at executive level. Membership is open to anyone with professional responsibilities in any of the marketing disciplines, or anyone in academia who is teaching or studying any aspect of marketing. The Marketing Institute of Ireland Marketing House, South County Business Park, Leopardstown, Dublin 18, Ireland Email: info@mii.ie, Web: www.mii.ie Contact: Jenny Bishop Email: jenny@mii.ie

UCD Michael Smurfit Graduate Business School UCD Michael Smurfit Graduate Business School is Ireland’s leading business school and research centre offering a wide range of postgraduate business programmes that equip students to become the business leaders of the future. UCD Michael Smurfit Graduate Business School is one of less than 60 schools worldwide to hold triple accreditation from the US, Europe and the UK accrediting bodies. UCD Michael Smurfit Graduate Business School University College Dublin, Carysfort Avenue, Blackrock Co. Dublin, Ireland Email: info@smurfitschool.ie, Web: www.smurfitschool.ie Contact: Professor Mary Lambkin Email: mary.lambkin@ucd.ie


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