Page 1

2013

Q1

UCD Michael Smurfit Graduate Business School

Consumer Market Monitor


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 one of 2013.


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 discretionary 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 logical response has seen borrowing levels reducing steadily, helping to restore household finances, but has resulted in a marked reduction in spending, particularly of non-essential 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. The evidence suggests that this decline in spending may be bottoming out by now, with retail spending in quarter one of 2013 being just about the same as the same period last year. It is difficult to see, however, how the curve can turn upwards in the near term, in the face of further pay cuts, the introduction of property taxes, and other cost increases. The forecast from the Central bank anticipates consumer spending remaining virtually flat this year and next (-0.2% this year and +0.4% in 2014). On the plus side, however, employment seems to be picking up slightly in the private sector, and there is some evidence of increased activity in the property sector, both of which should boost activity in the consumer economy. There may also be a positive effect from enhanced tourism numbers which are expected this year.

Consumer Confidence 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. Consumer confidence rose from -24 in December 2012 to -16 in January 2013 which was a significant improvement. A slight drop occurred in February and in March due to concern about the impact of new property taxes and pay cuts on household finances. Overall, consumer confidence for Q1 2013 was 5 points higher than Q4 2012 (-19 compared to -24) but was only about the same as in Q1 2012, suggesting thta confidence is still very weak. Mirroring the Irish trend, consumer confidence in the EU picked up slightly in January 2013 with a 4 unit rise and remained steady in February and March, with Q1 2013 ending at -21. Confidence is likely to remain weak while unemployment remains high and rising costs, plus new taxes are putting ever-increasing pressure on already cash-strapped consumers. Consumers are exercising caution by paying down debt rather than UCD Marketing Development Programme Š2012


spending, even when they have secure incomes, and this cautious outlook seems likely to persist for some time to come.

Consumer Incomes and Spending Following growth of 60% in household disposable income from 2002 to 2008, there has been a steady decline in recent years. Disposable incomes declined -7.6% in 2009, and by a further -4.2% in 2010, but stabilised in 2011, with a decline of just -0.4%. Household spending mirrored the income trend, increasing by a record 48% between 2002 and 2008-–from €62bn to €92bn. Spending has since declined in line with incomes, dropping -10.9% in 2009,and continuing downward in 2010 (-3.0%) and 2011 (-1.0%), to a level of €78 billion. Consumer demand remained weak in 2012 as households continued their efforts to repair impaired balance sheets, resulting in four consecutive years of decline, which saw real consumption contract by a cumulative 7.5% in real terms. There was a slight easing in the rate of decline in 2012 with consumption up by 0.5% in current terms for the year. However, spending was still down by -0.9% in real terms when price increases were taken into account. The CPI was up by 2% for 2012 as a whole, but certain categories of essential items were up by much more, for example, fuel and utilities were up by 7.3%. Various forecasts agree, however, that the retrenchment in consumer spending may have run its course by now as real disposable incomes begin to stabilise, with a decline of just -0.2% forecast for 2013, and a modest level of growth returning from 2014 onwards (+0.4%). One positive sign was that gross disposable income was up 2.5% in 2012, from €84 billion to €86 billion, due to higher wages (+€711m) and profits of the self employed (+€1.9b). Household expenditure reflected this lift but by a slightly smaller amount (+0.5%) from €77.5 billion to €78 billion.

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, down -3.9% for the year and a reduction of 26% from the peak. Total household lending is continuing to fall in 2013, down -4% in the first 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%. Loans for house purchase continued to decline in 2012, down about 2% for the year. However, house loans actually increased by 8% between November and December, in a rush to avail of mortgage interest relief before it ended. Lending for house purchase has continued to decline in 2013, down -2% year-on-year. 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% in the first quarter of 2013.

Retail Spending Retail sales have been badly hit in the recession, declining -10% in volume from the peak in 2007 to the end of 2012, while value declined by -16%.

UCD Marketing Development Programme ©2012


For the year 2012 as a whole, however, retail sales stabilised, with volume decreasing by just -0.2%, and value increasing by 0.4%, compared to 2011. This year was a tale of two halves, however, with sales volume down by -2.1% in Q1 and -1.1% in Q2 yearon-year, but increasing slightly in the third (0.6%) and fourth quarters (1.5%). After the seasonal peak in Q4 2012, retail spending slowed in Q1 2013. Spending was virtually flat for the first quarter of 2013 year-on-year suggesting, at best, that the market has bottomed out and may finally be stabilising. While these conditions are still very challenging for many retailers, it is still a positive sign that retail sales may be stabilizing after four years of decline, with growth prospects in some categories.

Recent Trends Sales through the motor trade have also been difficult for several years and car sales struggled again in 2012. For the year ending December 2012 there were 76,256 new cars sold, a decrease of 12% from the 86,932 new cars sold in 2011. This weakness has continued into Q1 2013, with sales of 36,286 down -14.3% on Q1 2012. In contrast, sales of second-hand cars saw a slight rise in Q1 2013, increasing to 13,305, a 9.1% year-on-year increase. Essential products including food and department stores held up well in the first quarter of 2013 and household equipment showed significant growth: • • • •

Food sales up 0.4% in volume and up 1.7% in value; Non-specialised stores (supermarkets) up 0.5% in volume and 1.7% in value; Department stores up 1.8% in volume and up 1.0% in value; Household Equipment up 6% in volume and up 0.6% in value;

All other retail categories experienced declines in Q1 year-on-year: • • • • •

Fuel down -0.5% in volume but up 0.4% in value; Clothing, footwear & textiles down –1.7% in volume and -3.4% in value; Books, stationery etc. down -9.9% in volume and -9.4% in value; Bar sales down -4.8% in volume and -2.1% in value; Pharmaceuticals and cosmetics down -4.6% in volume and -3.3% in value

UCD Marketing Development Programme ©2012


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 among consumers and across all sectors except the retail trade in 2012. 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 now averaging -20 compared to a long-term average of -5. The US index is currently averaging 65 compare to a long-term average of 97. .

UCD Marketing Development Programme Š2012


CONSUMER CONFIDENCE – MONTHLY

Jan 2007 - March 2013 Europe

Ireland

UK

5 0 -5 -10 -15 -20 -25 -30 -35 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 Sept Oct Nov Dec 2011 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2013 Jan Feb March

-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. Consumer confidence rose from -24 in December 2012 to -16 in January 2013 which was a significant improvement. A slight drop occurred in February and in March due to concern about the impact of new household taxes and pay cuts on household finances. Overall, consumer confidence for Q1 2013 was 5 points higher than Q4 2012 (-19 compared to -24) but was about the same as in Q1 2012. Mirroring the Irish trend, consumer confidence in the EU picked up slightly in January 2013 with a 4 unit rise and remained steady in February and March, with Q1 2013 ending at -21. Consumer confidence in the US decreased from 68 in February to 60 in March of 2013. Historically, the US consumer confidence averaged 93 reaching an all-time high of 145 in January 2000 and a record low of 25 in February 2009. 2

2

http://www.tradingeconomics.com/united-states/consumer-confidence

UCD Marketing Development Programme Š2012


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%in real terms 3. 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 by a further -4.2% in 2010, and by -2.4% in 2011 to a total of €87 billion, giving a net decline of 16% from the peak. This period corresponded with a reduction in employment almost equal to the earlier increase -- from 2.13 million in 2008 to 1.82 in 2011--a net reduction of 310,000. Household spending mirrored the income trend, increasing by a record 48% between 2002 and 2008-–from €62bn to €92bn. Spending has since declined in line with incomes, dropping -10.9% in 2009,and continuing downward in 2010 (-3.0%) and 2011 (-1.0%), to a level of €78 billion. Consumer demand remained weak in 2012 as households continued their efforts to repair impaired balance sheets, resulting in five consecutive years of decline, which have seen real consumption contract by a cumulative 7.5% in real terms. Another positive sign was that gross disposable income was up 2.5% in 2012, from €84 billion to €86 billion, due to higher wages (+€711m) and profits of the self employed (+€1.9b). Household expenditure reflected this lift but by a slightly smaller amount (+0.5%) from €77.5 billion to €78 billion. Forecasters expect household spending will stabilise in 2013, with modest increases 4 beginning from 2014 onwards .

3

CSO Institutional Sector Accounts ESRI and Central Bank UCD Marketing Development Programme ©2012 4


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, recording only 2.2% growth from 2007. There was a record decline in 2009, of-7.2%. Personal consumption stabilised somewhat in 2010, declining by just -0.8% in real terms, broadly matching the decline in disposable incomes. Unfortunately, consumer spending resumed its downward trend in 2011, down by -2.4% for the year as a whole. This downward trend continued in 2012, but at a slower pace, real consumption declining by -0.9%. The first quarter was particularly weak, in part related to the timing of a VAT increase on 1 January 2012, followed by a gradual recovery thereafter. Real consumer spending actually increased by 0.5% in the third quarter, but was down by 0.9% for the year as a whole. 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. Households factored in a reduction in both wealth and future income prospects and adjusted spending downwards in order to put their finances back on a more sustainable footing.

5

Central Bank of Ireland, Quarterly Economic Bulletin, Quarter 1, 2013. UCD Marketing Development Programme Š2012


PERSONAL SPENDING ON GOODS & SERVICES – QUARTERLY

2007 - 2012 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

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 -0.8% in 2010, and -2.4% in 2011. In sum, this represents a decline of 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 up by 0.5% in current terms for the year. However, spending was still down by -0.9% in real terms when price increases were taken into account. The CPI was up by 2% for 2012 as a whole, but certain categories of essential items were up by much more, eg, fuel and utilities were up by 7.3%. Various forecasts agree, however, that the retrenchment in consumer spending may have run its course by now as real disposable incomes begin to stabilise, with a decline of just -0.2% forecast for 2013, and a modest level of growth returning from 2014 onwards (+0.4%). Consumer spending in the UK is weak; it fell -6% in the 2008 and 2009 recession and has been broadly flat since the end of 2009 6. Consumers spent more on utilities in Q1 2013 as a result of increased energy prices, while spending in discretionary categories continued to ease compared to Q1 2012. Spending on main household appliances increased in Q1 2013, a sign that consumers are starting to consider buying bigger ticket items7. US GDP spending rose strongly in quarter one, up by 3.2%, despite a 2% payroll tax rise, and compared to an increase of 1.8% in Q4 2012.8

6

7

Bank of England Quarterly Economic Bulletin, Q1 2013.

http://www.mondaq.com/x/235774/Economic+Analysis/The+Deloitte+Consumer+Tracker+Q1+2013

8

http://www.davyselect.ie/news/article_3666.html

UCD Marketing Development Programme Š2012


PERSONAL SAVINGS – ANNUAL

2002 - 2012 Current

Net Personal Savings as a % Disposable Income 12%

11% 10%

10%

9%

9.5%

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 11% in 20129. The average for the past decade has been 3.5%. The savings ratio continued to rise in 2012, estimated to be as high as 11% for the year as a whole. The longer-term net savings ratio consistent with economic recovery for Ireland should be in the range of 5-7%. The savings ratio is not expected to reduce much in the next few years as consumers prioritise repaying personal loans and mortgage debt over current spending. In fact, over 80% of this saving represents repayment of loans 10. Despite the increase in savings, the net worth of Irish households (the difference between total assets and liabilities) fell by -38% from its peak value at Q2 2007 to the end of 201111. 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 capita12. The UK savings ratio declined from the mid-1990s until 2008 when it reached 2.0%. It rose again following the financial crisis and reached a peak of 8.4% in Q3 2009 but has since fallen back to a more normal level of 6.6% in 201214. The US Personal Saving Rate is currently at 6.5%, just slightly lower than the longterm average of 6.9%15.

9

CSO Quarterly Institutional Sector Accounts. Central Bank of Ireland Central Bank Quarterly Economic Bulletin, Quarter 3, 2012.

10 11

12 14

Central bank Quarterly Financial Accounts

Office of National Statistics US Department of Commerce UCD Marketing Development Programme ©2012 15


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 '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, down -3.9% for the year and a reduction of 26% from the peak16. Total household lending is continuing to fall in 2013, down -4% in the first 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%. Loans for house purchase continued to decline in 2012, down about 2% for the year. However, house loans actually increased by 8% between November and December, in a rush to avail of mortgage interest relief before it ended. Lending for house purchase has continued to decline in 2013, down -2% year-on-year. 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% in the first quarter of 2013.

16

Central Bank of Ireland, Money and Banking Statistics. UCD Marketing Development Programme ©2012


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 22,079 in 2009, 17,152 in 2010 and 9,700 in 2011. This trend reversed slightly in 2012, with a 19% rise in the number of new mortgages issued, for a total of11,548 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 stock of properties for sale on Daft.ie in Q4 2012 was 33,600 17, which is 18% lower than in 2011, and more than 60% below the 112,000 in 2007. The total number of transactions registered in 2012 was 21,000, compared to 17,621 in 2011 and 19,000 in 201018. The stock available for sale in Dublin has fallen 35% from its peak of late 2008 to a current low of 3,500. The proportion of properties selling within four months has risen in Dublin to 63% since the start of the year suggesting some normalisation in the market.

17 18

Daft.ie Property Price Report, Quarter 4, 2012. MyHOme.ie Property Barometer Q4, 2012

UCD Marketing Development Programme Š2012


NUMBER OF MORTGAGES ISSUED – QUARTERLY

2007 - 2012 Total 18,000 16,000

First time buyers

Movers

16,830 16,426 15,738 14,339

14,000

12,459

12,000

11,038 9,498

10,000

7,395

8,000

5,8056,1055,627 4,6634,864 4,542 3,839 3,786

6,000

5,402

3,381 2,8412,563 2,702 2,1862,502 2,084

4,000 2,000

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

The number of new mortgages issued to owner occupiers continued to fall in 2011, with just 10,622 issued, down -43% on 2010. The number of new mortgages issued picked up in quarter two of 2012, and Q3 continued this positive trend. Mortgage lending increased by 110% in Q4 2012 compared to Q4 2011, driven by the ending of mortgage interest relief at the end of the year . State controlled banks are expected to double mortgage lending again in year ending 2013, from €2.5 billion to about €5 billion . This could mean as many as 20,000 new mortgages being issued, if this lending follows through into a doubling of the number of new mortgages. This would be a major boost for the property market, which has been crippled by a lack of mortgage lending in recent years. The UK mortgage value has increased by 18% in Q1 2013 year-on-year. March has been the strongest month in 2013 so far, with the value of lending increasing by 11% in that month alone. US household purchases advanced by 2% in March 2013, followed by a 7% increase in February. .19

19

www.bloomberg.com

UCD Marketing Development Programme ©2012


OWNERSHIP STATUS OF BORROWERS 2012

First Time Buyers

2011

Movers

Buy-to-Let

First Time Buyers

Movers

Buy-to-Let

6%

5% 37% 58%

First Time Buyers

2010

Movers

38%

56%

2009

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 201220. Other categories which experienced declines were mover purchasers, the re-mortgage and top-up segments. The only sector which showed some buoyancy was first-time-buyers. First-time buyers remain the single largest segment of the market accounting for almost 60% of the total market 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 approximately in 2012.

20

IBF/PWC Mortgage Report Q3, 2012. UCD Marketing Development Programme Š2012


NUMBER OF CREDIT CARDS IN CIRCULATION – ANNUAL

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

2198000 2131000

2,200,000

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 remained at 2.2 million. The number of personal credit cards in circulation in 2012 was 1.94million which represents a decline of -9% on 2010. The number has continued to fall in 2012 reaching 1.90 million in December of this year, an annual decline of 4%, and a decline of -14% 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 1 million in 2011 and a further 1 million in 201221, to a total of about 60 million, the lowest level since 2003 22. Total outstanding credit card debt dropped by 5% in 2011, leaving the average credit card balance at about £1,000. However, UK consumers are still among the most indebted in the world, with the average UK household still saddled with nearly £8,000 of unsecured debt."

21

Credit Cards in UK, Euromonitor International Jan 14 th 2013 Precious Plastic, PWC UCD Marketing Development Programme ©2012 22


CREDIT CARD DEBT – ANNUAL

2006 - 2012 Constant Oustanding Levels of Debt on Personal Credit Cards 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 23 $7,194 in 2012.

23

US Department of Commerce. UCD Marketing Development Programme ©2012


CREDIT CARD DEBT – MONTHLY

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

3,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 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 July Aug Sept Oct Nov Dec 2011 Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec 2012 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2013 Jan Feb

1,000

€ 0,000

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 credit card 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. Credit card debt has continued to decline in 2012; it fell by -6.1% in December 2012 compared to December 2011. The average balance on credit cards in Ireland is €1,275.24 Credit card debt has continued to decline in Q1 2013, down -8% year-on-year, reflecting reduced consumer spending. Average consumer borrowing (including credit cards, motor and retail finance deals, overdrafts and unsecured loans) per UK adult was £3,218 in February. This saw a steady increase from £3,195 in December 2012. US credit card and household debt is rising, up 2.5% in Q1 2013, the fastest rate of growth since 2008, when the financial crisis was just starting.

24

Central bank of Ireland UCD Marketing Development Programme ©2012


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 the peak in 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, compared to 2011, and value increasing by 0.4%. This year 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 2011, up 7.7% from 2010 which, in turn, increased 5.9% from 2009 (which had declined -2.5%). Sales were up 5.2% in 2012. Sales are estimated to rise 3.4% in 2013, their slowest rate since 2010. 25

25

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 Š2012


RETAIL SALES INDEX MONTHLY

January 2007 - March 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

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. For the year 2012 as a whole, retail sales stabilised, with volume decreasing by just -0.2%,and value increasing by 0.4%, compared to 2011. This year was a tale of two halves, however, with sales volume down by -2.1% in Q1 and by -1.1% in Q2 year-onyear, but increasing slightly in the third (0.6%) and fourth quarters (1.5%). After the seasonal peak in spending in Q4 2012, retail spending slowed in Q1 2013. The figures still show positive signs, however, as spending increased by 0.4% in volume and 0.5% in value compared to Q1 of 2012. The UK experienced the lowest retail growth in 2012 since 1998, and was the worst year for retail bankruptcies and failures since the start of the recession, with 54 significant retailers going into administration. However, volume and value grew by 1.3% and 2.0% in Q1 2013 year-on-year, suggesting some signs of recovery. US retail sales saw a 2.3% increase in Q1 2013 compared to that of last year. In fact, March 2013 was the 41st consecutive month of positive year on year growth. 27

27

All Businesses Excluding Motor Trade 2005 - 2012, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie *Visible data labels refer to value of sales. 29 Retail sales figures for the final quarter of 2012 show slight increase – Retail Excellence Ireland, http://www.retailexcellence.ie Central Statistics Office Centre for Retail Research. US Department of Commerce http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2013/stb-rsi-march-2013.html UCD Marketing Development Programme Š2012


SALES OF PRIVATE CARS ANNUAL

2006 - 2012 New Private Cars

Secondhand Private Cars

Total

300000 250000

227517

200000 173273

239473 206561

180754 146470

150000

124010 103896

100000 54244

58719

2006

2007

60091

50000

128081

84907 86932

54432 49464

114725

76,256

39103

41149

38,469

2010

2011

2012

0 2008

2009

Sales of Private Cars, 2006-201229 Car sales are a leading indicator of activity in the wider consumer market. In Ireland, the motor industry grew strongly during the economic boom. This peaked in 2007 with 180,754 new cars sold that year. Between 2008 and 2010, sales of new cars dropped by -42%.The largest drop occurred between 2008 and 2009, when the market dropped by -63%, to just 54,432 new cars. The market rebounded in 2010, with 84,907 new cars sold, influenced by the scrappage scheme which accounted for 20% of new cars sold. 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 -12.3% decrease from 2011. 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.

29

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). 29 (http://useconomy.about.com/b/2013/01/17/december-retail-sales-encouraging.htm ). UCD Marketing Development Programme Š2012


SALES OF PRIVATE CARS MONTHLY

January 2007 - March 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

5000

Private Vehicles Licensed for the First Time, Number of Units30

The variance in car sales over each twelve months is due to seasonality, with new car sales concentrated in January and February. The largest drop occurred between 2008 and 2009, when the market dropped by -63%, to just 54,432 new cars. The market rebounded in 2010, with 84,907 new cars sold, an increase of 56% on 2009. This was influenced by the scrappage scheme, which accounted for 20% of new cars sold in 2010. 2011 saw a further slight increase in sales, to 86,932, a 2.4% rise from the previous year. Sales in 2012 resumed a downward trend, however, with 76,256 new cars sold, a -12.3% decrease from 2011. This weakness has continued into Q1 2013, with Q1 sales of 36,286 down -14.3% on Q1 2012. The second-hand car market has also been affected in the recession. Following a peak of 60,000 in 2008, sales 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%). Sales of second-hand cars saw a slight rise in Q1 2013, increasing to 13,305, a 9.1% year-on-year increase. New car registrations in the UK rose by 7.4% in Q1 2013, to 605,198 units. In fact, March 2013 was the 13th consecutive month of growth in new car registrations with sales this month the highest since 201031. US auto sales peaked in 2005 and bottomed out at 10.6 million vehicles in 2009. Growth resumed in 2010(+22%), 2011(+10%), and 2012 was up by a further 13% to a total of 14 million vehicles – still 2 million off the peak.32US Car sales continued to grow in Q1 2013, which saw a 6.3% increase year-on-year.

30

Vehicles Licensed for the First Time (Number) by Month and Type of Vehicle Registration, New and Second Hand Private Cars, www.cso.ie.

31

http://www.smmt.co.uk/2013/04/new-car-market-momentum-continues-in-key-plate-change-march/ (http://useconomy.about.com/b/2013/01/17/december-retail-sales-encouraging.htm ) UCD Marketing Development Programme Š2012 32


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 = 10033

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 Q2 compared to 2011. Sales rallied significantly in Q4, with the seasonal peak sales up 7.4% in volume and up by 7.5% in value year on 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 may be partly due to the continuing growth in internet shopping which accounted for 9.1% of sales in December 2012. 34 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 35 whole.

33 34

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) 35

U.S. Census Bureau UCD Marketing Development Programme ©2012


RETAIL SALES INDEX – DEPARTMENT STORES MONTHLY

January 2007 - March 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

50

Retail Sales – Department Stores, Base 2005 = 10036

Department stores have a marked seasonal pattern, which peaks each year in the preChristmas period and a lesser 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%. In Q1 2013, department store sales increased by 1.8% in volume and 1.0% in value year-on-year, suggesting a slight pick-up in business this year. Sales through UK department stores have also picked up this year, up by 5.1% in volume and 3.3% in value in Q1 2013 year-on-year. Internet sales have continued to grow in the UK, accounting for 10.4% of all retail sales in March 2013. In contrast, sales of US Department stores dropped by -5.2% in Q1 2013 compared to Q1 2012.

36

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. UCD Marketing Development Programme ©2012


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 = 10037

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 5.2% in value. The grocery sector is currently worth about €9 billion in Ireland and average weekly spend is €101. 38 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 13.1% of the grocery market this year. 39 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 year on year.

CSO Retail Sales Index Value and Volume Unadjusted (Base 2005=100). NCA/Kantar Worldpanel Presentation, March 2012. 39 Irish independent April 30, 2013 37

38

UCD Marketing Development Programme ©2012


RETAIL SALES – FOOD MONTHLY

January 2007 - March 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 March

90

Retail Sales Index – Food, Base 2005 = 10040

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. The volume of food sold in Ireland in December 2011 was up by 1.1% year-on-year and value was up by 2.3% suggesting that the price discounting of 2009 has become less widespread. Food sales increased in Q1 of 2012, up by 1.1% in volume and by 1.8% in value. This positive trend continued in Q2 with sales volume up 2.3% and value up 1.1% compared to the same quarter last year. In Q3, food sales continued to rise, with a 1.9% increase in volume and a 3.1% increase in value. In Q4 2012, food sales increased by 1% in volume and by 3% in value. Food sales continued to rise in Q1 2013, increasing by 0.9% in volume and 2.2% in value year-on-year. In the UK, food sales decreased by -1% however the value of UK food sales increased by 1.9% even though the year-on-year prices of food sold were 3% higher in March 2013. Internet food sales increased to 3.4% in Q1 2013 compared to the 3.2% of food sales made via the internet in 2012 as a whole.41 Food retail sales in the US increased by 2.8% in Q1 2013 year-on-year and by 0.8% compared to Q4 2012.42

Visible data labels refer to value of sales. 40 Food 2006 - 2010, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie

41 42

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2013/stb-rsi-march-2013.html#tab-Sector-Summary US Census Bureau advance monthly sales for retail and food services March 2013

UCD Marketing Development Programme ©2012


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 = 10043

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, and this has been a steady pattern with a regular annual decline of around -2.5%. However, the value of bar sales decreased by slightly less, by -19.4% in total, or -1.9% per year, due to increases in unit 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 has 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. Sales were even stronger in December 2012, up by 2.4% in volume and by 5.4% in value, compared to 2011. 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 2008.44. There are currently 51,178 pubs in the UK, down from 60,000 in 2000, and from 58,000 in 2005.

43

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 ©2012 44


RETAIL SALES – BARS MONTHLY

January 2007 - March 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

60

Retail sales Index – Bars, Base 2005 = 10045

Bar sales follow a seasonal pattern with a peak in August and December 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. Volume sales were down by -4.6% for the fourth quarter of 2011 compared to the same period in 2010, and value was down -4.7%. This downward trend accelerated further in the first half of 2012, with sales volume and value down by about 8% compared to 2011. The rate of decline slowed in Q3, and stabilized further in Q4, down just -0.4% in volume, and up by 1.5% in value. Sales were particularly strong in December 2012, up by 2.4% in volume and by 5.4% in value, compared to 2011. All in all, sales volume and value were down by just less than -5% for the year 2012. Bar sales are continuing to decline in 2013, down by -4.2% in volume and -1.5% in value in Q1, year-on-year. Sales in British pubs are also continuing the downward trend of recent years, down by 5.5% in Q1 2013, year-on-year, compared with a 0.1% rise in off-trade sales46.

45

Bars 2006 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ieall figures relate to on-trade sales. British Beer and Pub Association UCD Marketing Development Programme ©2012 46


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 = 10047

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. 48 Sales of household goods in the US increased by 7.7% in value in 2012, while electrical appliances decreased by 0.7%.49

47

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 ©2012 48 49


RETAIL SALES HOUSEHOLD EQUIPMENT – MONTHLY

January 2007- March 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

60

Retail Sales Index – Household Equipment, Base 2005 = 10050

Sales of household goods are quite seasonal with a small peak in June/July each year coinciding with the summer retail sales, and a bigger peak in the pre-Christmas period. The annual peak in sales volume reached its highest level in December 2012, since its 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 two quarters of 2012, down -7.5% in volume and -3.9% in value. In a significant turnaround, sales volume increased by 5.6% in Q3, while value remained steady (0.8%), compared to the same period last year. This positive trend continued in Q4, with sales increasing by 10.3% in volume and 7.5% in value. Sales of household equipment have continued this positive momentum in 2013, up by 5.5% in volume in Q1. Sales value has remained steady year-on-year. In contrast, sales of household equipment in the UK are continuing to be weak, down 3.4% in volume and 3.5% in value in Q1 2013, year-on-year.

50

Household Equipment 2006 - 2011, Retail Sales Index Value and volume Unadjusted (Base 2005=100), www.cso.ie UCD Marketing Development Programme ©2012


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 = 10051

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, 52 and by 5.5% for the whole year.

51

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 ©2012 52


RETAIL SALES CLOTHING, FOOTWEAR AND TEXTILESMONTHLY

January 2007- March 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

60

Retail Sales Index – Clothing, Footwear and Textiles, Base 2005 = 10053

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. However, sales decreased further in the first half of 2012, with volume and value both down by about 5%, year-on-year. Sales in Q4 maintained the same pattern, down -1.4% in volume and -2.1% in value from the same period in 2011. In contrast to the normal seasonal boost, sales were particularly weak in December, down -2.6% in volume and -3.9% in value, probably a reaction to the tough budget. Clothing, textile and footwear retail sales have continued to decrease in Q1 2013, down by -0.7% in volume and -2.6% in value year-on-year. This trend is continuing to create difficulties for retailers, with a number of high profile chains entering receiverships and examinerships in recent times. Clothing and footwear sales are also continuing to be weak in the UK, falling -0.8% in volume and -0.6% in value in Q1 2013 year-on-year. This decline accelerated in March, down -3.4% in volume compared to last year.54 In contrast, sales of clothing in the US are doing well, up 3.4% in value in Q1 2013 year-on-year, following growth of 5.5% in 2012.55

53

Textiles and Clothing 2006 - 2011, Retail Sales Index Value and Volume Unadjusted (Base 2005=100), www.cso.ie

54

http://static.bdo.uk.com/assets/documents/2013/04/High_Street_Sales_Tracker_-_March_2013.pdf http://www.guardian.co.uk/business/2013/apr/08/springwear-clothes-shops 55 US Department of Commerce, Apparel Retail Sales in December 2012 UCD Marketing Development Programme Š2012


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

Consumer Market Monitor Quarter 1 2013  

The Consumer Market Monitor is a service provided by the Marketing Institute of Ireland in collaboration with the UCD Smurfit Graduate Busin...

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