Resilience required by NI retailers
The last couple of years have been very challenging for Northern Ireland retailers and their customers and the next year is likely to be difficult too, the new Director of the Northern Ireland Retail Consortium, Neil Johnston tells Neighbourhood Retailer.
The covid pandemic, the energy crisis and the broader inflationary situation have all taken their toll and the economic weather in the coming months may be turbulent.
The retail industry is Northern Ireland’s biggest employer and although Westminster and Stormont offered assistance in the form of furloughing and a business rate ‘holiday’, the collapse in footfall during the pandemic was very difficult for many retailers, including many Retail Consortium members.
The Retail Consortium represents the overwhelming majority of the retail trade in Northern Ireland by turnover, encompassing many high street names who provide everything from coffee to clothing, a lot of the larger retailers who sell products such as electrical goods, DIY items and gardening supplies, and virtually all the main supermarkets.
The covid pandemic was a truly extraordinary period which cost billions in lost retail sales and left retailers reeling with more debt and cash flow woes. Sadly, for many the pandemic was the final straw, with shops closing across the country.
Unfortunately, a brief window of post-covid economic optimism dissipated rapidly due to the conflict in Ukraine. The ensuing energy and commodity shock supercharged the costs crisis and compounded supply chain issues and bottlenecks caused by a world rebounding after the pandemic.
Twelve months ago shop price inflation was at 0.3%. Today, prices at the tills are soaring by 7.4%, an 18-year high.
‘It seems incredible that we are entering 2023, over six years after Brexit, without these fundamental trading arrangements properly resolved’
Other factors have challenged consumers and retailers. The NI Protocol has added extra costs and uncertainty, the political stalemate in Northern Ireland for the past 12 months and the political turbulence at a UK level last year have all combined to produce an extremely unsettled backdrop for retail operations.
It seems incredible that we are entering 2023, over six years after Brexit, without these fundamental trading arrangements properly resolved. It is equally incredible that we will soon be marking 12 months without an Executive in place – meaning the Assembly will have functioned properly for only one year in the last five years.
Nine months after the last remaining covid restrictions were removed Northern Ireland’s shopper footfall remains below pre-pandemic levels. Shop vacancies are substantially higher and retail sales have flatlined in real terms for the past six months. In recent weeks several well-known brands have faltered, whilst others have announced store closures, and that’s before the traditionally sticky period in late January and February when revenues usually dip and rent and rates bills need paid. The economic scarring of the pandemic and costs crunch will be with us for years.
There have been bright spots. The Platinum Jubilee gave a timely boost to footfall. The re-opening of Primark in Bank Buildings and the opening of the new Ulster University campus in Belfast city centre have helped to drive up footfall in recent months,
Despite acknowledgement from government that businesses are facing their own “costs emergency”, there has been little by way of immediate relief for firms. UK Ministers aren’t hiking the business rate in England but in Northern Ireland the trajectory for business rates over the next few years is unclear, from an already high starting point compared to the rest of the UK.
In addition, the absence of a functioning local legislature at Stormont has meant that opportunities for change – such as changing the laws protecting shop workers from violence which have been modernised at Westminster and Holyrood, remain untouched here.
It’s been a year of profound ups and downs for retail in Northern Ireland. The industry is hoping for less of a white-knuckle ride over the coming 12 months. With the economy in difficulties, the outlook for demand uncertain, and unpredictability the new norm, prospects for the coming year look inauspicious. Retailers will again need to call on all the agility, and remarkable resilience they have displayed in recent times.
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