DESPITE POSITIVE PRE- and post-Christmas sales in 2011, Irish retailers are pessimistic about the year ahead.

That is according to Retail Ireland, the IBEC group that represents the Irish retail sector.

Retail Ireland Director Stephen Lynam explained that although sales rose in early December, the middle of the month saw sales fall again.

Christmas week and the current week appear to be better than last year, but it is likely that total retail sales for the whole of 2011 will end up at around the same as those in 2010.

The good pre- and post-Christmas figures are welcome, but this year’s sales are being compared with a disastrous Christmas last year. It is also possible that many shoppers are trying to beat the 2 per cent VAT increase which comes into force next week.

Lynam added that since the start of the recession, retail sales have fallen by over 20 per cent, and that “meanwhile, rents remain too high, local authority charges are up in many areas and wage costs remain very high by European standards”.

He said that amongst Retail Ireland members the mood is “grim”.

Retail Ireland carried out a business sentiment survey in November which showed:

• 65 per cent of retailers consider the overall business environment in Ireland to be poor or very poor and 70 per cent believe the business environment will be poor or very poor in three months time.
• 66 per cent rated their business in Ireland currently as poor or very poor while 61 per cent believed their business in Ireland would be poor or very poor in three months time.
• 42 per cent felt less confident about their business in Ireland than they were three months previously. Only 16 per cent felt more confident.
• 73 per cent expect lower profits over the following three months. 53 per cent expect lower numbers of customers in the same period.

Lynam described these figures as “not surprising”, adding that consumer sentiment is “poor” and retail businesses are struggling. “Many may close early next year,” he said.

In an effort to help in resolving this difficult situation, Retail Ireland believes the government can take some key actions early in 2012.

This includes reviewing VAT receipts in March and reversing the 2 per cent increase if the expected tax take is not reached; working with Retail Ireland in drawing up proposals on reformed examinership rules; tackling the black economy, particularly the illegal sale of cigarettes and fuel; and examing the full range of business charges and taxes with a view to reducing the burden on the struggling retail sector.

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Read: Irish people worried about money and their jobs in the year ahead – survey>