AS IRISH RETAILERS gather next week for their annual conference, the crisis facing the country’s small, independent shops is more pressing than ever.
Butchers, greengrocers, bakers and other high street businesses are boxed in on all sides. Costs have climbed despite the recession, while larger shops are forcing down prices.
Director of Retail Ireland Stephen Lynam says that while the economic tide is lifting most businesses, independent retailers are still struggling.
“The statistics suggest that sales in specialist stores, which tend to be independently owned, fell by seven per cent compared to March of the previous year…other sectors are starting to recover, whereas sales in those stores continued to fall.”
One of the biggest problems, Lynam says, is the high level of costs traders face.
“No retailer can sustain high costs of doing business while sales are sluggish, but the independent small sector is particularly vulnerable to that.”
On the ground
It’s certainly true for the traders on Dublin’s Meath Street. A busy shopping street in a working class area, the Meath Street is famed for its independent retailers.
Brothers Paul and Declan Larkin took over Larkin’s butchers from their father, who set up shop in the 1940s.
“At the moment, we’re just hanging on. See what happens. That’s all you do.”
Paul reckons that many independent shops like his will be pushed to the wall in the coming years. Mounting bills, sky-high livestock prices and declining custom have forced him to cut back on staff costs.
“We had one full time fella, and we used to have a couple of part times. We don’t bother with them anymore, we let them go and just do it all ourselves now.”
It’s the same story for Jack Roche, who has been a greengrocer around The Liberties for most of his 70 years.
He’s slow to criticise the large chain stores that are aggressively pricing independent retailers out of the market, but acknowledges the impact they have.
“For the Aldis and the Lidls, in our case they decimate prices. They sell things way below cost.”
He says that the larger shops use a strategy of below cost selling to increase footfall.
“Cost us a euro, sell it for a penny, it doesn’t matter.”
They don’t sell the lawnmowers for a penny, mind. They might sell a head of cabbage for a penny, but they’re not that stupid. They are Germans after all.
He says that the shrinking of the independent sector is inevitable.
“I think the independents will be smaller – you’ll get people who like to support it even though they might be paying a little bit extra…they can recognise good value for good stuff, and they like the idea of supporting smaller shops.”
Price pressure and vacancies
Again, the statistics back up the high street experience.
“The Consumer Price Index shows the cost of people shopping has fallen significantly because of intense competition”, according to Lynam.
“It’s a great time to be a consumer, almost every store is in perpetual sale mode. Consumers always expect some product to be on special, so retailers have to respond to that.”
He says that the most visible sign of this has been vacant shops in city centres. Dublin, Limerick, Galway and Cork have all been affected.
While it is understood that Dublin, Cork and Galway are seeing some improvements, high rates, high unemployment and out of town shopping mean that the city centres of Limerick and Waterford remain decimated.
Adapt or die?
Despite the grim prospects for independent retailers, Lynam suggests that by adapting to consumer habits and market trends, smaller shops can survive and even thrive.
“Certainly there’s been a sea-change in consumer behaviour…but by being the best value for money, a small independent store can still compete on that level. They need to be aware of what their competition are doing.”
That rings true for James Lawlor, who has run Lawlor’s butchers in Rathmines for 21 years. Just as the recession was starting to bite, he tore up his shop, doubled in size and expanded his product range.
He’s now looking forward to his fourth year of growth in a row.
“We’re seeing between five and eight per cent growth per year, every since 2010.”
Ironically for a butcher’s, sales flew up during the horse meat scandal. As consumers lost trust in mass-produced products, they flocked to familiar, independent outlets where the emphasis was on branding.
“People just abandoned supermarkets. Burger sales went through the roof, because everyone presumed frozen burgers were made of horse meat.”
He’s seen success in ready meals and pre-packed goods – usually the preserve of supermarkets.
“In some ways, you have to look at what supermarkets are doing and try to do that too, but also try to keep yourself different as well.”
Government must step up
Tom O’Connor is a neighbour of Lawlor’s in Rathmines, and has run Fothergill’s cake shop in the village for fifteen years. He says that small businesses are hard pressed to keep up with standards that are set for multinational companies.
“The statuatory requirements are at a standardised rate-you’re painted with the same brush as McDonalds. I might have 500 customers in my shop in a week, and how many customers have they every week?”
When it comes to retail, O’Connor says: “It’s very tough. You wouldn’t be recommending your family to take it on.”
Lynam says that the Government has to tackle high utility bills sheltered sectors like the legal profession, where nosebleed costs for independent retailers are pushing many to the wall.
Ultimately, he says there is a space for an independent retailer that is clued in to the competition, but costs have to come down, and retailers need to react quickly to changing consumer behaviours.
“Just because they’re independent doesn’t mean they are blind to market pressures out there. No shop, regardless of size, will survive unless they are prepared for the way consumers shop.”
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