Cross-border shopping cost Exchequer €810m in 2009

According to the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland’s (MII) Consumer Market Monitor for the fourth quarter of 2009, shopping in the North is up 25pc since the end of 2008 with 250,000 households in the Republic now doing their grocery shopping in the North.

The Q4 results also show 10pc of the Republic’s off-licence business has migrated to the North in 2009.

Decline in consumer spending
The research showed that the decline in consumer spending in 2009 continued during the fourth quarter and remained weak for the Christmas season.

It also predicted a further fall of 10pc in consumer spending for 2010 due to a decline in disposable income, an increase in personal savings from a low of 3pc of disposable income in 2007 to a high of 11pc in 2009 and the depreciation of sterling.

Domestic demand is also expected to fall again in 2010, although at a slower rate of -2pc compared to -10pc in 2009. 

But the monitor did show rising levels of confidence in the Irish consumer market. The level of confidence in December 2009 was 6pc better than in December 2008 and the average level of confidence for the year as a whole was 4pc better than 2008.

Consumer shifts
However, the research also showed that Irish consumers are still cautious with their income and have changed their spending habits. It showed that consumers are buying less (55pc), spending more time hunting for value (65pc) and trading down or buying cheaper produce (35pc).

According to Mary Lambkin, Professor of Marketing, UCD Smurfit School, the report brings to light important consumer shifts: “Q4 results show consumers are voting with their feet in search of better value for money in the North. This mass exodus reflects a more consumer savvy population and the need for retailers in the Republic to compete with rock bottom prices on offer just over the border.”

Retail sales slump in 2009
Retail sales fell significantly in 2009, and while final figures are not yet available, the November 2009 figures showing a fall of 11pc are indicative of the trend, the report said.

All sectors were hit by falling sales, with motor trade and household equipment particularly affected. The motor trade’s downward trend accelerated to a record low in 2009 - last seen in 1987 - with total private car sales falling 50pc, new car sales by 62.8pc and the total number of new car licensed at just 54,432 vehicles.

The experience of the Irish motor trade in 2009 has also been much worse than in other countries. By comparison, new car sales were down 19pc in the US, 6.4pc in the UK and just 1.6pc in the EU25 compared to 2008.

Other sectors hit in the 12-month period ending November 2009 were: department stores (-22pc), clothing, footwear and textiles (-15pc), books and newspapers (-16pc), bars (-13pc), food (-8pc) and pharmaceuticals, medical and cosmetics (-6pc).

Average transaction values have also declined significantly, especially within ladieswear, the research showed. On average, the price per transaction shows women spent €80.55 in Q4 2008 compared to €50.01 in 2009, which represents a reduction of 38pc.