Shoppers' in-store spending keeps sliding as bargain-hunters head online
Many consumers aren’t feeling any benefit from a stronger economy.
FACE-TO-FACE SALES continue to slide in Irish retail outlets, according to the latest consumer spending figures from Visa.
Consumer expenditure in stores decreased for the eighth successive month in May – down 2.5% year-on-year – as consumers drift towards online outlets.
Despite the ongoing improvement in the economy and the jobs market, there was only “modest growth” in total spending year-on-year across the board in May.
Spending figures were up 0.6% compared to a year earlier, however this was a marked slowdown in growth compared to the 9.2% annual rise recorded in May 2016.
Visa noted that the consumer spending growth seen during the second quarter of 2016 is the weakest since it started its surveys in 2014.
Andrew Harker, a senior economist with IHS Markit, said Irish households were showing “an element of caution in their spending” with high-street stores the hardest hit as shoppers hunted for bargains online.
There was a spike in spending on household goods last month, up 6.2% year-on-year. Spending on food and drink also rose 3.2% – the third month of successive growth for the category.
Over the year, the only sector which observed a dip in spending was transport and communications.
Elsewhere, there was a modest increase in spending on clothing and footwear (0.8%), while spending in the recreation, culture, hotels, restaurants and bars categories also saw growth.
This is the first time clothing and footwear has seen a year-on-year rise in spending for two consecutive months since July 2016. The category has been in decline for seven of the previous eight months.
Sentiment down
The continued fall in face-to-face sales came after a survey showed that many Irish consumers still aren’t seeing the effects of a stronger economy.
The KBC Bank Ireland consumer sentiment index for May showed the weakest reading since December, as consumers voiced continuing concerns about their personal finances.
Less than a quarter of consumers said that their personal finances improved in the past 12 months, while a similar number reported a deterioration in their living standards.
The outlook among consumers for the next 12 months is moderately better, however this is because many feel their household finances will not get any worse rather than show any improvement.
