Insurance, rent, bank interest and energy are main culprits.
Unrealistic wage demands must be stopped.
ISME, the Irish Small & Medium Enterprises Association, welcomed the continued positive trend in retail sales as shown in the CSO Retail Sales figures for March released today (28th April) but cautioned against complacency as input costs continue to rise. The Association warned that the recovery should not be taken for granted and, while volume is strong, value growth continues to lag behind.
Commenting on today’s retail figures, ISME CEO Mark Fielding said, “We are seeing a gradual improvement in volume sales, which we expect to continue, however the sector is still threatened by increasing input costs. Allied to this is a slow recovery in sales value which is still over 10% below 2007 levels. The increased input costs and reduced value is reducing margin and threatening the sustainability of many SME retailers”.
“Retailers are reporting demands for increases in rents of 15% to 20%, added to the continuing disproportionate local authority rates, energy costs above the norm, insurance and bank interest and charges at Celtic tiger levels and wage demands of eye-watering proportions.”
“While the consumer benefits from low inflation and savage and intense competition from foreign multiples and internet sales, many SME retailers have had to heavily discount their merchandise to ensure footfall. The pincer movement of price reduction and cost increase is placing heavy pressure on retailers, putting their longer term survival at risk.”
“There seems to be absolutely no realisation that the recovery is so fragile. SME retailers’ turnover is 13% below 2007 levels, 40,000 retail jobs have vanished along with the shops and livelihood of over 3,000 retailers. Meanwhile trade unions use the hiatus created by dithering politicians to advance the claims for more and more, without a thought for sustainable recovery.”
“Political leadership is badly required to at least bring some sanity to wage demands. Politicians repeatedly state that governments create the environment to create jobs. The time is overdue for the current crop to at least create a government”, concluded Fielding.