It may be Christmas time but for a number of retailers the next month will mark the last of their existence. Rent payments are due on January 1 and a number of industry sources that will prove a payment too far for some retailers and that the banks will move in and close them or place them in receivership.
Those that hoped the Christmas trade would save them are likely to be disappointed. The situation is so serious that some of the retailers will not even be allowed have sales as the banks will want that cash for themselves, the sources said.
"There's a number of well-known brands experiencing exceptionally adverse trading conditions that could have closed by now but have desperately tried to hang on through the Christmas period to shift stock even if it's at a loss," said David Fitzsimons of Retail Excellence Ireland. "Where they are at, basically, is they will be insolvent. I don't see the banks making credit available to those businesses making excessive losses."
Fitzsimons said that many have not met the Collector General's requirements in terms of paying taxes, have cut labour "to the bone" and severed relationships with suppliers, especially those without trade credit insurance. That trade credit issue is a major issue for the industry albeit Trade Credit Brokers said recently that there were signs the market is beginning to re-emerge and that the volume of claims has slumped dramatically.
"There will be exaggerated closures in the first and second quarter," Fitzsimons said, although he pointed out that the old routine of three-months- in-advance rent driving businesses off a cliff has ameliorated and now the vast majority of retailers pay monthly in arrears. "Spending is so far back, in the border counties in particular, that the inability of a tenant to modify costs to meet that decreased demand will lead to closures," he said. That's bad news for landlords, particularly given that research released by property advisers Jones Lang LaSalle last week show that the total shopping centre floor space in Ireland has actually doubled since 2003. While that might not seem to affect people, many of those centres are owned by pension funds, meaning it does have implications for the man on the street.
Retailers also point out that while some centres seem busy, that isn't necessarily being reflected in the tills. Anecdotal evidence suggests that a significant percentage of the footfall is window shopping, perhaps in the hope that the downturn in business will leave retailers forced into sales before Christmas rather than the traditional period in January.
Fitzsimons will speak to his members next week but already knows what the feedback will be. "They'll say that Christmas hasn't started yet for us, what business that is there is down and that footfall is stable but conversion to sales is poor."
One major player bucking that trend is Aurora Ireland, which owns Oasis, Coast, Karen Millen and Warehouse and is the second biggest player on the Irish high street . "I'm not whingeing," its chairman Ian Galvin said last week. "Things are down but in a less negative way than they were. I think it's a pity we couldn't have had the Budget in October but I'm glad the figures we're having now are happening pre-Budget."
One of the leading critics of Grafton Street in recent years, Galvin says that business has begun to improve for retailers there. "This time last year Grafton Street was dead. This time around I've seen much more activity across the board," he said, adding this may be due to improving car-parking and the fact that less-manic crowds are translating into increased sales.
"All of our shops on Grafton Street have seen a pick up, particularly the standalone Karen Millen shop and the Karen Millen concession in Brown Thomas. In certain cases we're back to 10% below last year whereas in October trade was very difficult," he said.
Galvin has also noticed a strong performance from Oasis on St Stephen's Green and the Warehouse store on South King Street, which is part of the State-majority owned Gaiety Centre, "has been a slow burner but it's seen an improvement since October".
Aurora's trade in Dundrum has plateaued but this is partly because sales were particularly strong there last year. "Coast and our freestanding stores and concessions in House of Fraser there are doing well," he said.
The recession means that people are shopping differently. "People have shifted in fashion terms from buying whole outfits to individual pieces. People are updating what they have," he said.
The sole bright light for other retailers, who find themselves struggling, is the general belief next week's Budget is unlikely to shock consumers into spending less. "People have taken measures already and the delivery of knowledge will help. Lenihan needs to be absolutely clear that that's that for the year and there will be no interventions in 2010," Fitzsimons said. Hopes that there might be a VAT or duties cut to bring rates in line with the North are unlikely, he accepts.
One legacy of the Celtic Tiger is that parents are still trying to satisfy their children's desires. "While shoppers remain cautious our data suggests that parents are putting their kids first and trying to make sure that they don't lose out as a result of any cutbacks," said Don Nugent, the centre director of Dundrum Town Centre, last week. Nugent said their footfall is up 7 per cent and that sales of children's clothing, footwear, accessories and toys are outperforming other sectors.