Consumer Market Monitor 2012 Q4

Transcription

1 Consumer ket Monitor 2012 Q4

2 CONSUMER MARKET MONITOR The Consumer ket Monitor is a publication provided by the keting Institute of Ireland in collaboration with the UCD Michael Smurfit Graduate Business School. It is designed to track key indicators of confidence and activity in the Irish consumer market as a resource for marketers and the wider business community. The consumer market accounts for 63% of GNP so it is an important indicator of the health of the overall economy. It relies on a model of consumer behaviour which sees economic variables such as income levels, taxes, interest rates and exchange rates influencing consumer confidence which, in turn, influence consumer behaviour including spending, saving and borrowing. It is based on data from the Central Statistics Office (CSO), the Central Bank, the European Commission, and other secondary sources. The added value rests in the fact that the information is brought together in a single location and presented in a way that is easy to use for market analysis and sales planning. The accompanying editorial also highlights important trends and linkages that point to emerging opportunities and threats. It is published on the MII website and the UCD Smurfit School website and is updated every quarter. This edition covers quarter four of 2012 as well as providing a year-end review.

3 EXECUTIVE SUMMARY Consumer Confidence Consumer confidence in Ireland picked up slightly in the first half of 2012, rising to -20 in e, but has proceeded downwards since then. This reflects an annual trend whereby confidence falls each autumn as the prospect of a harsh budget receives increased attention in the media. Confidence dipped again in the final quarter of 2012, but did not fall as low as in previous years. Confidence is likely to remain weak while unemployment remains high and rising costs are putting ever-increasing pressure on already cash-strapped consumers. Consumers are exercising caution by paying down debt rather than spending, even when they have secure incomes, and this cautious outlook seems likely to persist for some time to come. In contrast, consumer confidence in the UK picked up in recent months giving some cause for optimism, with clear changes in how people view the general economic situation.consumer confidence in the wider EU remains weak, however, broadly matching Irish levels. US consumer confidence jumped to 83 in ober, the highest level since tember However, it fell back in the final quarter of 2012, to 67 in ember, and down again in January 2013 to 59. Consumer Incomes and Spending Following growth of 60% in household disposable income from 2002 to 2008, there has been a steady decline in recent years. Disposable incomes declined -7.6% in 2009, and by a further -4.2% in 2010, but stabilised in 2011, with a decline of just -0.4%. Household spending mirrored the income trend, increasing by a record 48% between 2002 and from 62bn to 92bn. Spending has since declined in line with incomes, dropping -10.9% in 2009,and continuing downward in 2010 (-3.0%) and 2011 (-1.0%), to a level of 78 billion. Consumer demand remained weak in 2012 as households continued their efforts to repair impaired balance sheets, resulting in five consecutive years of decline, which have seen real consumption contract by a cumulative 7.5% in real terms. Looking to the future, there appears to be a slight cause for optimism. Gross disposable income was up slightly in up 2.3% in real terms for the first three quarters. Household spending has not reflected that yet, remaining more or less static (a decline of -0.2%) for the first three quarters of the year. However, there is a consensus among forecasters that household spending will stabilise in 2013, with modest increases beginning from 2014 onwards 1 Consumer Borrowing Borrowing by Irish consumers grew at a record level from 2000 onwards. Total household credit peaked in ch 2008 at 150 billion, but declined steadily since then, down to 111 billion by ember 2012, a reduction of -26% from the peak. Debt to disposable income stood at 211% at Q1 2012, a significant decrease from its peak 2009 of 224% in Q4, ESRI and Central Bank of Ireland

4 Loans for house purchase account for over 70% of lending to households. Total outstanding loans for house purchase peaked in 2008 at 127 billion but reduced to 85 billion by ember 2012, a drop of -33%. Loans for house purchase continued to decline in 2012, down about 2% for the year. However, loans for house purchase actually increased by 8% between ember and ember, in a positive sign of revival in the property market. Other consumer lending peaked in Q at 24 billion but had declined to 12 billion by ember 2012, a drop of 50% from the peak. This category declined by -5.5% for the year. Retail Spending Retail sales have been badly hit in the recession, declining -10% in volume from the peak in 2007 to the end of 2012, while value declined by -16%. Retail sales have continued to be weak in 2012, down by -2.1% in Q1 and -1.1% in Q2 year-on-year but increasing slightly in the third (0.6%) and fourth quarters (1.5%). The net effect was that sales volume remained more or less flat for the year, with value increasing by a very slight 0.4%. This suggests that retail sales may be stabilizing after four years of decline, but this stability is on a very low base, which still represents very challenging conditions for many retailers. Recent Trends Sales through the motor trade have also been difficult for several years and car sales struggled again in For the year ending ember 2012 there were 76,256 new cars sold, a decrease of 12% from the 86,932 new cars sold in Excluding the motor trade, the retail sector experienced a small turnaround in the fourth quarter of 2012, with volume increasing 1.5% and value up 1.8% compared to last year. Essential products including food and pharmaceuticals held up well in the fourth quarter, and household equipment showed significant growth: Food sales up 1.2% in volume and up 2.4% in value; Non-specialised stores (supermarkets) up 1% in volume and 2.5% in value; Pharmaceuticals and cosmetics up 3% in volume and 1.8% in value. Department stores up 7.2% in volume and up 7.4% in value; Household Equipment up 8.5% in volume and up 3.1% in value; All other retail categories experienced declines in Q4 year-on-year: Fuel down -3.1% in volume but up 5.2% in value; Clothing, footwear & textiles down 0.8% in volume and -1.5% in value; Books, stationery etc. down -3.3% in volume and -4.3% in value; Bar sales down -0.4% in volume but up 1.5% in value.

5 CONSUMER CONFIDENCE - ANNUAL Europe Ireland United Kingdom Consumer confidence reached an all-time low in Ireland in 2008, following the financial crisis, and this was mirrored in the United Kingdom and the rest of the European Union. Confidence improved all over Europe throughout 2009 with the UK showing the strongest signs of recovery. Ireland continued to lag both the UK and the rest of Europe, by margins of 54% and 47% respectively. The average level of confidence for 2009 in Ireland was just 4% better than Consumer confidence remained very low in 2009 but recovered steadily through the first half of This trend reversed in the second half of the year coinciding with the IMF bailout. This downward trend continued in 2011 with confidence falling by 21% compared to 2010, and remained low throughout Confidence levels in the UK reached an all-time low in 2011, down 62% from 2010, due to a combination of higher living costs and a weak jobs market. Consumer confidence in the rest of Europe also fell in 2011 (down 16%), although not as significantly as the UK. Economic sentiment in the euro area improved among consumers and across all sectors, except retail trade in All countries measured in this index remain well below the average confidence level experienced in the growth years preceding For example, the UK is now averaging -20 compared to a long-term average of -5 while the US is averaging 65 compared to a long-term average of 97.

6 CONSUMER CONFIDENCE - MONTHLY Jan Europe Ireland UK 2007 Jan 2008 Jan 2009 Jan 2010 Jan t 2011 Jan t 2012 Jan t Consumer confidence in Ireland reached an all-time low in y of 2008 and remained weak in It recovered through the first half of 2010 but reversed in the latter half of that year. It recovered again in the first half of 2011, but this improvement was not sustained. Confidence picked up slightly in the first half of 2012, rising to -20 in e, but has proceeded downwards since then. This reflects an annual trend whereby confidence falls each autumn as the prospect of a harsh budget receives increased attention in the media. Confidence dipped again in the final quarter of 2012, but did not fall as low as in previous years. Confidence is likely to remain weak while unemployment remains high and rising costs are putting ever-increasing pressure on already cash-strapped consumers. Consumers are exercising caution by paying down debt rather than spending, even when they have secure incomes, and this cautious outlook seems likely to persist for some time to come. In contrast, consumer confidence in the UK picked up in recent months giving some cause for optimism, with clear changes in how people view the general economic situation 2.Consumer confidence in the wider EU remains weak, however, broadly matching Irish levels. US consumer confidence jumped to 83 in ober, the highest level since tember However, it fell back in the final quarter of 2012, to 67 in ember, and down again in January 2013 to Gfk Roper Consumer Sentiment Index 3 US Conference Board Consumer Confidence Index

7 CONSUMER INCOMES AND SPENDING 120,000 Disposable Incomes and Household Spending Billions 100,000 80,000 60,000 40,000 20, Disposable Incomes Household Spending Disposable income in Ireland increased from 65bn in 2002 to 104bn in 2008 an increase of 60% 4. This was due to the combined effects of more people in employment and rising income levels. This trend reversed in 2009, however, when disposable incomes declined by -7.6%, to 96bn. Incomes declined by a further -4.2% in 2010, and by -2.4% in 2011 to a total of 87 billion, giving a net decline of 16% from the peak. This period corresponded with a reduction in employment almost equal to the earlier increase -- from 2.13 million in 2008 to 1.82 in a net reduction of 310,000. Household spending mirrored the income trend, increasing by a record 48% between 2002 and from 62bn to 92bn. Spending has since declined in line with incomes, dropping -10.9% in 2009,and continuing downward in 2010 (-3.0%) and 2011 (-1.0%), to a level of 78 billion. Consumer demand remained weak in 2012 as households continued their efforts to repair impaired balance sheets, resulting in five consecutive years of decline, which have seen real consumption contract by a cumulative 7.5% in real terms. Looking to the future, there appears to be a slight cause for optimism. Gross disposable income was up slightly in 2012, up 2.3% in real terms for the first three quarters. Household spending has not reflected that yet, remaining more or less static (a decline of -0.2%) for the first three quarters of the year. However, there is a consensus among forecasters that household spending will stabilise in 2013, with modest increases beginning from 2014 onwards 5. 4 CSO Institutional Sector Accounts 5 ESRI and Central Bank

8 PERSONAL SPENDING ON GOODS & SERVICES ANNUAL Personal Spending of Goods and Services 100,000 90,000 83,979 91,948 93,863 84,173 82,591 81,101 80,000 80,000 70,000 60,000 50,000 50,604 55,706 62,114 70,899 67,203 76,927 40, Millions of Euro There was a steady rise in personal spending in Ireland from 2000 to 2007, with a record increase of 8.6% in that year. Spending growth slowed in 2008, recording only 2.2% growth from Personal consumer spending has been on a steady downward trend over the last four years reflecting the impact of declining disposable incomes and a sharp increase in precautionary saving. There was a record decline in 2009, of-7.2%. Personal consumption stabilised somewhat in 2010, declining by just -0.8% in real terms, broadly matching the decline in disposable incomes. Unfortunately, consumer spending resumed its downward trend in 2011, down by -2.4% for the year as a whole. This downward trend continued last year, with real consumption declining by about 1.3%. The first quarter was particularly weak, in part related to the timing of a VAT increase on 1 January 2012, followed by a gradual recovery thereafter. Real consumer spending actually increased by 0.5% in the third quarter, but was down by -1.3% for the year as a whole. In sum, personal consumption fell by a cumulative -7.5% in real terms over the five years from the peak in 2007 to the end of Households factored in a reduction in both wealth and future income prospects and adjusted spending downwards in order to put their finances back on a more sustainable footing. 6 Central Bank of Ireland, Quarterly Economic Bulletin, Quarter 1, 2013.

9 PERSONAL SPENDING ON GOODS & SERVICES - QUARTERLY ,000 Personal Spending on Goods and Services 25,000 23,000 21,000 19,000 17,000 15,000 Q Q3 Q Q3 Q Q3 Q Q3 Millions of Euro Q Q3 Q Q3 Q Q3 Personal spending peaks each year in the fourth quarter, in the run up to Christmas. This peak reached an all-time high in the final quarter of 2007 but has been on a steady downward trend since then. The volume of personal consumption in Ireland declined in real terms by -0.8% in 2010, broadly matching the decline in real disposable incomes. Consumer spending maintained a downward trend in 2011, down -2.4% for the year as a whole. In sum, this represents a decline of -7.5% from the peak in 2007 to the end of There was a slight easing in the rate of decline in the second quarter, with real consumption contracting at a quarterly rate of -0.4% following a decline of -1.9% in the first quarter 7. However, worries about the ember budget dampened consumer confidence in the latter part of the year with the result that spending slowed again, and it is estimated that consumption was down by -1.3% for the year as a whole 8. Various forecasts agree, however, that the retrenchment in consumer spending may have run its course by next year as real disposable incomes begin to stabilise, with a decline of just -0.4% forecast for 2013, and a modest level of growth returning from 2014 onwards (+0.2%). Consumer spending in the UK is also weak; it fell -6% in the 2008 and 2009 recession and has been broadly flat since the end of Spending was virtually flat in 2012, but growth of 0.9% is forecast for 2013, just a quarter of the average rate before the recession. US consumer spending is somewhat stronger indicating that recovery is still ongoing. Spending increased by 2% in 2012 on an annual basis, but the rate of growth has slowed in recent months CSO Quarterly National Accounts 8 Central Bank of Ireland Quarterly Bulletin, Q Bank of England Quarterly Economic Bulletin, Q US Department of Commerce.

10 PERSONAL SAVINGS - ANNUAL 14% Net Personal Savings as a % Disposable Income 13% 12% 10% 10% 9% 10% 8% 6% 4% 2% 0% -2% 6% 2% 1% 1% 0% 0% % -1% The level of net personal saving in Ireland increased dramatically over the past five years, from a low of -1% of disposable income in 2006 to a high of 13% in The average for the past decade has been 3.5%. The savings ratio continued to rise in 2012, estimated to be as high as 13% for the year as a whole. The longer-term net savings ratio consistent with economic recovery for Ireland should be in the range of 5-7%. The savings ratio is not expected to reduce much in the next few years as consumers prioritise repaying personal loans and mortgage debt over current spending. In fact, over 80% of this saving represents repayment of loans 12. Despite the increase in savings, the net worth of Irish households (the difference between total assets and liabilities) fell by -38% from its peak value at Q to the end of Significantly, Q saw the first rise in the net worth of Irish households since Q At the end of tember 2012, the net worth of Irish households stood at nearly 457 billion, or 99,646 per capita. The UK savings ratio declined from the mid-1990s until 2008 when it reached 2.0%. It rose again following the financial crisis and reached a peak of 8.4% in Q but has since fallen back to a more normal level of 6.6% in The US Personal Saving Rate is currently at 6.5%, just slightly lower than the longterm average of 6.9% CSO Quarterly Institutional Sector Accounts. 12 Central Bank of Ireland 13 Central Bank Quarterly Economic Bulletin, Quarter 3, Office of National Statistics 15 US Department of Commerce

11 PERSONAL BORROWING QUARTERLY Total Credit House Mortgage Finance Other Personal Loans 160, , , ,000 80,000 60,000 40,000 20, Q2 Q3 Q4 07 Q2 Q3 Q4 08 Q2 Q3 Q4 09 Q2 Q3 Q4 10 Q2 Q3 Q4 11 Q2 Q3 Q4 12 Q2 Q3 Q4 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Billions of Euro Borrowing by Irish consumers grew at a record level from 2000 onwards. Total household credit peaked in ch 2008 at 150 billion, but declined steadily since then, down to 111 billion by ember 2012, down -3.9% for the year and a reduction of -26% from the peak 16. Loans for house purchase account for over 70% of lending to households. Total outstanding loans for house purchase peaked in 2008 at 127 billion but reduced to 79 billion by ember 2012, a drop of -33%. Loans for house purchase continued to decline in 2012, down about 2% for the year. However, loans for house purchase actually increased by 8% between ember and ember, in a positive sign of revival in the property market. Other consumer lending peaked in Q at 24 billion but had declined to 12 billion by ember 2012, a drop of 50% from the peak and of -5.5% for the year. Lending to UK households was broadly flat in 2011 and 2012, with a slight increase in mortgage finance in the latter part of the year 17. Mortgage lending fell by 300m and consumer credit lending dropped by 100m 18.In contrast, consumer borrowing in the US was up by 6% in 2012, which compares to an increase of 3.4% for 2011, and a reduction of -1.2% in Central Bank of Ireland, Money and Banking Statistics. 17 Bank of England Lending Trends, January US Federal Reserve

12 NUMBER OF MORTGAGES ISSUED - ANNUAL Number of Mortgages Issued ,152 9, The number of new loans paid out for house purchases is a good indicator of the number of homes being bought and sold in the market. This number peaked in 2005 with a total of almost 85,000 new loans issued, but has fallen dramatically since then, from 40,390 for 2008, to 22,079 in 2009, 17,152 in 2010 and 9,700 in This trend changed in 2012, with a 19% rise in the number of new mortgages issued, for a total of11,548, suggesting the beginning of a recovery in the housing market. This trend reflected the number of new house completions, which reached almost 137,000 in 2006, the peak year of the Irish property bubble. In contrast, there were 26,820 house completions in 2009, 21,772 in 2010, 15,800 in 2011, and 7,500 in The stock of properties for sale on Daft.ie in Q was 33,600 20, which is 18% lower than in 2011, and more than 60% below the 112,000 in The total number of transactions registered in 2012 was 21,000, compared to 17,621 in 2011 and 19,000 in The stock available for sale in Dublin has fallen 35% from its peak of late 2008 to a current low of 3,500. The proportion of properties selling within four months has risen in Dublin to 63% since the start of the year suggesting some normalisation in the market. 20 Daft.ie Property Price Report, Quarter 4, MyHOme.ie Property Barometer Q4, 2012

13 NUMBER OF MORTGAGES ISSUED - QUARTERLY 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 16,830 16,426 15,738 14,339 9,498 12,459 11,038 7, Total First time buyers Movers 5,805 6,105 5,627 4,542 4,6634,864 3,839 3,786 2,186 2,5022,841 2,563 2,084 2,702 3, Q1 Q2 Q3 Q Q1 Q2 Q3 Q Q1 Q2 Q3 Q Q1 Q2 Q3 Q Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 The number of new mortgages issued to owner occupiers continued to fall in 2011, with just 10,622 issued, down -43% on This decline continued in 2012, with the first quarter down 5% on the same period in However, the number of new mortgages issued 22 picked up in quarter two of 2012, totalling 2,702, up 2% from the 2,643 issued for Q2 last year. Q3 continued this positive trend with 3,381 new mortgages issued, up 23.5% on Q2 and up 10.4%% on the same quarter in This is the first year on year increase since Q The biggest problem in Dublin is the lack of supply with just 3,500 houses on the market in ember 2012, less than half the figure from four years ago and similar to levels last seen in ruary This has led to price increases in each of the last three months, evidence that the market is picking up. Demand in the UK has also picked up significantly in the latter part of f Easier credit conditions should lend support to house prices and housing activity. The government is forecasting a 2.7% rise in house prices in 2013/14 and a remarkable 20% increase in housing transactions 26. Investors certainly see better times ahead for the UK house building industry. 22 Loans to first time buyers plus movers. 23 www,build.ie 24 Daft.ie Property Price Report Q4, pdf 26 UK Office of Social Responsibility

14 OWNERSHIP STATUS OF BORROWERS First Time Buyers Movers Buy-to-Let 5% First Time Buyers Movers Buy-to-Let 6% 37% 58% 38% 56% 2010 First Time Buyers Movers Buy-to-Let 2009 First Time Buyers Movers Buy-to-Let 7% 12% 35% 58% 37% 51% The most notable change in the composition of mortgage lending has been the reduction in buy-to-let lending, from 25% in 2008 to 5% in Other categories which experienced declines were mover purchasers and the re-mortgage and top-up segments. The only sector which showed some buoyancy was first-time-buyers. First-time buyers remain the single largest segment of the market accounting for almost 60% of the total market in terms of number of transactions and 55% in terms of monetary value. The mover market has held relatively steady in percentage terms from 2007 to 2012, but this conceals a dramatic reduction in the number of transactions, from 32,864 in 2007 to 6,533 in ,241 in 2011, and 4,750 approximately in IBF/PWC Mortgage Report Q3, 2012.

15 NUMBER OF CREDIT CARDS IN CIRCULATION - ANNUAL Personal Credit Cards on Issue 2,300,000 2,200, ,100,000 2,000, ,900,000 1,800,000 1,700,000 1,600, There was a steady rise in the number of credit cards in circulation in Ireland from 2003 to 2008, peaking at 2.2 million, an increase of 393,000 over five years, which equates to a rise of 22%. This trend levelled off in 2009 when the number of personal credit cards on issue remained at 2.2 million. The number of personal credit cards in circulation in 2012 was 1.94million which represents a decline of -9% on The number has continued to fall in 2012 reaching 1.90 million in ember of this year, an annual decline of 4%, and a decline of -14% from the peak. The number of credit cards in circulation in the UK has also fallen by some 1.5 million from 2009 to 2010, and by a further 1 million in 2011 and a further 1 million in , to a total of about 60 million, the lowest level since Total outstanding credit card debt dropped by 5% in 2011, leaving the average credit card balance at about 1,000. However, UK consumers are still among the most indebted in the world, with the average UK household still saddled with nearly 8,000 of unsecured debt." 28 Credit Cards in UK, Euromonitor International Jan 14 th Precious Plastic, PWC

16 CREDIT CARD DEBT ANNUAL Oustanding Levels of Debt on Personal Credit Cards Millions of Euro There was an increase of 31% in credit card debt from 2005 to 2008, or approximately 10% per annum. Growth continued into 2008 but at a slower rate of 8.2%, and reversed altogether in 2009 with a decline of -1% for the year. Total repayments exceeded new spending for ten of the twelve months in 2009 and this trend continued throughout This decline accelerated in 2011, with net outstanding credit card debt down -5% in ember year-on-year. Total outstanding debt on personal credit cards peaked at 3 billion in ember 2008; it was down to 2.47 billion at ember 2012, a drop of 18%. Credit card spending in the UK was also down average unsecured credit (credit cards and personal loans) fell by -6% in 2010 and by 5% in 2011, with a small recovery of 1% in This equates to a reduction in unsecured borrowing of about 500 out of an average of around 8,000 per household. US consumers have also been reducing their credit card debt, down by 10% in 2010, and 11% in 2011, but remaining flat in The average credit card balance was $7,194 in CREDIT CARD DEBT - MONTHLY 30 US Department of Commerce.

17 January ember ,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 Outstanding Indebtedness on Personal Credit Cards 2007 Jan 2008 Jan 2009 Jan 2010 Jan y t 2011 Jan y t 2012 Jan t 0,000 The spike in credit card debt that occurs each ember corresponds to the Christmas season. Having grown at a dramatic rate for several years, the level of credit card debt levelled off in 2009 and began a steady decline through 2010 and 2011, with repayments exceeding spending every month for the past four years. Credit card debt has continued to decline in 2012; it fell by -6.1% in ember 2012 compared to ember The average balance on credit cards in Ireland is 1, Credit card debt has also been falling in the UK, down -5% in the third quarter, compared to the same period in 2011, following a decline of 5.7% in By e 2012, credit balances were 16% off the 2005 peak 32.This trend is expected to continue over the next few years with UK consumers showing commitment to paying off their debts 33. US consumers have also been using credit cards much less since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In ember 2012, that figure was 17% lower, at $858 billion. 34 RETAIL SALES INDEX 31 Central bank of Ireland 32 Datamonitor Financial Statistics 33 Deloitte Tracker 34

18 Annual Value Volume Retail Sales Index, Base 2005 = 100 Retail sales, excluding the motor trade, grew exceptionally strongly from 2000 to 2007, with a 32% increase in volume and a 52% increase in value. This was facilitated by a huge increase in shopping space over the 10 years from from 500,000 square metres to a current level of 3.3 million square metres. Retail sales have fallen each year since the peak in The decline in volume from the peak in 2007 to the end of 2012 was -10%, while value declined by -16%. Retail sales stabilised in 2012, with volume decreasing by just of -0.2% from 2011, and value increasing by 0.4%. This year was a tale of two halves, however, with sales volume down by -2.1% in Q1 and -1.1% in Q2 year-on-year, but increasing slightly in the third (0.6%) and fourth quarters (1.5%). Retail sales in the UK have also been affected during the recession but not to the same extent. In fact, the index of volume sales in 2012 was more or less the same as in Retail sales in the US rebounded quite strongly in 2011, up 7.7% from 2010 which, in turn, increased by 5.9% from 2009 (which had declined -2.5%). Sales were up 5.2% in Sales are estimated to rise 3.4% in 2013, their slowest rate since All Businesses Excluding Motor Trade , Retail Sales Index Value and Volume Unadjusted (Base 2005=100), CBRE Richard Ellis Retail Reports Central Statistics Office ONS Retail Statistics ember 2012 US Census Bureau Wall Street Journal January 28, 2013.

19 RETAIL SALES INDEX 160 January ember 2012 Value Volume Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan Retail Sales Index = Base 2005 = 100 The seasonal peak in spending that usually occurs in ember and ember recovered noticeably in 2011 for the first time since the peak in This seasonal peak occurred again in 2012, slightly exceeding that of Retail sales volume increased by 0.8% in ember 2012, and value by 1.1% compared to ember For the year 2012 as a whole, retail sales stabilised, with volume decreasing by just -0.2% on 2011, and value increasing by 0.4%. This year was a tale of two halves, however, with sales volume down by -2.1% in Q1 and by -1.1% in Q2 year-on-year, but increasing slightly in the third (0.6%) and fourth quarters (1.5%). Retail sales in the UK also showed some upward movement from ust 2011, but this positive trend slowed in the latter part of The volume of sales in ember increased by just 0.3%, the lowest year-on-year growth since ember 1998 (-0.4%) proved to be the worst year for retail bankruptcies and failures since the start of the recession with 54 significant retailers going into administration. US retail sales value rose 5.2% for the year 2012, but this growth slowed in the latter part of the year. Sales value grew by 3.6% in Q4 2012, compared to the same quarter in 2011, with a 1.1% increase on Q3. Holiday sales grew by 4.1% year-on-year All Businesses Excluding Motor Trade , Retail Sales Index Value and Volume Unadjusted (Base 2005=100), *Visible data labels refer to value of sales. 29 Retail sales figures for the final quarter of 2012 show slight increase Retail Excellence Ireland, Central Statistics Office Centre for Retail Research. US Department of Commerce

20 SALES OF PRIVATE CARS Annual New Private Cars Secondhand Private Cars Total , , Sales of Private Cars, Car sales are a leading indicator of activity in the wider consumer market. In Ireland, the motor industry grew strongly during the economic boom. This peaked in 2007 with 180,754 new cars sold that year. Between 2008 and 2010, sales of new cars dropped by -42%.The largest drop occurred between 2008 and 2009, when the market dropped by -63%, to just 54,432 new cars. The market rebounded in 2010, with 84,907 new cars sold, influenced by the scrappage scheme which accounted for 20% of new cars sold saw a further slight increase in the sale of new cars, to 86,932, up 2.4% on the previous year. Sales in 2012 resumed a downward trend, with 76,256 new cars sold, a -12.3% decrease from This weakness has continued into 2013, with January sales of 17,299 down -18.5% on January last year. The second-hand car market also increased in the boom years, to a peak of 60,000 in This figure dropped back to 49,464 in 2009 and 39,103 in Sales rebounded slightly in 2011, to 41,149, but dropped again in 2012, to 38,469, (-6.5%). In contrast, 2012 saw a 5.3% increase in the sale of new cars in the UK, with over 2.04 million new vehicles registered, the highest level since US auto sales peaked in 2005 and bottomed out at 10.6 million vehicles in Growth resumed in 2010(+22%) and 2011(+10%), and 2012 was up by a further 8.6%, to 14 million vehicles -- still 2 million off the peak CSO Vehicles Licensed for the First Time by Type of Vehicle Registration and Year, ( king37.html). 37 ( ).

21 SALES OF PRIVATE CARS January ember 2012 New Private Cars Secondhand Private Cars Total 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan e y 2012 Jan Private Vehicles Licensed for the First Time, Number of Units 38 The variance in car sales over each twelve months is due to seasonality, with new car sales concentrated in January and ruary. The largest drop occurred between 2008 and 2009, when the market dropped by -63%, to just 54,432 new cars. The market rebounded in 2010, with 84,907 new cars sold, an increase of 56% on This was influenced by the scrappage scheme, which accounted for 20% of new cars sold in saw a further slight increase in sales, to 86,932, a 2.4% rise from the previous year. Sales in 2012 resumed a downward trend, however, with 76,256 new cars sold, a -12.3% decrease from This weakness has continued into 2013, with January sales of 17,299 down -18.5% on January last year. The second-hand car market also increased in the boom years, to a peak of 60,000 in This figure dropped back to 49,464 in 2009 and 39,103 in Sales rebounded slightly in 2011, to 41,149, but dropped again in 2012, to 38,469, (-6.5%). In contrast, 2012 saw a 5.3% increase in the sale of new cars in the UK, with over 2.04 million new vehicles registered, the highest level since US auto sales peaked in 2005 and bottomed out at 10.6 million vehicles in Growth resumed in 2010(+22%) and 2011(+10%), and 2012 was up by a further 13% to a total of 14 million vehicles still 2 million off the peak Vehicles Licensed for the First Time (Number) by Month and Type of Vehicle Registration, New and Second Hand Private Cars, 39 ( )

22 RETAIL SALES INDEX DEPARTMENT STORES Annual Value Volume Retail Sales Index Department Stores, Base 2005 = In line with general retail trends, sales through department stores increased continuously over the period from 2000 to 2007, with an overall growth of 42% in volume and 49% in value. Sales revenues have declined every year since then, down -23% to the end of 2012, reflecting regular price discounting used to stimulate sales. Sales volumes held up much better, down by just -4% over the five year period. Department store sales continued a downward trend in the first and second quarters of Sales volume decreased by -5.3% in the second quarter, and by -5% in Q3 compared to last year. Sales rallied in Q4 of 2012,with seasonal peak, department stores sales up in volume by 7.4% in Q4 year on year, and up by 7.5% in value in Q4 year on year. Department store sales in the UK experienced a large drop in 2012, down -8.4% in volume and -6.6% in value. This may be partly due to the continuing growth in internet shopping which accounted for 9.1% of sales in ember U.S. department store sales dropped -1.0% again in the year ending Department Stores , Retail Sales Index, Value and Volume Unadjusted (Base 2005=100), 41 ( Hamilton, S. (2013, January 18). U.K. Retail Sales Unexpectedly line Around Christmas. Retrieved January 28, 2013, from Bloomberg: 42 U.S. Census Bureau

23 RETAIL SALES INDEX DEPARTMENT STORES January ember Value Volume Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan Retail Sales Department Stores, Base 2005 = Department stores have a marked seasonal pattern, which peaks each year in the pre- Christmas period and experiences a lesser increase in y coinciding with summer sales. The Christmas shopping period followed a normal pattern in 2011, with the quarterly growth rate in Q4 of 2.3%, following a contraction in Q3 of -1.1%. The increase in ember was more pronounced, up 8% compared to ember, and up 3% compared to ember Department store sales resumed a downward trend in the first and second quarters of Sales volume decreased by -5.3% in the second quarter, and by -5% in Q3 compared to last year. In Q4 of 2012, department stores saw the seasonal peak, with sales volume up by 7.4% year on year, and value up by 7.5%. ember sales were up 6.5% in volume and 6.2% in value, year-on-year, despite the harsh budget announced on ember 5. Department stores in the UK saw an increase in the volume of 7.3% and in value of 5.6% in ember 2012 compared with ember The prices of goods sold in this sector continued to decrease, falling 1.4% in the year to ember % of sales ( 80.6 million) were made via the Internet. In the US, department store sales increased strongly in the first half of 2012, up 9%, due to an increase in incomes and good employment numbers. However, sales were down slightly in Q3, -1.3% year-on-year, and down -8.4% in Q4. The net effect was a reduction in sales of -1% for the year as a whole. 43 Department Stores , Retail Sales Index Value and volume Unadjusted (Base 2005=100), *Visible data labels refer to value of sales. 44 ONS Retail Report, ember 2012.

24 RETAIL SALES INDEX FOOD Annual Value Volume Retail Sales Index Food, Base 2005 = Food sales increased steadily in the period between 2005 and 2008 along with most other retail categories. The volume of food sold from 2005 to 2008 increased by 16%, an average annual growth rate of 5.3%. The value of food sales increased even more, by 24%, an average annual rate of growth of 7.9%. As an essential item, sales of food have held up relatively well in the current recession. From the peak in 2007 to the end of 2012, volume has declined by -0.3% and value by -4%. The volume of food stayed steady in 2010 while value declined by a relatively modest -2.6% saw very little change in either the volume or value of food bought in this country when compared to 2010 figures. In 2012, sales of food increased 1.3% in volume and 5.2% in value. The grocery sector is currently worth about 9 billion in Ireland and average weekly spend is Branded goods account for 54% of spend, down from 58% in 2007, and own labels 35%. The food sector accounts for 42% of all retail spending in the UK. In 2012, food sales volume decreased by 0.9% while value increased by 1.9%. Food sales in the US performed well over 2012 increasing by 3.3% in value year on year. 45 CSO Retail Sales Index Value and Volume Unadjusted (Base 2005=100). 46 NCA/Kantar Worldpanel Presentation, ch 2012.

25 RETAIL SALES INDEX FOOD 150 January tember 2012 Value Volume Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan Retail Sales Index Food, Base 2005 = Sales of food are normally steady throughout the year with a small peak in the pre- Christmas period, followed by a return to trend in January. The volume of food sold in Ireland in ember 2011 was up by 1.1% year-on-year and value was up by 2.3% suggesting that the price discounting of 2009 has become less widespread. Food sales increased in Q1 of 2012, up by 1.1% in volume and by 1.8% in value. This positive trend continued in Q2 with sales volume up 2.3% and value up 1.1% compared to the same quarter last year. In Q3, food sales continued to rise, with a 1.9% increase in volume and a 3.1% increase in value. In Q4 2012, food sales increased by 1% in volume and by 3% in value. In the UK, food sales increased by 1% in volume and by 1.7% in value in The quantity bought at supermarkets in ember 2012 was unchanged from 2011 but sales at specialist food stores, off licenses and tobacconists fell. 3.2% of food sales were made via the Internet. Food sales in the US performed well over 2012 increasing by 3.3% in value in ember 2012 year on year. Visible data labels refer to value of sales. 47 Food , Retail Sales Index Value and Volume Unadjusted (Base 2005=100),

26 RETAIL SALES INDEX BARS Annual Value Volume Retail Sales Index Bars, Base 2005 = The bar trade in Ireland has been in decline for the past decade as a result of a combination of factors including the introduction of the smoking ban and random breath testing, and changing consumer lifestyles. The volume of bar sales decreased by -26% from 2000 to 2010, and this has been a steady pattern with a regular annual decline of around -2.5%. However, the value of bar sales decreased by slightly less, by -19.4% in total, or -1.9% per year, due to increases in unit prices and taxes. From the peak in 2006 to the end of 2012, volume sales through bars decreased by - 37% and value by -30%. Over the same period, the number of pub licences has reduced from 9,500 to 8300, a drop of -13%. This downward trend continued in the first half of 2012, with sales volume and value down about -8% year-on-year. This trend reversed in the second half, and sales in Q4 of 2012 were down just -0.4% in volume, while up by 1.5% in value. Sales were even stronger in ember 2012, up by 2.4% in volume and by 5.4% in value, compared to All in all, sales volume and value were down by just less than -5% for the year. A similar trend has been experienced in the UK, with sales down by an average of -5% each year since There are currently 51,178 pubs in the UK, down from 60,000 in 2000, and from 58,000 in Bars , Retail Sales Index Value and Volume Unadjusted (Base 2005=100), figures relate to on-trade sales. 49 British Beer and Pub Association

27 RETAIL SALES INDEX BARS January tember 2012 Value Volume Jan 2008Jan 2009Jan 2010Jan 2011 Jan 2012 Jan Retail sales Index Bars, Base 2005 = Bar sales follow a seasonal pattern with a peak in ust and ember followed by a trough in January each year. This conceals a long-term decline in the pub trade which is showing little sign of abating. Volume sales were down by -4.6% for the fourth quarter of 2011 compared to the same period in 2010, and value was down -4.7%. This downward trend accelerated further in the first quarter of 2012, with sales volume down by -8.7% and value by -8.1% compared to last year. This trend continued in the second quarter with sales volume down by -7.1% and value down by -7.9%. The rate of decline slowed in Q3, down -3.4% in volume and -1.9% in value, and experienced a significant increase in tember, up 2.3% in volume and 3.9% in value. Sales stabilized further in Q4, down just -0.4% in volume, but up by 1.5% in value. Sales were even stronger in ember 2012, up by 2.4% in volume and by 5.4% in value, compared to the same month in All in all, sales volume and value were down by just less than -5% for the year. UK beer sales revenue also declined in 2012, down -6.2% in Q4. On-trade and off-trade both struggled, with off- trade (shops and supermarkets) down -7.5% and the on-trade (pubs, bars and restaurants) down -4.8% Bars , Retail Sales Index Value and volume Unadjusted (Base 2005=100), figures relate to on-trade sales. 51 British Beer and Pub Association

28 RETAIL SALES HOUSEHOLD EQUIPMENT ANNUAL Annual Value Volume Retail Sales Index Household Equipment, Base 2005 = Household equipment is the sum of three retail sub-categories: furniture and lighting; hardware, paints and glass; and electrical goods. All of these items are highly dependent on the housing market, particularly on the number of new homes. Sales of household equipment grew rapidly in line with the boom in housing construction, reaching a peak in 2007, following the year in which 90,000 new homes were built. However, sales declined just as rapidly, falling by -18% in volume and -40% in value from the peak in 2007 to the end of The rate of decline slowed, however, through 2010, and again in In 2012 household equipment actually increased by 8.5% in volume and by 3.1% in value. The individual categories within household goods displayed considerable variations in their sales in Q4, year-on-year. Furniture and lighting decreased by -6.7% in volume and by -10.9% in value, hardware, paints and glass were flat, while electrical goods increased by 17.1% in volume and 11% in value. Sales of household goods have also been weak in the UK, down -3.6% in volume and -0.9% in value in 2011, and were virtually flat in 2012, with an increase of just 0.1% in volume and a 0.2% in value compared to Sales of household goods in the US increased by 7.7% in value in 2012, while electrical appliances decreased by 0.7% Household Equipment , Retail Sales Index Value and volume Unadjusted (Base 2005=100), 53 (ONS) 54 (US Census Bureau)

29 RETAIL SALES HOUSEHOLD EQUIPMENT MONTHLY January tember 2012 Value Volume Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan Retail Sales Index Household Equipment, Base 2005 = Sales of household goods are quite seasonal with a small peak in e/y each year coinciding with the summer retail sales, and a bigger peak in the pre-christmas period. Within this seasonal pattern, the underlying trend has been downwards from 2008 through The annual peak in sales volume reached its highest level in ember 2012, since its peak in However, sales value was significantly lower, reflecting the extensive discounting that has occurred. Sales volume of household equipment decreased in the first two quarters of 2012, down -7.5% and -3.9% in volume. In a significant turnaround, sales volume increased by 5.6% in Q3, while value remained steady (0.8%), compared to the same period last year. This positive trend continued in Q4, when sales increasing by 10.3% in volume and 7.5% in value. Sales of electrical goods were particularly strong, increasing by 17.1% in volume and 11% in value. In contrast, furniture and lighting decreased by -6.7% in volume and by -10.9% in value, and sales of hardware, paints and glass were flat, In the UK, household goods saw an increase in volume (2.1%) and in value (0.5%) in ember 2012, year-on-year. 6.1% of sales ( 41.8 million) were made via the internet. In the US, sales of furniture and home furnishings increased by 7.7% in the final quarter of 2012 year-on-year, following a similarly strong performance in the previous quarter. 55 Household Equipment , Retail Sales Index Value and volume Unadjusted (Base 2005=100),

30 RETAIL SALES CLOTHING, FOOTWEAR AND TEXTILES ANNUAL Annual Value Volume Retail Sales Index Clothing, Footwear and Textiles, Base 2005 = Clothing and footwear purchases are price and income elastic which means that they tend to fluctuate along with the health of the economy. Sales of clothing and footwear grew strongly during the boom years and then dropped back just as quickly when economic conditions deteriorated. Sales volume grew by 89% from 2000 to 2007 which is equivalent to 13% per annum, while value increased by 46% or 7% per year. Sales declined dramatically in 2009, down by -5.6% in volume and by -16.2% in value. Sales of clothing and footwear rallied somewhat in 2010, up 3.5% in volume although down -5.4% in value. Sales stabilised further in 2011, down by just -0.9% in volume and -1% in value compared to In sum, sales volume was down by just -4% from peak to the end of 2012, while value was down -26%. Sales of clothing and footwear stabilised further in 2012, down by just -1.4% in volume and -2.1% in value in Q4 from the same period in Sales of clothing and footwear in the UK were also weak in 2012, with sales value falling by -2.8% for the year. Online sales in these stores were up 26.3% in ember 2012 compared with ember 2011, accounting for 10.3% of sales. Sales of clothing in the US increased by 4% in Q from the same period in 2011, and 5.5% of whole year. Jobs growth and low gasoline prices were mentioned as reasons for the sales increase in this sector Textiles and Clothing , Retail Sales Index Value and volume Unadjusted (Base 2005=100), 57 US Department of Commerce, Apparel Retail Sales in ember 2012