Name a shop in Ireland and who do you think of?
Penneys, Dunnes or Brown Thomas? Or TK Maxx, Marks and Spencer or Louis Vuitton? The first group are large well known Irish retailers, the second group are international companies or brands.
But it may surprise you to know that of the 42,000 retail and wholesale businesses in Ireland:
- 34,860 (83%) are Irish owned and run
- 31,500 (75%) are family owned
- 30,660 (73%) employ 10 or less employees. 1
So just digest that for a moment – Irish retail is small, local, Irish owned and family run.
Why is this important?
Surely in this age of increasing globalisation big is beautiful? Not so. A recent article by Bryan Pearson 4 Indisputable Signs Little Local Retail Is Becoming A Goliath states that local retailers are not going the way of the dinosaur! He is talking about retailing trends in the US and, as we have seen before, retail trends tend to hop across the pond (Black Friday, shopping malls, omnichannel etc.)
What contribution does the retail sector make to Irish society?
- €7 billion in tax revenue
- 23% of State’s tax returns
- 12% of GDP
- 280,000 employees
- 70% of retail jobs outside Dublin 2
So with this massive contribution to the Irish economy, where are all the good news stories about retail in the media? What about all those retail jobs? We hear plenty about FDI (foreign direct investment) companies and the latest tech start up but not about retailers. The FDI companies produce jobs but often the profits are repatriated to their home countries. However the corporation tax they pay is substantial.
Corporation tax payments are heavily concentrated among large companies, mainly multi-nationals. This concentration has increased over recent years, reflecting that the multinational and export-focused sector has performed better than the domestic sector and SMEs generally.3
So that’s why FDI is so important.
McElhinney’s in Ballybofey, Co Donegal
This is the largest independent department store in the state, trading for 45 years. Last year they were planning a €2.3 million investment in their warehousing and e-commerce facilities. It approached Enterprise Ireland (EI) for help to develop its export business, as it sources many of its products from Irish suppliers. The application was rejected as Enterprise Ireland does not assist pure retailers, saying it is bound by legislation. However EI does support online retailers in the shape of Mick’s Garage, helping them to expand their online car parts business, which now boasts a multi-million euro turnover. Why is that so different? However the good news is that the McElhinney warehouse is going ahead but being financed directly by the company. More on this story on this link from the Irish Times.
Who are these Irish retail companies?
Apart from this Co Donegal success story, who are the other retail companies who are the unsung heroes of the Irish Economy? Here are two examples.
Edges of Fairview, Dublin
In 1916 Elias Edge was out of a job when the oil barrels at Hampton Leedom Hardware exploded and the Henry Street shop was left in ruins. However Elias Edge decided to set up his own hardware store in Fairview in 1917. Four generations later it is still thriving. Victor Edge took over the shop when he was just 16 years old, after his father Elias Edge Jnr died suddenly. Beverly Edge worked with her father, Victor whilst still at school and her children may yet work in the business. This shop is still the heart of the community and Victor’s personal service is a given; you can still go in, ask for advice and buy four screws. Local customers have set up a facebook group The Edges Hardware Appreciation Society, a modern expression of the value of the shop in the local community.
Davern’s of Cashel
Established 91 years ago in 1926, Davern’s is a boutique selling luxury brands for men and women. The business is explained in a quote from their website
Daverns of Cashel is a third generation business originally started by Mary Davern in 1926. Her son Raymond joined the business at the age of 16 and continued to run the business until his retirement in 1998. Daverns specialises in leading ladies and gents designer labels. Ladies and Gents buyers for Daverns of Cashel, attend the leading fashion exhibitions in both Dusseldorf and London on a seasonal basis to select cutting edge fashion for our loyal clientele. Raymond Davern Jnr. is currently heading the family business which is continuing to offer individual service to our customers, catering for every taste and occasion.
Both of these businesses are operating in fiercely competitive markets – hardware/DIY and luxury fashion brands, and dominated by the big national and international names. Yet their businesses are not only surviving but thriving in the face of this global competition. And these are just two examples of the thousands of small independent retailers nationwide.
But what about the e word?
Yes online shopping is here to stay, but even in the US the statistics are very interesting – 5% of total retail sales for quarter 4 2016 was spent online. 4
That means that for every $10 spent in retail 85 cent was online, or to round it up:
- For $1 spent online, $9 were spent in a store.
Admittedly this figure includes all retail sales, including cars and petrol (which you can’t buy online). The online sales percentage is growing but it still means that there is a lot of shopping happening in traditional bricks and mortar shops. However retailers must not ignore the online experience but harness its power to improve their businesses. This can be done in many ways (I feel another blog coming on!). Some may even go the whole way, as demonstrated by the commitment of McElhinneys (above) to a large scale e-commerce investment.
So the shape of retail in Ireland may not be what you think it is!
If you thought Irish retail is large, multinational and faceless then think again. We are fortunate in Ireland to have over 30,000 diverse, locally based retailers. They may not get the media attention they deserve (maybe because 70% of the retail jobs are outside Dublin?), but are supported and valued by the town and village communities where they trade. They know their market and their customers, and deliver a very personal service.
P.S. Next time you reach for your phone to search for the latest must have item, think about what is available in your neighbourhood. It may not pop up at the top of your feed but try a little harder to seek out the wonderfully diverse array of local businesses. There’s even an app for it now – https://www.pointy.com/ie makes it easy to find things in local shops.
1 Retail Ireland IBEC. Retail in depth web page
2 Data as of March 1st 2017
Shaping the future of Irish retail 2020. A strategy developed by Retail Ireland and its members.
3 Economic Impact Assessment of Ireland’s Corporation Tax Policy: Summary Research Findings and Policy Conclusions. Department of Finance. October 2014