In the run up to Christmas 2008, the news was full of doom and gloom about Irish retailing. The Brits changed their VAT rate which went down, ours went up, and we were fed stories of hard done by consumers rushing up to Newry in droves to do their Christmas shopping. Irish retailers shouted loud, some blaming the Irish Government for the crisis in the retail sector, and reporting a 5% drop in the retail sector in 2008. But is it as simple as that? Has the retail downturn really come as a shock, or shouldn’t the retail sector have been predicting this anyway?
In the very same week that Irish retailers reported were reporting a 5% drop in sales, Amazon.com reported their best ever Christmas. Music retailer Play.com also reported record Christmas figures, with 30% growth on 2007 over the 2008 Christmas period.
No wonder bricks and mortar retailers are scared. Technology has moved the shopping experience from the high street to the living room. The recession has actually helped the online retail sector, with shoppers turning to price comparison sites to get the best value for their money. So, isn’t this really just a change for the better? Shouldn’t retailers just put up or shut up – and start moving an increasing portion of their businesses online?
Retailing is the backbone of the economy, and it’s predicted by some that 70,000 retail jobs will be lost in Ireland in 2009. It sounds bad, and in many ways it really is.
But what people forget is that for everything in life there is give and take. People choose to forget that several ecommerce dotcoms including Ebay and Amazon have set up bases in Ireland, and in a way that has been creating ‘retail’ jobs – but a new type of retail.
This new type of retail is a retailing model where the end product price to the consumer isn’t indirectly affected by commercial property prices, and spikes in over-demand due to latent ‘wealth’. A retailing model which is cost effective for the business and therefore the consumer. And a retailing model which is increasingly sustainable as broadband pentration increases, and technology adoption rates soar.
When traditional high street retailers simply begin embrace the benefits of using the internet as a sales and marketing channel, they’ll soon have a hell of a lot more to be positive about.
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