Feature on how small retailers in the North have been affected by shoppers (and their cash) coming over the border. First appeared in Sunday Business Post 03/01/2010.
On Chichester Street, in the centre of Belfast, the lines of southern registered coaches have become a familiar sight. Every day they arrive, at weekends as many as 15 or 20, disgorging day trippers from Dublin, Sligo and elsewhere into the nearby Victoria Square centre.
Cross-border shopping is certainly big news for Northern Ireland’s retailers but small businesses are finding it difficult to cash in on the influx of southern shoppers. ‘I’ve not seen any significant increase in my southern trade,’ said Alister Beverley, proprietor of Yoke, a small designer label clothing store on the opposite side of Donegall Square from Victoria Square. ‘Everyone thinks we’re doing great up here on the back of it but the truth is that most of the trade goes straight into the Victoria Square and Castlecourt.’
According to figures released recently by the Central Statistics Office, shoppers from the Republic spent about 435 million euro in Northern Ireland in the 12 months to July. Cross-border shopping is thought to have cost upwards on 11,000 jobs in the Irish Republic, but, according to Beverley, it is multinational chains that are really benefiting from the drift of shoppers northward.
‘It’s the High Street stores that are doing well. The irony is that the money (southern shoppers) are spending isn’t really staying in the north – it’s mostly going across the water (to Britain). Obviously it’s creating some jobs here but the money is leaving the country so it’s not really helping the economy in the long-term.’
The weak pound has been one of the main factors motivating Irish shoppers to cross the border, but Beverley believes that the conversion rate might be harming small retailers in the north more than it is helping them.
‘Most of the brands that I sell are bought in euros so I can’t really sell them any cheaper than I can in euros. Anything that is sourced within this country, retailers will be better off with but for anything that is paid for in euros or dollars or from the Far East you’re losing out. For me the whole thing has been a pain – I wish it had never happened. Due to the euro rate my prices have gone up 10%. The sooner it goes back to normal the better,’ Beverley said.
Around the corner in the Bureau, a trendy men’s clothing shop housed in a former Presbyterian Dining Hall on Howard Street, co-owners Paul Craig and Michael Hamilton agree that smaller retailers have not benefited from cross-border trade to the same extent as high street stores and shopping centres.
‘The number of southern customers coming through our doors has increased but not massively. I would have expected to have more, to be honest. As it is, the percentage of our custom that comes from the south is so small that it barely registers,’ commented Craig.
Throughout the 1980s Belfast was popular with Irish shoppers, mainly due to its wide selection of UK high street stores, but during the1990s significant amounts of local trade was lost to Dublin. Hamilton believes Belfast is only now making up for lost ground. ‘For 15 years there was no need for southern shoppers to come to Belfast. And during the boom times lots of northern trade went south too, mainly because sterling was so strong – 1.4, 1.5 to the euro. It’s only in the last two years that the situation has reversed and we’re seeing more shoppers come north,’ he explained.
Last week’s budget attempted to stem the exodus of Irish shoppers north, reducing Vat and slashing duty on alcohol, but David Fitzsimons, chief executive of Retail Excellence Ireland believes more needs to be done. ‘While the drivers for customers going north are primarily food and alcohol, a lot of supplementary items are being purchased,’ he remarked.
Fitzsimons calls for reductions in rent and wages, to allow retailers in Ireland to match their counterparts across the border. ‘There’s massive money going out of the economy to the north. Irish retailers have been priced out of the market by the government. We are uncompetitive and until something is done to tackle this the problems will remain,’ he said before adding that expected Vat increases and new minimum pricing on alcohol in the UK should see a contraction in cross-border shopping in 2010.
In Newry, closer to the Irish border, John Kehoe, Marketing Manager of Kehoe Kars, feels that perception that all of Northern Ireland is profiting from cross-border trade is misplaced. ‘There is a misconception that the private retailers are getting all this business but they are not. Customers from the south are driving in the Dublin Road and turning into the two shopping centres [Buttercrane and the Quay’s], they’re not coming up into the town,’ Kehoe said from his forecourt on the Old Warrenpoint Road. ’Twenty years ago when we had busloads of people coming up from the south it was the private retailers that benefited but now it is the multinationals.’
While Kehoe accepts that the motor industry in the north has seen cross-border business grow he has little sympathy for traders on the opposite side of the border. ‘Southern retailers might complain about the loss of business but we have been in the same position ourselves for the last 10 years. All it takes is a fall in the euro rate for everything to flip around again,’ he commented.
Recently, many auto traders along the border have targeted their business model directly at customers in the neighbouring jurisdiction. With new cars registered in the Irish Republic and satellite dealers in the south buying and selling used vehicles it has never been as easy for customers in the south to buy cars in the north. Nevertheless, John Kehoe maintains that cross-border trade is ‘a bonus’ that cannot be relied upon as a long-term engine for business growth. ‘Our bread and butter is trying to retail here in Northern Ireland. That is what we are focused primarily on, and it is a difficult task because there’s a recession on here too and we have had large-scale redundancies too.’
Boucher Road, on the southern outskirts of Belfast, is home to many of Northern Ireland’s main car dealerships. Here, too, cross-border trade is up but retailers believe that it is currency considerations that will ultimately dictate whether southern customers decide to head north.
‘I suspect that while there is still value in the pocket there will be people coming north,’ said Peter Gordon, Sales Manager of Charles Hurst. ‘The strength of the euro has been the big draw in terms of bringing people across the border, and while that is still the case I would expect our cross-border trade to hold up. If that changes then we are likely to see a change.’
Southern Shoppers Making a Night of It
Last year record numbers of visitors stayed overnight in Belfast, among them many southern shoppers. The five-star Merchant Hotel, just a stone’s throw from the Victoria Square shopping centre in the heart of the bustling Cathedral Quarter, is proving particularly popular with Irish shoppers. ‘We have seen a huge increase in our southern customers, both during the week and at the weekend,’ said Lisa Scott, the Merchant’s Sales Manager. ‘Sometimes up to 50% of our business at the weekend is from the south, particularly from Dublin and from the west coast, Donegal and Sligo.’
Scott credits the marked improved the political situation in Northern Ireland over the last decade as one reason why shoppers from the Irish Republic are choosing to spend a night or two in the city. ‘Belfast is a much safer place to come to now. It’s an unexplored place that many people in the south have never been to and they want to come and see. It’s a new experience for them,’ she commented.
The Merchant has long been a popular corporate hotel, but Scott has noticed a change among business customers from the south. ‘A lot of people are looking to negotiate much harder with corporate rates. We get a lot of people from the Republic trying to bargain, saying “We can get this in Dublin for 80 euro a night, will you match that?”, but thankfully we are in a position where we don’t need to bargain.’