Posted on Thursday 10 December 2009 by Ulster Business


Image courtesy of the Northern Ireland Tourist Board.

There can be no mistaking the hoards of shoppers heading north across the border to take advantage of the beneficial exchange rate. Julie Sloan, director of Mintel Ireland offers a statistical insight into how much Northern Ireland will benefit from this seasonal bonanza.

In December 2008, a report in The New York Times noted that Newry had become the "hottest" shopping location within all of the European Union's open borders, with cross-border shoppers visiting the city to receive discounts of up to 30%. 2009 looks likely to follow suit with November 23rd's public sector strike action in the south of Ireland giving sudden impetus to the start of the Irish Christmas cross-border shopping season. Rather than standing on picket lines, it seems strikers decided to use the chance to visit Northern Ireland to conduct some Christmas shopping. The influx of Republic of Ireland cross-border shoppers saw a five-mile tailback outside of Newry, one of the key destinations for cross-border shoppers. Enjoy the extra footfall while it lasts So who's benefited most? During the 2008 Christmas period, between €350-550 million was spent in Northern Ireland by southern shoppers in 2008, a loss upwards of €640 million to the Republic of Ireland economy. Even the lowest estimates show that the Northern Ireland economy has enjoyed a serious boon during the recession, helping Ulster retailers to survive the downturn. While some argue that UK retailers have benefited more than independents, there is little doubt it is better to be sitting this side of the border. The UK government has also benefited from the increase in VAT and duty revenue, with low estimates indicating that the cross-border shopping trend boosted VAT and duty takings by €58 million (£49.7 million) in 2008. With higher unemployment (12% and rising), pay cuts throughout the workforce and the average Republic of Ireland household having an average of €128,000 debt, shoppers will be making cutbacks this Christmas. The annual consumer survey by Deloitte (Sept/Oct 2009) estimates that the average southern consumer intends to spend some 22% less than 2007 levels during the festive period (circa €1,110). Reasons for travelling north are clear; in July 2009, a study by the European Commission found that on average, consumers in the south of Ireland paid 27% more on average for food than other European countries, with prices on average 20% higher than UK supermarkets. Shopping behaviour and motivations In August 2009, Mintel Ireland conducted a survey of cross-border shoppers in the Republic of Ireland border regions (500 main shoppers). Mintel's report, Impact of Cross-Border Shopping - Ireland - August 2009 found that most cross-border consumers are willing to travel up to an hour to shop in Northern Ireland, if it means they can save money on their grocery shopping. Grocery retailers are taking advantage of the cross-border shopping trend, with 60% of those surveyed visiting Asda, and 46% visiting Sainsbury's. General groceries, alcohol, fresh produce, cereals and other food items are among the most common purchases. Clothing is a draw to shoppers among half of cross-border shoppers, with discount clothing more sought-after than expensive designer brands. Alcohol is set to be a favourite Christmas gift in 2009, with some 39% of cross-border shoppers buying alcohol. Anecdotal reports claim that some visitors to Newry have filled trailers with alcoholic drinks to take home. Not just for Christmas Mintel's research found that some 20% of cross-border shoppers felt that Northern Ireland offers a better variety of shops and activities. Some 39% of those surveyed claim that they will continue to visit Northern Ireland even if the exchange rate becomes less favourable, while a further 21% stating that they 'probably will' still visit Northern Ireland. Some 39% of cross-border shoppers visit Northern Ireland only to shop and return straight home after they have finished shopping. This is compared to 17% of cross-border shoppers who claim that they spend the day in Northern Ireland or 'make a day of it' undertaking other leisure activities. Over a third of cross-border shoppers eat lunch when cross-border shopping, while just under a fifth stay and eat an evening meal. Cross-border traffic shows no 'immediate' signs of slowing Price is the overriding motivator, with almost three-quarters of consumers shopping 'up north' to save money. The UK 15% VAT rate (21% in Republic of Ireland), coupled with an exchange rate of £1 to €1.10 (November 2009), means that northern retailers can expect to benefit from the cross-border shopping trend throughout the Christmas shopping period, and into the New Year. However, both VAT and the exchange rate are subject to change, with widespread predictions suggesting that the UK may increase VAT to a level comparable to the Republic of Ireland which could put a halt to cross-border shoppers. Furthermore, there have been defensive moves; southern retailers have been lowering their in-store prices to become more competitive, and the Irish Finance Minister has made emotive calls to consumers to shop in a more patriotic 'Republic of Ireland-tax-friendly' fashion. As a result these factors should see a slowdown in cross-border shopping in 2010, however the cross-border experience is likely to have a long-term impact on Northern Ireland tourism, and to have instilled a price-comparison culture in border counties.


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