Posted on Friday 26 October 2018 by Ulster Business
Breakfasteer: Aodhan Connolly, director of the Northern Ireland Retail Consortium
Venue: Grand Central Hotel, Belfast
Aodhan Connolly says there will be opportunities for retail businesses in Northern Ireland once the UK exits the EU in March.
To be fair, that’s probably the only positive Brexit line the director the Northern Ireland Retail Consortium mentions to me, as we sit on the ground floor cafe of Hastings Hotels 23-storey Grand Central on Bedford Street.
“Retail is challenging, and there is a lack of both consumer confidence and business confidence,” he says.
“That is stemming from the political uncertainty around Brexit. It’s the biggest challenge to our industry in a lifetime.
“The fact that we as an industry are not only consumer-facing, and rely on consumer footfall, and spend industry in a lifetime. The fact that we as an industry are not only consumer-facing, and rely on consumer footfall, and spend, we are also facing deals with other sectors such as construction, services, agri-food – there are complex supply chains.”
Of course, Belfast itself has been hit with another major blow to retail. The fire which gutted the listed Bank Buildings, home to Primark, effectively cut the city centre in two – with a cordon, ongoing at the time of print, stopping the regular free-flowing
This is a very coffee-heavy morning for me, I should note. A couple of pods before leaving the house leads to flat white-driven discourse with my breakfast companion.
It’s noted by the staff that I, like others that morning, have opted for a healthy option – muesli. I’m not sure what that says about me.
Back to Brexit, Aodhan says that squeezed margins across the retail sector aren’t going to improve with any additional financial or administrative burden caused by Brexit. And that, for consumers, will mean increased prices.
“Anything that adds to that administration, or financial burden, is not welcome,” he said.
“On Brexit, we are talking about tariffs, customs, our colleagues in the front line, the supply chain. We as retailers cannot afford to absorb any more costs.
“Our profit margins have cut and cut, due to the grocery wars, and there simply isn’t the wiggle room for us to absorb everything, so some of that will have to get passed on to the consumer.”
“Our consumers already has have half the disposable income, compared to those elsewhere in the UK. There will be opportunities with Brexit, but we need to get the challenges sorted first.
“We plan five or 10 years in advance. With the situation now, it allows us to sustain, but it doesn’t allow us to look at further investment and growth.”
He says decision making, or a lack of, is what is at the core of the uncertainty. That includes re-examining rates.
“We need decisions made on that… when Stormont fell, decision making fell. One of the big things for us, and something we should be shouting about, is that retail is undervalued.
“Its cont to supply chain, to employment, to GVA. We really are running the risk of falling behind Great Britain. They have lead officials on retail and they have, or are working on, retail strategies.
“There is nothing in Northern Ireland. We are going to fall behind. Retail, for all of its challenges, is a very good dipstick of how the economy is performing. More than 65% of our GDP is consumer-driven.”
He says the entire landscape of late has meant a huge drop in the number of retail-related planning applications – an indication that shops and others are playing it safe and waiting for the storm to subside.
“Anecdotally, the number of planning applications going through regarding retail, is less than a third of what it had been a few years ago.
“People need the certainty. We are still a growth market in NI, and are not at saturation yet. It’s one of the hardest places to do business.
“When the Assembly was sitting, 80 pieces of legislation went through, and those made it harder to do business, not easier. We in Northern Ireland, need to plan for the future, and make it more business-centric.” ■