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News Release

Dublin

Retail Occupiers Ireland Survey 2012

Survey constitutes a sample of occupiers trading in approximately 700 separate outlets in Republic of Ireland


Stephen Murray, Retail Director of Jones Lang LaSalle Dublin reveals the findings of an extensive retail occupiers' survey undertaken by the company, which highlights some very interesting results.  The survey is limited to retailers trading in the Republic of Ireland and constitutes a sample of occupiers trading in approximately 700 separate outlets.  Interestingly more than 55% of the respondents trade from less than 5 separate branches in the country which points to the current and potentially increasing importance of indigenous retailers.

In response to the first question as to whether the company is likely to reduce or increase store numbers, 62% confirmed an intention to either stay the same or reduce store numbers.  Of the 38% of respondents who are considering expanding, a third intend opening  up to  2 further stores in calendar year 2012 On  the important question of employment, more than half at 52% of the retail company’s surveyed had less than 50 employees and only 15% of the respondents employed in excess of 300 staff.

On the very topical question of whether retail occupiers had received rental reductions from their Landlords to the reserved lease rents, 68% claimed they had, with 32% claiming reductions had not been granted.  According to Stephen Murray, on drilling deeper into the extent of rent reductions received, 68% of respondents claimed they secured rent reduction in excess of 20%. Within that group slightly more than half advised they secured rental reductions greater than 30%.

Increasingly in evaluating the case for rent reductions and the sustainability of a Retail business into the future, questions   turn to level of and recent trends in turnover. Interestingly responses to the query as to expected like for like sales trends for the current year are split about 50/50.  Half of respondents  are projecting decreases in turnover and the other half expecting the 2012 figures to either match or exceed those for 2011.  This comparatively even split would suggest that we may be close to the bottom of the cycle with turnover trends beginning to stabilise.

The current challenging retail market requires retailers to save costs and innovate in order to survive . Perhaps not surprisingly (because of the number of smaller multiple occupiers in the cohort )the percentage of online retail sales was exceptionally low, with 58% of total respondents advising that there were absolutely no sales on line and 89% verifying that the percentage of total sales on line in Ireland are less than 5% of total sales.  With customers increasingly not caring whether purchases are through bricks or mortar shopping or as internet based commerce, it is important for retailers to provide a convenient online means of transacting business and for retailing management to change their mind-set in this regard.

With much also spoken about the integration of sustainability measures into many  company’s business strategies, this now appears to have become a central plank, with 74% of business ranking this topic as either very important or important . Only 10% of businesses surveyed  believe that sustainability is an unimportant element to the company’s business strategy over a relatively short time frame of 2-3 years.

For those occupiers seeking to expand into further accommodation, respondents were given the opportunity to rank the most important influencers for their  site selection decisions.  In the current very tight market, it is not surprising that 94% ranked total rent as the most important element.  The next most important criteria was the flexibility that comes  from a short lease length or tenant break options.  With set up costs for new businesses being difficult to fund through traditional banking sources , the rent free package represents the third most significant criteria and  other outgoings such as service charge and local authority rates complete  the top 5 factors.  Localised incentives or other issues lease repairing obligations amongst others were considered comparatively unimportant items of detail.

In summarising the findings, Stephen Murray suggested that notwithstanding close to a third of occupiers not being granted rental reductions there does seems to be a reasonable level of engagement with landlords and those granting  reductions seem to be prepared to materially reduce outgoings.  The scope for further employment from new store openings in the current climate does seems to be limited, though Murray admits there may be a wider market of pop-up retailers perhaps not captured in the survey. Whilst there is a wider sentiment of  negative March trading figures, the prognosis on like for like sales suggests that Retailers  are finally beginning to see a stabilisation of the level of trade.  However, it is felt in an increasingly competitive retailing environment in addition to limited expansion in terms of new store openings, many retailers have the opportunity of expanding their sales through active engagement with online, with the vast majority of retailers coming from an exceptionally low base in this area.

Stephen Murray confirms that this latest research sits in the context of wider and forward looking research on pan European Retail changes and trends undertaken by Jones Lang La Salle called Retail 2020 which can be accessed at www.retail2020.com