The value of goods bought by Irish households in the North has surged by 42 per cent to €50 million since the Brexit vote, The Times can reveal.
Data provided exclusively to this newspaper by Kantar Worldpanel, the consumer insights firm, showed that after years of decline in the number of cross-border supermarket sales, the value of goods purchased in Northern Ireland by consumers from the Republic spiked over the past year.
The value of the cross-border market, which is defined as the amount spent by households from the Republic in Asda and Sainsbury’s in Northern Ireland, has increased from €29 million in the 12 months to the end of April 2016 to €50 million in the equivalent period to the end of April 2017. The dramatic increase followed four consecutive years of decline between 2013 and 2016 when the value of the market fell from €81 million to €29 million.
David Berry, the director at Kantar Worldpanel in Ireland, said that the decrease leading up to 2016 was driven by falling grocery prices in the Republic, as well as the expansion of retailers “own-brand” labels which are typically cheaper than branded goods.
The referendum result prompted a reversal of that trend which had hit border counties hardest, he said.
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“The border area would have felt the pressure of that reversal much more than anywhere else, given its proximity to the North. If people are living close they are obviously much more inclined to cross the border to shop. Those consumers will travel to buy everyday items while others from further afield would only do so for big ticket items,” Mr Berry said.
Thomas Burke, the director of Retail Ireland, the industry representative body, said that retailers in border counties had been rocked by the huge increases in cross-border shopping since the referendum.
While the Kantar Worldpanel data relates specifically to supermarket sales, Mr Burke said the feedback he had received showed the same trend across the entire retail sector in the border counties. Brexit also posed a unique challenge to retailers who were suffering from a greater number of consumers shopping in Northern Ireland to take advantage of sterling’s depreciation and consequent cheaper prices, he said.
The euro has gained in value from an average of 73p last year to 87p yesterday. While Mr Burke said that movement across the border was natural, he added that the currency swing could lead to a fundamental shift in trade.
“Certainly there is a concern in the interim that so much trade is being lost and getting it back is going to be a real challenge. That, allied with an increase in online shopping and the leakage out of the state to retailers outside of the jurisdiction, is also a concern. Retailers are being hit on a couple of fronts there,” Mr Burke said.
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He advised retailers to “prepare for a world” in which sterling would be worth between 86p and 90p for “at least the next two years”. Maintaining a strong focus on competitiveness was of particular importance to offset the impact of sterling’s depreciation and maintain market share.
“We were very good during the recession years at focusing on input costs and making sure we were driving them down when we were trying to wrestle back Ireland’s competitiveness position,” Mr Burke said. “I think unfortunately our eye might have slipped off the ball a little bit in recent times and businesses are certainly telling us that they’re seeing costs increase again at a rate that is just not being matched by the retail sales picture.”
He also called on the government at both local and national level to address issues impacting upon retailers’ competitiveness such as business rates, insurance costs and rental costs.