How will the Irish retailing scene change in the next 10 years, particularly against the background of buoyant trading experienced in the past five years and favourable economic forecasts for the next 10?
Will the growth in e-tailing spell closure for existing shopping centres and will the Retail Planning Guidelines ensure that there is very little new development available. Will Irish retailers dominate or be dominated?
Before answering this question it is helpful to look at some key statistics from the past 10 years.
Since 1990, it is estimated that the economy has grown by 76 per cent, with retail sales volumes increasing by almost 60 per cent - not surprising when employment numbers have increased by almost 40 per cent.
Tourist numbers have almost doubled and spend per tourist increased by 133 per cent. Net emigration of c.23,000 in 1990 has turned into net immigration of c.25,000 by 1999.
In that period, about four million sq ft of shopping centre space, representing a 70 per cent increase, was developed while almost 1.4 million sq ft of retail warehousing was constructed.
The BSM Strategic Planning Guidelines for the Greater Dublin Area identifies three factors which will have an important bearing on retailing in the next decade:
A 38 per cent increase in the workforce
A 48 per cent increase in the number of households
An additional 250,000 people
Alongside continued prosperity arising from reducing taxation and dependency levels, an increasing emphasis on the quality of jobs and virtual full employment, it is obvious that retail spending is likely to grow dramatically. Indeed, the Retail Planning Guidelines already recognise a dramatic increase in spending by 2010 and forecast that accommodating this will require a further 7.8m sq ft of additional retail space.
These guidelines, produced for the Department of the Environment, have been the subject of much comment but their effect is much more likely to focus international retailers, seeking a slice of the Irish market, into an acquisition mode rather than an organic development trail.
Against this background, the current speculation regarding Dunnes Stores and Wal-Mart is not surprising and there is no doubt, should Wal-Mart decide to enter the Irish market, Dunnes Stores would be the most suitable vehicle it could target. By contrast, both Aldi and Lidl have chosen a site by site route, most probably because of the absence of any suitable chain to acquire. Ironically, when one looks back to 1900, Dublin's retailing was heavily influenced by British ownership and although that trend was reversed after the Civil War, we find ourselves at the end of the millennium with a very significant level of UK retailers throughout the country.
I expect the trends in globalisation, combined with EMU and our buoyant economy, to lead to a wave of international penetration into the country over the next 10 years. This will come predominantly from the European mainland and the US. Nevertheless, opportunities will remain strong for Irish retailers on their own account, as JV/Franchisees and in niche markets.
Much has been written about the potential demise of shops and shopping centres through e-tailing but this ignores the patterns now emerging. Of course e-tailing will be large and have an impact but, judging by the policies of Amazon.com and GAP, both of whom are aggressively chasing high street shops, the Web will be an additional essential tool to support retailing rather than a solution in itself.
The demise of the high street or the shopping mall is a long way off and is more threatened by access and traffic issues than by the impact of e-tailing. As retailers and shopping centre owners struggle to compete for customer interest and loyalty, repositioning will be the key trend for the next 10 years.
As the city and edge of town centres become the favoured locations for half and full day shopping/leisure trips, the smaller local centres will compete for convenience and comparison needs of the 15 minute catchment area.
The Retail Planning Guidelines will make the planning process slower and more complex and with a further 3.5 m sq ft of shopping centre space and 1.75 m sq ft of retail warehousing already planned for completion by 2005, there will still be plenty of scope for further development to meet the almost eight million sq ft need, identified in the guidelines.
Aidan O'Hogan is managing director of Hamil- ton Osborne King
