It is estimated that Irish consumers spent €5 billion online in 2017, with €3 billion of that going to online retailers abroad. This is according to the latest findings of the latest Consumer Market Monitor (CMM), published today by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School.
The figures from the final quarter of 2017 indicate that the Irish consumer economy is in good health with total disposable income at €102 billion – eclipsing the last peak experienced a decade ago in 2007. Retail spending has seen the most significant growth, with up 7% last year to €40 billion, despite losing at least €3 billion to overseas suppliers through online spending.
Irish consumers are spending on most types of goods and services. The strength of demand is especially evident in the housing market where 50,000 homes were sold last year, despite a chronic shortage of supply. The number of properties for sale stood at just 18,900 at the end of 2017.
Consumer spending in Ireland is now growing at a strong pace and continues to be one of the main drivers of economic growth, along with construction. Growth continued in both sectors in 2017 and this trend is expected to endure throughout 2018. Total consumer spending was up 2.8% for the year, while construction grew by an even more significant amount of 4.2%.
Consumers were relatively cautious in the first half of the year— with spending up by just 1.5% year-on-year. This figure reflects a decline in new car sales with many consumers switching to second hand imports, as well as weaker spending on services. Conversely, spending accelerated in the second half of the year, reaching an estimated growth rate of 5.3% in the final quarter. This positive momentum is continuing into 2018, with all forecasts indicating growth of close to 3% for the year.
The report states that the main drivers of this growth are population expansion, along with increasing employment. There are now 2.2 million people at work, up 48,000 year-on-year, and up by 344,000 or 19% from the low point in 2012. Growth of 2.2% is forecast for 2018 and 1.8% for 2019 which will bring another 90,000 people into the workforce.
According to the report, the increasing number of people employed, as well as increases in hours worked, is leading to a substantial surge in the amount of disposable income in the economy. There has been a marked increase in aggregate disposable income which has increased upwards by about 5% per year in each of the past three years. In sum, it reached €102 billion in 2017, eclipsing the 2008 peak of €101 billion. It is forecasted that disposable income will continue growing in 2018 and 2019 at a similar rate of 5% per annum.
Author of the report and Professor of Marketing at UCD Smurfit School, Mary Lambkin said, "It is great to hear the cash registers ringing again for Irish retailers, and signs are positive for continued growth. The rapidly expanding labour market and rising incomes are two significant factors fuelling spending, however, a significant amount of retail spending is leaving the country.
She added, "Only 40% of online retail spending goes to Irish websites which is disappointing for indigenous businesses. This is something that can be improved upon, but will require investment in websites and e-commerce platforms, as well as access to decent broadband infrastructure."
Source: www.businessworld.ie
