Irish economy continues to struggle
Despite the IMF and EU pumping EUR85 billion into the country, necessitated by the Irish government’s bank bail-out in 2008, the economy has shown little sign of recovery. Ireland has the highest budget deficit in the Eurozone, house prices continue to fall, unemployment is at record levels and incomes are decreasing. More recent implementation of the four-year programme of austerity measures has hit consumer confidence further, through a combination of higher taxes, reductions in welfare payments and further job losses.
Luxuries in decline
Over the course of the recession consumers were cutting out non-essential and luxury items from their budgets. While this was evident across the entire market, from grocery to non-grocery items, the most significant cutbacks were unsurprisingly focussed on categories such as electronics, leisure and personal goods and furniture and furnishings. Although there was clear evidence of consumers trading down in grocery categories, since this part of the market carries a number of essential staples, sales were better maintained, particularly in volume terms.
Price competition remains dynamic
Ongoing economic difficulties have encouraged operators throughout the retail market to push on with their strategies of deep discounting and promotions, resulting in increased competition and putting pressure on suppliers to keep prices low. Another growing channel adding price competition to the market is internet retailing, which has seen notable development, as both supermarkets and many non-store based retailers have invested heavily in improving their online facilities and services.
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