David Fitzsimons CEO Retail Excellence Ireland

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David FitzsimonsCEORetail Excellence Ireland
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The Irish Retail Industry The Facts

• The Irish retail industry is the largest employer
  in our economy with 300,000 people employed
• Retail sales volumes declined by 17.37 in
  Quarter 1 2009
• Retail Excellence Ireland predicts job losses of
  in excess of 40,000 people in 2009.
• While the rate of sales per square foot is
  reducing for most retailers, every headline cost
  is increasing at exponential pace including wage
  cost, rent, utilities, rates and the cost of
  finance
• The acceleration in the deflation of product
  pricing and vigorous discounting has placed
  retailers under immense pressure to maintain
  sales volumes. Retailers are shifting more boxes
  to stand still.

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QUESTIONS
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WHAT IS HAPPENING IN IRISH RETAIL?
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Q1 Trading Performance
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Trading Performance Trend
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The Issues
Liquidity The economy is cash starved with the
net effect that inherently good businesses are on
the brink of failure (Furthermore Irish retail is
uninsurable). Business Costs While sales
volumes erode, headline business costs are
increasing at an exponential rate Rent / Rates
/ Wage / Utilities. Pricing Price differential
has further eroded consumer confidence in the
Irish Retailer. Caused by 1. VAT differential
(6.5 added to price) 2. Property Cost (4.85
added to price) 3. Wage Cost (6.32 added to
price) 4. Suppliers (varies dependant on sector
and scale)
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Property Policy - Rent (Lease Law Arbitration
Culture) - Rates (New Calculation Review
Rates Base) - Planning (Funding of Local
Authorities)Labour Policy - Intensity
(Investment in People V PRSI) - Minimum Wage
(2nd Highest in Europe)
The Issues
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What Happens Next
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Accelerated Consolidation
Strong Grow Stronger and the Weak Die
(USA Top 3 Retailers Market Share)
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Accelerated Natural Churn
Recession equals 20-25 of Businesses Fail
C-Stores
Fast Food
Lifestyle Retailers
Department Stores
Home Delivery
Specialist Restaurants
Toy Superstores
Discounters
Music Retailers
E-commerce
Tween Teen Specialty Retailers
Automated Shopping
Shopping Clubs
Emerging Growth Maturity
Decline
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Interest Groups - Weak Get Weaker
Stronger Interest Groups Survive
RETAIL
LOCAL AUTHORITIES
LANDLORDS
SUPPLIERS
BANKS
GOVERNMENT
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• WHAT CAN RETAILERS DO?

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Cheapest (Price) Biggest (Selection) Hottest
(Fashion) Easiest (Service) Quickest (Spee
d)
Find An EST

• REMEMBER - If you are not in the top2 select set
  you are in trouble

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Think Revolution
Lets just be great at what we do
If we stand still we will die
We know we cannot compete with the big boys
Lets do coffee but with a real point of difference
Lets be the largest sportswear retailer in Europe
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The way we do things around here
Look at Our Culture Behaviours
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Know Your Numbers
Traffic 1,648 Conversion 52 (3.2) Sales
25 (48.1)
Traffic 3,940 Conversion 603 (15.3) Sales
103 (17.1)
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• WHAT CAN REI DO?

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MACRO TACTICS

• REPRESENT YOUR INTERESTS
• -RENT Lease Law
• -SUPPLIER BEHAVIOUR - Competition Authority
• -VAT - Lobby
• -WAGE - Lobby
• -RATES - Lobby
• TELL IT AS IT IS

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MICRO TACTICS

• DRIVE DOWN YOUR COST BASE
• - RENT REDUCTION REVIEW GVA
• - MEDIA BUYING
• - AFFINITY DEALS
• - WAGE BENCHMARKING
• DRIVE BAD PRACTICE OUT OF SUPPLY
• COST RATIONALISATION SUPPORT
• COST EFFECTIVE TRAINING ON-LINE

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MICRO TACTICS

• KEEP YOU INFORMED
• -QUARTERLY PRODUCTIVITY REVIEWS
• -SHOPPING CENTRE PRODUCTIVITY
• -RETAIL PARK PRODUCTIVITY
• -HIGH STREET PRODUCTIVITY
• -DISSEMINATE RENT REDUCTIONS
• -REAL TIME FOOTFALL ANALYSIS

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MICRO TACTICS

• DRIVE YOUR BUSINESS VOLUMES
• -REI PRIVILEGE PROGRAMME
• -REI GIFT CARD PROGRAMME
• -RETAIL AWARDS

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Thanks
WIN THE LOTTO