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Dublin - retail in need of some TLC
In recent months, as in the UK, the Irish economy has taken a beating, with the retail sector particularly hard hit. Nowhere has the effect of this been felt more than in Dublin. To see how all of this has affected the previously booming star of Europe, our resident retail specialist Karl McKeever of Visual Thinking paid a visit to the city to see how retailers were facing up to their many challenges.
In the years before the recent economic crisis Ireland was booming. By all standard indicators the country's new economic success appeared unstoppable and as a result Ireland was riding high. However, Ireland became an early victim of the credit crunch and the highly successful 'Celtic Tiger' was quickly and decisively slain. Now the immediate crisis phase of the Irish economy appears to have past, and like many European cities, Irish shoppers are getting used to a changed retail landscape.
Not so long ago the new malls at Swords, Blanchardstown, Tallaght and Dundrum were all built, introducing new, high quality shopping environments. These created a fierce ring of retail competition all around the capital and challenged Dublin's established position for city centre shopping.
It appears the new malls have worn the recession quite well. Mostly occupied by major stores, these brands have the ability (and power) to play 'the long game' during a downturn, by cutting capital spending and squeezing costs, ramping up promotional activity or switching focus to value product lines. Although, even here, I understand the retailers are working hard to keep consumers spending and to stay on track. However, it's in the city where you can see the effects of the recession more clearly.
At the start of the crisis, there were some high profile business failures, with sizeable brands such as Chartbusters, Adams, Land of Leather, Barratts, Sasha and Habitat exiting the market all together.
As the recession deepened in 2009 and businesses struggled through, further shop closures were inevitable and Dublin now bears the scars with many vacant premises across the city. The familiar site of lowered shutters, timber hoardings and agents' boards that similarly blight UK high streets is mirrored in Ireland too. This has been particularly noticeable with independent retailers. Those that survive are described as being in 'peril' due to high rents and the effect of falling sales and typically it's not just shops, but bars and restaurants too.
Currently, there appears to be a 're-balancing' going on, with some big retailers reviewing property portfolios and adjusting their selling space accordingly. This has seen brands such as Dunnes Stores vacate its prestige Grafton Street location to focus on the nearby St. Stephens Green branch, and it's closed a whole floor in the Ilac Centre store. Similarly, Arnotts is closing the edgy fashion basement in its recently opened Arnotts Project Store in the Jervis Centre. This innovative, youth-focussed shop is a great idea that appears to have suffered from awful timing with its launch coinciding with the start of the recession. However, New Look is rumoured to be moving in to fill the void - watch this space!
Therefore, for consumers there is little evidence of 'green shoots', although recent statistics suggest the rate of retail sales decline is on an improving trend after experiencing the worst three months in recent trading history at the end of 2009. And, whilst the end of year clearance sales were better for some retailers, many had to clear stock at up to 70% discount, so margins will have suffered.
Put simply, whilst the worst may be over, there is little 'new' out there to tempt shoppers back instore. Whilst unemployment remains high and recent pay cuts work their way through the system, value as expressed by low prices will remain important and shoppers will remain cautious. However, where retailers invest in adding 'value' through the shopping experience, the changes will be sure to catch the headlines and shoppers' attention - if only for something to get excited about!
For me, one store that demonstrates this forward thinking approach is the refurbished flagship Arnotts store in Henry Street. Now comprehensively updated with good store design, impactful VM and good customer services, it has a strong, clearly focused fashion offer with an impressive range of beauty, clothing and home brands.
Recent additions include a prominent space for George Davies' latest clothing brand, GIVe. The Conran Shop opened a concession in here in Autumn 2009, which sits alongside Natuzzi and Ligne Roset, creating an authoritative home furnishings offer.
Across the street from Arnotts, Debenhams has an impressive store in the Ilac Centre and whilst the site doesn't surprise in terms of design or VM (using familiar formula) it is delivered to a consistent and high standard.
Close by, but sitting out on a limb in O'Connell Street is Ireland's oldest department store, Clery's. With its magnificent, protected classical exterior, from the street it delivers a similar 'wow' factor to Selfridges on Oxford Street. But, that's where the comparisons end. In my opinion, the store seems to have lost focus in recent times, and clearly the recession hasn't helped here.
With a downbeat store interior, the layout looks cluttered and uninspiring with a dated VM style and tired appearance overall. Posters on the grimy upper floor windows promote a quality, value, service and choice message, but for me these were sadly lacking instore. Clery's is a perfect find for a benevolent retail investor to come and lavish a much needed store investment programme (and a lot of TLC) to re-invent this magnificent store. I think the potential is there even though the location is now somewhat off-pitch. If ever there was a case for better VM to help lead a retail revival - this is it!
Some of Clery's marketing messages seemed overly jingoistic and out of place in a country that's warmly welcomed European workers in recent years. This being the active promotion of Irish brands and products. Never slow to spot an opportunity, Dunnes Stores was similarly promoting a strong 'Buy Irish' message in its shops. I wonder how the remaining Polish, Czech and other workers view this stance?
In Dublin's smart Grafton Street area, I particularly like the M&S store. With its last refurbishment it successfully combines striking heritage architecture (being Brown Thomas' original site) with M&S's clean modern look, with a bold, confident and distinctive delivery - everything a leadership brand should be!
Speaking of Brown Thomas, the standard bearer for chic and style in the city didn't disappoint. In my opinion, recent work on the store has made it an even better place to shop. Individual branded areas are treated with imagination and flair to maximise their emotional value (and price premium) and give shoppers a lift from the gloom outside. Here, the international flavour of the brands was the key point of difference and very much appreciated by its consumers.
With the store's designer proposition and premium status, it shows how effective brand management requires long-term vision and support, along with the culture and commitment from management to maintain investment in both good times and bad to succeed. It's a message other businesses can learn from as retailers look for ways to secure a head start on the road to recovery and future growth.
As in many markets, the recession has been a stark reminder that there are no guarantees that businesses have a right to survive. In future, it's likely that shoppers are going to be harder to tempt, at least for a while longer. The shocks have been painful and are still too recent in consumers' minds.
From walking the streets of Dublin, it seems clear to me that if retailers here are going to enjoy a new renaissance or similar success to pre-recession times, they will need some big, fresh ideas, along with the confidence to deliver their ideas with crowd pleasing impact instore.
The same old, same old won't deliver the kick start to sales that's needed. Pulling on national strings will only have a limited, short-term sales impact at best. This will not be an easy mind set to adopt when survival may have been the most pressing thing on the agenda in recent months. But now it's time for retail leaders to lift their eyes and to see what must be done. Exciting times lie ahead I'm sure.