http://www.businessweek.com/news/2013-01-29/bono-is-no-match-for-retail-slump-hitting-dublin-s-fifth-avenue

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Bono No Match for Retail Slump Hitting Dublin’s 5th Ave

January 30, 2013

Bono Is No Match for Retail Slump Hitting Dublin’s Fifth Avenue

Peopl walk along Grafton Street, the main shopping area of Dublin, in Ireland. Photographer: Peter Muhly/AFP via Getty Images

Darren McCarthy is learning one thing from Ireland’s economic woes: how to be a salesman.

“Before the crash you didn’t have to sell,” said McCarthy, 31, as he took a break from his job in a fashion store on the corner of Grafton Street in Dublin. “People came in looking for a shirt to wear and left with jeans and a coat too. Now you have to work hard to sell.”

For many Dubliners, the thoroughfare is still the heart of the city, equivalent to Fifth Avenue in New York or Oxford Street in London. Each Christmas Eve, crowds gather to hear U2’s Bono perform for charity. Yet now the stars have left and the lights have come down for another year, the scars of Ireland’s crash are starting to show.

Retail sales fell 1 percent in December from a year earlier, the country’s statistics office said this week, as falling spending puts a brake on Ireland’s economic recovery.

More vacant units are appearing on and around Grafton Street as the area suffers post-Christmas closures. As doormen wearing top-hats usher shoppers into Brown Thomas, a department store selling handbags for as much as 7,000 euros ($9,440), others, including HMV Group Plc (HMV)’s outlet, are closed.

“There is no question that people are having to make further cuts,” said Austin Hughes, chief economist at KBC Bank. “It is progressing further along the food chain. There’s an issue for businesses right across the spectrum.”

Buying Online

The decline is more pronounced than across the Irish Sea in the U.K. December retail sales in Britain rose 0.3 percent from a year before, with a record proportion of purchases over the Internet. So far in January, HMV, Britain’s biggest seller of CDs and DVDs, movie rental chain Blockbuster Entertainment Ltd., and camera seller Jessops all entered administration.

Irish retail sales have fallen by about 20 percent since 2008 as home prices plunged, unemployment almost tripled and the government raised taxes and cut spending to narrow the largest deficit in western Europe. In a sign of the testing times, less than 10 percent of retailers are planning pay increases this year, Retail Excellence Ireland said today.

“The vast majority of retailers who are freezing pay in 2013 are currently struggling with significant operating costs and decreasing consumer demand,” said David Fitzsimons, the head of the group. “Some retailers will have to actually reduce pay and restructure in order to continue trading.”

Different Place

The fallout is being increasingly felt around Grafton Street, which had so far been immune from the worst of the crash. Since Christmas, the Apollo Gallery, which sold art by Rolling Stones guitarist Ronnie Wood, has closed, along with the landmark HMV store, adding to closures of shoe, clothing and book stores over the past two years.

“It’s such a different place now,” said David Tee, a teacher in his 40s who returned to Ireland in the 1990s when the economy was growing faster than anywhere else in western Europe. “It’s depressing is what it is,” Tee said, standing on the street. “It’s just so quiet compared to its heyday.”

Paddy Coughlin, a 34 year-old Dubliner, opened Rare Clothing Co. on Dawson Street just off Grafton Street four months ago. He specializes in second-hand designer clothes.

“It wouldn’t have been possible to have been on this street selling this during the boom,” said Coughlin. “It’s been tough going, though.”

Spreading Pain

The pain has spread from other parts of Irish capital. Across the River Liffey, Gordon Brothers in September bought Clerys department store on O’Connell Street from receivers appointed by Bank of Ireland Plc.

About one in eight stores around the city’s retail core spanning both sides of the river were empty in the second half of last year, Dublin realtor Lisney said.

And a pick-up in retail sales may be some time away. Taxes are still rising, unemployment is showing little sign of dropping from about 14.6 percent, and one in four mortgages is in trouble. Lisney forecasts that discount stores will continue to “aggressively” expand as others close.

“The retail vacancy rate will rise,” said Fitzsimons at Retail Excellence. “The consumer is under pressure and there is a trend of a move away from the center to out of town.”

To contact the reporter on this story: Colm Heatley in Belfast at cheatley@bloomberg.net

To contact the editor responsible for this story: Dara Doyle at ddoyle1@bloomberg.net


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