A NEW RETAIL survey has shown that 68 per cent of traders have received rent reductions as a consequence of the slowdown in consumer spending in recent years.
The balance of 32 per cent of respondents were either refused rent concessions or did not ask for them.
The survey was carried out by estate agents Jones Lang LaSalle (JLL) among retailers trading in the Republic with 700 separate outlets. About 55 per cent of the respondents have less than five separate branches.
Stephen Murray, retail director of JLL, said that on drilling deeper into the extent of rent reductions received, 68 per cent of respondents said their rent was cut by over 20 per cent and more than half of them reported reductions of at least 30 per cent. He said that notwithstanding the fact that close to a third of occupiers had no rent reductions, there seemed to be a reasonable level of engagement with landlords.
Questioned about the sustainability of their retail businesses and sales trends in the current year, the traders were split 50/50 on future prospects. Half of them were expecting a fall off in turnover, while the remainder were projecting that sales figures would either match or exceed those for 2011. Murray said that the comparatively even split would suggest that we may be close to the bottom of the cycle with turnover trends beginning to stabilise.
Responding to questions as to whether they were likely to reduce or increase store numbers, 62 per cent confirmed their intention to either stay the same or reduce store outlets. Of the 38 per cent who are considering expanding, one-third intend opening up two further outlets this year. About 52 per cent of the retail companies surveyed had less than 50 employees and only 15 per cent employed more than 300 staff.
Not surprisingly, the level of online retail sales was exceptionally low, with 58 per cent of respondents advising that there were absolutely no sales online and 89 per cent disclosing that the level of online sales in Ireland was less than 5 per cent of total sales.
Traders planning to expand were asked in the survey to rank the most important issues before deciding on a site. In the current tight market, it is hardly surprising that 94 per cent ranked total rent as the most important factor. The next most important criteria was the flexibility that comes from a short lease length or tenant break options. With set-up costs for new businesses difficult to fund through traditional banking sources, rent-free packages was advanced as the third most significant criteria. Other issues raised among the top five factors were service charges and local authority rates.
Murray said that while there was a wider sentiment of negative March trading figures, the prognosis on like-for-like sales suggested that retailers were finally beginning to see a stabilisation in the level of trade.