Post-Christmas lockdown led to collapse in discretionary spend

A collapse in discretionary spending due to fresh lockdown measures was behind a by 3.9 per cent reduction in retail spend in Dublin during the first quarter of the year compared with the previous quarter, new data shows.

The Government re-introduced Level 5 lockdown restrictions in the early part of the year following a massive spike in Covid-19 cases due to the relaxation of public health measures over the Christmas period.

As a result, discretionary spending dropped by more than 20 per cent in the quarter compared with the final quarter of 2020 as all but essential retail was closed, the latest MasterCard Spending Pulse shows.

The pulse, which encompasses data from all four local authorities in the capital, shows household goods spending was the strongest performer in the quarter as it rose by 8.5 per cent.

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However, this growth rate was weaker than the equivalent rate for the final quarter of 2020.

Expenditure on both necessities and entertainment remained stable in the first quarter, albeit at polar opposite levels of performance given the restrictions which applied.

Ecommerce, which may have benefitted from the lack of in-store post-Christmas sales in Dublin, maintained an upward trajectory with growth of 4.4 per cent.

On a year-on-year basis, retail spending in the capital contracted by 4 per cent. This was primarily driven by declines in discretionary (-57 per cent) and entertainment (-69.1 per cent) spending.

Lockdown measures were first introduced in the Republic in the run-up to St Patrick’s Day last year, which was towards the end of the first quarter.

Necessities expenditure was up by 8 per cent year-on-year. Household goods expenditure, which is often considered to be a bellwether for consumer confidence, increased by 7.6 per cent year-on-year.

Ecommerce continued to benefit from a “perfect storm” for online sales over the past 12 months with growth of 45.1 per cent.

Meanwhile, tourist spending in Dublin and across the Republic remained at a very low ebb in the first quarter of the year. All markets posted significant year-on-year declines as travel restrictions limited international tourism.

"The introduction in April of mandatory hotel quarantining for individuals travelling from or via a collection of over 70 countries will have done little to improve the situation in the second quarter of this year," Dublin City Council said.

Michael McNamara, global head of Spending Pulse, MasterCard, said sales activity decelerated across all sectors in the first quarter of the year.

“Sectors, like discretionary and entertainment that had already been experiencing declines fell under more pressure in the quarter,” he said.

“Spending on necessities and household goods that had been increasing and helping to offset weakness elsewhere saw sales growth moderate. This adds up to a negative aggregate growth rate for Dublin as well as negative growth for Ireland overall.

“On the positive side, it is likely that we are seeing the light at the end of the tunnel. Recent easing of restrictions in the second quarter is a very welcome sign and should help boost domestic spending.

“Tourism spending in Dublin and Ireland did not move much in the first quarter as travel restrictions continued to freeze spending. As vaccination programs proceed in key markets such as the US, there is optimism that spending could pick up in the second half of the year.”