Dublin's top shopping area may see Lidl replace Habitat

PROOF THAT the recession really has arrived may be evident from the fact that a fashionable Habitat store near the bottom of Dublin’s Grafton Street could be replaced by a Lidl discount supermarket.

The German discounter is one of only two businesses – the other is an overseas bank – pitching for the lease of the massive store in Dublin’s most fashionable shopping area.

Lidl and its fellow discount chain Aldi are believed to have seen a significant increase in business since the effects of the credit crunch on the economy have become apparent.

Their turnover has also been greatly helped by the National Consumer Agency’s recent survey, which found that a basket of 28 own-brand goods was more than 50 per cent cheaper in Lidl than in Tesco or Dunnes Stores. Tesco is now preparing to launch a new range of own-brand products to slow down the defections to the Germans.

The current moves by Lidl to break into the top end of Dublin’s retail market will be seen as a major change in policy by the Germans since they opened their first stores here in 1999. Up to now they have largely targeted rural towns and immigrant and working-class areas of cities.

However, Lidl is apparently trying to get the Habitat lease without having to pay the receiver key money of €2 million. This figure is well above the going rate of €400,000 to €700,000 generally sought for the leases of good-sized premises on Grafton Street.

Garvan Walsh of estate agents Kelly Walsh, who is advising the Habitat receiver, said he was still confident of securing a substantial premium for the lease of the 2,750sq m (29,600sq ft) premises. The store has an annual rent of €1.3 million.

Several leases now available on Grafton Street have been slow to sell because of the downturn in consumer spending this year.

Equally, attempts to find investors willing to pay €42 million for two adjoining business premises – the Richard Alan clothes shop and the adjoining Zerup building – have proven unsuccessful, and will not have been helped by a prediction from property advisers CB Richard Ellis that business premises on the high street will only sell when values have been cut by 50 per cent.

Lidl is not the only big-name trader to have checked out the former Habitat store. Nearby trader Avoca looked and left, and despite careful preparations and lots of promotional work to attract the American clothing giant Abercrombie, its advisers did not waste much time on the exercise.

Not only was the Habitat store unsuitable but they told their surprised hosts they would not open a store anywhere near Grafton Street because of its poor image and unattractive mix of shops.

So much for Dublin’s main high street.