British department store chain Debenhams yesterday cut its profit forecast - the third time its done so in the past six months. The company is just one of many struggling British retailers who are cutting back, with others including House of Fraser, New Look and Marks and Spencer. Meanwhile other brands like Maplin and Toys R Us have disappeared from the high street altogether.
Mary Lambkin, Professor of Marketing at the UCD Smurfit School of Business, said the closures are partly a side-effect of Brexit but are also part of a broader, global trend. "There are many retail brands in the US, for example, that are struggling - mostly the traditional, big department stores like Sears, Macys and so on," she said. "The experience in the UK is being paralleled in a lot of markets and the majority of that really is the internet effect. A very high proportion, and an increasing proportion, is going online and just sucking out business from the high street," the Professor said.
The Brexit effect is exacerbating that in Britain, as consumer confidence - and in turn spending - has taken a hit since the country's vote to leave the European Union.
It is a slightly different story for Irish retailers, who are also dealing with the threat from online, but are benefiting from improved consumer sentiment and levels of disposable income. "The rise in disposable income and the strong consumer spending here is helping all businesses and certainly the retailers," Ms Lambkin said. "Even the branches of those British retailers are doing better here than they're doing at home in the UK. "But the online activity is still a factor, and an ever-growing factor for our retailers," she stated.
Ms Lambkin said that figures indicate a €5 billion online spend in Ireland last year, which is significant considering the fact that retail sales as a whole are worth around €40 billion. Much of that is also going overseas, meaning it is lost to the Irish industry, but Ms Lambkin says it is nearly impossible for Irish firms - especially smaller firms - to compete with digital giants.
"It's easy to be critical of Irish retailers or high street retailers everywhere, and say they are trying to be online but they're not doing a very good job at it," she said. "It's very, very difficult when you're up against the major players, the world leaders like Amazon, who sold $80 billion worth of merchandise last year. "For a small Irish retailer to be competing against the attraction of that is nearly impossible."
There are other ways for retailers to compete, however, even if going head-to-head might not be possible. "We need to think of retail - and it's the same with bank branches in a different way - it's an experience", Ms Lambkin said. "When people go shopping in town, for example, they're going in for a day out. They're not going particularly to purchase things. They want to meet friends, drink coffee, browse and maybe try things on. Retailers need to think of themselves as providing a shopper experience and they need to invest their money in making that experience exciting," she concluded.
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*** The value of digital currency bitcoin has fallen this morning after more than $30m worth of cryptocurrencies were stolen from South Korea's top exchange. It is the latest of many bitcoin thefts, which has raised concerns about the level of security in place on its online trading platforms. At around $6,600, the price of bitcoin is more than double where it was a year ago but it is down 66% on its mid-December peak.