Tuesday January 13, 02:57 PM
Northern Irish border town enjoys rare retail boom
By Andras Gergely
NEWRY, Northern Ireland, Jan 13 (Reuters Life!) - Cathal Austin is a retailer under pressure; pressure to meet demand.
While recession rages around the globe, Austin's town of Newry in Northern Ireland has been totting up a mini-boom as bargain-hunters from the Republic of Ireland, clutching valuable euros, flock to pick up bargains in sterling.
Austin, whose customer numbers at The Quays Shopping Centre are growing by the minute, has had to hire extra staff as the pre-Christmas rush morphed into a busy January sales season.
'We had one Saturday when the whole population of Dublin seemed to descend on Newry,' Austin said.
Across the border and over the water, retailers in Britain and the Republic of Ireland are slashing prices to lure custom.
Woolworths (Munich: 886853 - news) , a bastion of the British high street, has gone under with the loss of 27,000 jobs and thousands more hang in the balance as New Year sales fail to take off for many.
In Newry, a once peripheral town ravaged by bomb attacks and shootings during the height of Northern Ireland's sectarian conflict in the 1970s and 1980s, there's traffic jams and a battle to find spare shopping trolleys.
The Quays attracted 7 million visitors last year, 17 percent more than in 2007 and more than the population of Ireland and the British province of Northern Ireland put together.
Roughly half the visitors came from south of the border.
The strength of the euro is a major draw. The single currency rose around 20 percent against sterling over the last two months of 2008 and despite some recent softening, still trades around 90 pence, more than 20 percent stronger than a year ago.
Austin said that even at levels above just 70 pence, Newry would still be doing well.
'When it's in and around the 80 mark it drives the retail business in Newry. It does not need to be around 90.'
But lower taxes and the cheaper cost of doing busy in the North have kept prices down generally.
'The devaluation of the pound against the euro is one huge factor in the amount of southerners that are coming,' Orla Jackson, chief executive of the Newry Chamber of Commerce and Trade, told Reuters.
'However, there is a huge difference in the cost of living between the two regions which is also making Newry more attractive.'
The Debenhams retail chain outlet in the Quays is now the fastest growing Debenhams (LSE: DEB.L - news) store across the whole of the UK, while its Sainsbury (LSE: SBRY.L - news) 's supermarket generates the highest sales anywhere in the chain, Austin said.
STOCK UP AS MUCH AS YOU CAN
Ireland's government is struggling to improve its economic competitiveness after years of economic boom inflated business costs.
Earlier this month, Dell (NASDAQ: DELL - news) , the world's No. 2 PC maker, cited high labour costs when it announced the transfer of its European manufacturing base from Ireland to a lower-cost base in Poland with the loss of 1,900 jobs and export revenues.
But while Ireland is facing its worst recession on record this year with a possible 4 percent contraction, the government raised its value added tax (VAT) rate last year by 0.5 percentage points to 21.5 percent to try and bridge a yawning budget deficit.
Britain cut its VAT rate to 15 percent from 17.5 percent.
'The cost of running a retail business in Ireland is radically greater than in the United Kingdom or indeed in another euro zone country,' said Torlach Denihan, director of industry body Retail Ireland.
Half of the country to the north of the line between Dublin in the east and Galway in the west is all within the catchment area of retailers in Northern Ireland, Denihan said.
'They won't go for their groceries every week, they will do maybe one or two shopping expeditions,' Denihan said.
Many of those living along the border do all of their grocery shopping and major purchases in the North despite criticisms from some southern politicians that cross-border shopping was unpatriotic.
'It's a no-brainer, is it, really?' said 49-year-old Willie Crawley in the centre of Dundalk, the next major town along the road to Dublin from Newry across the border.
'A friend of mine usually pays 200 euros for his groceries and he went down to Banbridge (in Northern Ireland) and got it for 87 sterling, which is about 95 euros,' Crawley said. 'Things aren't great around Dundalk, a lot of shops are closing down,' he added.
'At nearly parity, it's ridiculous,' said Cia Fox, a 43-year-old family therapist from the Irish border county of Monaghan after shopping at the Quays in Newry. 'Stock as much as you can, everybody is in there, going a bit mad.'
(Editing by Carmel Crimmins and Paul Casciato) Keywords: IRISH RETAIL/BORDER
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