Dáil debates
Wednesday, 21 February 2018
Topical Issue Debate
Retail Sector
2:25 pm
Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Deputy Kate O'Connell will raise the issue of the closure of the iconic retail outlet that was Waltons. Is it still Waltons?
Kate O'Connell (Dublin Bay South, Fine Gael)
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Yes it is still Waltons.
Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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If the Deputy feels like singing she could sing an Irish song, if she has time.
Kate O'Connell (Dublin Bay South, Fine Gael)
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I will not do that today, but with an extra minute I might. I thank the Ceann Comhairle.
I thank the Minister of State at the Department of Business, Enterprise and Innovation, Deputy John Halligan, for coming in to take this Topical Issue, which concerns the closure of Waltons music shop in Dublin city centre and the moving of its business to its Blanchardstown branch, having first opened its doors on North Frederick Street in 1922. It is many a block of rosin, a bow or a string I bought there in my time.
The decision to move was due to "ever rising costs of doing business in the city centre". This has been extensively covered in the media recently. I believe that physical, bricks and mortar retail shops are paying a disproportionate share of the overall basket of levies or costs placed on a physical business such as the commercial rates and VAT when these costs are compared to those of the online competitors. While some may be subject to rates for a warehouse the online competitor does not have to pay high street rates. In the case of a company based outside Ireland, for example, those rates would never hit Ireland's coffers.
We are not dealing with a level playing field. The burden is unfairly distributed on to the high street shop. The concept of rates sprang from a time long before online business existed and before online sales were even conceived. Rates are based on the principle that all retail transactions happen in a face-to-face environment. Obviously the traditional retailers need to embrace the changing environment but this legacy issue, this money that is going off their bottom line, puts them constantly on the back foot because their online competitors are starting off from a higher financial base. The high street businesses and those in the local villages are automatically at a disadvantage.
People's choices should not be inhibited. There is no doubt that many people will continue to shop online as they are entitled to do, and I hope that they do, but the choice of the retailer comes into question in this regard. Surely the choices are being made for retailers when there is a competitive disadvantage for the physical shop.
We must also consider the huge social and interpersonal value in having shops in a community. Members talk at length in the House about the value of pubs and post offices to the community. There is a dividend also for the community in supporting our retailers. Notwithstanding this there is also the importance of local employment. This matter is not about subventing the retail sector: it is about trying to help retail in this environment. I am not speaking of large companies: I am referring to the shops such as Waltons and the family businesses that have been in existence for some time. We can see the huge body of evidence from recent years that these businesses are not able to be sustained.
It is also very important to have a good mix of retailers on our streets. Anybody who has walked up Grafton Street recently can see the proliferation of large international companies coming in who are able to pay these rates. What has the Minister of State done and what is he doing to address these challenges to mitigate the loss of important contributors such as these retail outlets to the fabric of our towns and cities?
John Halligan (Waterford, Independent)
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I thank Deputy O'Connell for raising this very important matter. I too was disappointed to hear of the difficulties experienced by the iconic Waltons music shop. It is very famous for its musical instruments, but particularly famous for sheet music. Musicians would come from all over the country to buy there.
I recognise that retail is hugely important in the fabric of towns and communities the length and breadth of Ireland. Almost one in seven people in employment in Ireland is working in the retail sector and the vast majority of these are in small businesses.
The Minister for Business, Enterprise and Innovation, as the chair of my Department’s retail consultation forum, is engaging with retailers and retail representative bodies on the current key issues facing the sector, of which there are many. Through the forum, we are working on initiatives to both support retailers to build online capability and to enhance their cost competitiveness, and also to address the need for renewal of our town and village centres.
In 2017, the forum’s retail and town centre renewal working group published "A Framework for Town Centre Renewal", a reference document for stakeholder groups that sets out the key characteristics of a successful town centre and which identifies existing supports and best practice examples from around the country. It includes an action plan for town centre renewal which is intended to be a blueprint for towns and villages and to guide them through the three stages of town centre renewal: stakeholder engagement, carrying out a town centre health check, and preparing a town centre plan. Initiatives such as this are providing local groups with practical tools to make their town and village centres better places in which to work, shop and live.
It is important to note that the retail sector is currently undergoing a period of change as traditional modes of trading are accompanied by significant growth in online retailing, as we are all aware. The habits of consumers are changing and online retailing is rapidly becoming the norm. This rapid digital transformation of the retail sector and the competition from sophisticated international business models is a challenge to the domestic retail sector that needs to be turned into an opportunity. The internationalisation of retail means that Irish shops can now compete for business in a global market. Our support to the sector includes a focus on building digital capability within businesses in order to develop a competitive online offer to win back domestic sales and compete in the global marketplace.
The Deputy may be aware of the trading online voucher scheme, delivered by the local enterprise offices, LEOs, which was introduced in 2015 to provide training and matching funding to microbusinesses seeking to trade online. It is a very good scheme. It is a voucher scheme for businesses which have no more than ten employees, have less than €2 million in turnover, have been trading for at least two years, and are located within a local enterprise office's area. It is a pretty good scheme which appears to be working well. More than 1,200 vouchers were approved in 2015, some 1,140 in 2016, and a similar amount in 2017. Results from businesses in receipt of the voucher show that their sales increased by 20%, which is a dramatic increase.
To build on this, my Department is exploring the development of a pilot programme for the retail sector to support small and medium-sized retailers to scale up their domestic and international online trading activity. Through the retail consultation forum, a working group on skills for the retail sector is also looking at initiatives to assist with building digital skills capability in retail businesses. However, I also note that Walton’s music shop, which the Deputy referenced in her question, already has an online presence. In this regard, as a Government we must be mindful of the other issues, besides competition from online retailers, that are leading to businesses closing their high street premises.
2:35 pm
Kate O'Connell (Dublin Bay South, Fine Gael)
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I thank the Minister of State for his reply. He said that the trading online voucher scheme which is being run through the local enterprise offices is a very good scheme. Having talked to people on the ground about it, my understanding of the way the matched funding works is that the business comes up with €2,500 and the LEO gives them another €2,500. However, speaking practically, a business has to have €2,500 to begin with. There is also a lot more to online business than just the website, and I am not kidding about that. The maintenance of it is also an issue. If one multiplies 3,480 by €2,500, one is left with a large sum. Has anyone done an assessment of whether the scheme is working? It is my understanding, from talking to small businesses that fall into this category that people are paying the €2,500, going on the course and getting a website, but they are then left hanging in the sense that they do not know what to do next. Although I totally get that retail businesses must adapt or die, I am not sure that we are getting bang for our buck in respect of this investment. Are we looking at the outcomes of this investment or do we just have many small businesses which have online presences but which are not actually trading online?
John Halligan (Waterford, Independent)
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To refer back to the voucher scheme, it does offer financial assistance of approximately €2,500. It might be slightly more than that. I am not too sure. However, along with the financial assistance, it also offers advice and help to put businesses online. There are experts available to give advice to businesses. All I can say to the Deputy in respect of the voucher scheme is that it seems to be working pretty well and that the numbers involved have been increasing year on year. An assessment was carried out in respect of businesses which have participated in the scheme. As I told the Deputy, this assessment showed that their sales increased by 20%. I know that there is a lot more we can do, and we are attempting to do more. The Minister, Deputy Denis Naughten, selected Roscommon for a series of regional workshops on online trading for business owners. It is planned to take place in the next 12 months and will work its way around the country. It will be working with the local enterprise office in Roscommon.
I share the Deputy's concern about the impact of online retailing and other emerging factors on the high street, but we need to remember that, first of all, buyers and consumers look for easy access, product availability and value for money. This is all to do with competition. It is very difficult for us as a Government to take one side or another in a competitive section of the economy. I admit and accept that, as I said in my opening remarks, one in every seven people in employment in Ireland is working in the retail sector, the vast majority of these in small businesses. There is no question that we have to do what we can as a Government to help and support small businesses. We have introduced the Brexit loan scheme, we have retained the 9% hospitality VAT rate and we continue to reform the income tax system to put more money into people's pockets. There are efforts being made. All I can tell the Deputy on the voucher scheme is that it is working exceptionally well. Many businesses have taken it up but I accept that there is a lot more to do.