Harvey Norman has 14 stores in the Irish Republic, which has a population of around 4.3 million people.

When Harvey Norman announced its entry into the Irish retail market in November 2002, the company stated that “all indications are that this venture will be successful, similar to the entry into the New Zealand market in 1997.”
 
From the initial two stores that opened in Dublin in 2003, Harvey Norman’s Irish network expanded to 14 stores as the country’s economy became the envy of many of its European neighbours.

Last week at the company’s annual general meeting, chairman Gerry Harvey described the Irish business as a “catastrophe” and a “bad mistake” to open there.

"If that situation was in Australia, Harvey Norman would go broke. Ireland is a real worry,” he said. “I’ve never seen something get belted like Ireland.”

Harvey said the company would not pull out of Ireland because it was “too big an investment.”

In September, Harvey Norman announced an 18% fall in profit for two months to August 31 as losses started to mount from its Irish operations.

From ‘abysmal’ to ‘catastrophic’ 
In August, Harvey reported a six-month loss for its operations in Ireland of A$12.8 million, which Harvey described at the time as "abysmal".

Ireland’s retail sector is not looking any brighter as the country’s unemployment rate rises against a backdrop of falling consumer confidence.

While services spending has held up reasonably well so far in 2008, spending on goods, as evidenced in the monthly retail sales figures from the Central Statistics Office, has fallen off sharply.

According to the latest figures for September, total retail sales are down over 6% cent on 2007 levels in volume, or price-adjusted, terms.

While all sectors have been exposed to falling sales volumes, some have been worse hit than others. Sales of household goods, such as furniture, electrical and hardware products, are down almost 15% in the year to September.

“This is a direct consequence of the weakness of the domestic housing market, which has seen house completions declining from 78,027 last year, to an estimated 48,000 in 2008. Given the further fall in completions forecast for 2009, the outlook for sales of housing-related goods remains poor,” according to Ulster Bank economist Lynsey Clemenger.

Clemenger said no single factor explains the reining in of consumer spending across a broad array of retail sectors.

Modest growth in 2010 
“The decline was prompted by rising energy and food prices, the sharp slowdown in domestic and international economies, and low consumer confidence. While the last factors remain prevalent, inflation is now falling and is set to turn negative in 2009 as mortgage interest rates and energy and food prices fall further,” she wrote in a column in The Irish Times.

“However, the outlook for retail sales and consumer spending is even worse in 2009,” she added. “At this stage, we are pencilling in modest growth of half a percent in consumer spending in 2010.

“Taken together with an improved investment and export performance, this should see Irish growth turning positive again in 2010, albeit at a more modest pace than we have become accustomed to in recent years,” Clemenger said.