Winners and losers in an intensely competitive economy

Companies are taking advantage of buoyant levels of market confidence; however this is balanced with challenges caused by rising energy, overhead and supply costs, new competitors and difficulties recruiting appropriate skills.

As a result, while 83% of businesses continue to hold their ground or to grow, there has been a 50% increase over the year in the number of businesses that are struggling (12% in Q1 2016 to 18 in Q1 2017).

Those facing the greatest competitive challenges are in the ‘retail, distribution & other services’ sector and the construction sector, where 27 and 24 of businesses respectively describe themselves as reducing, surviving at all costs or winding down.

In these sectors, many businesses are more likely to face challenges dealing with rising costs either in absorbing them or passing them on in the face of intense competition.

Micro-businesses are also finding it more difficult to compete, with 20% reporting difficult conditions compared with only 4% of firms employing more than 50 people.

Larger companies and those that export are also more likely to be growing (62% and 55% respectively) compared to around a third of micro-firms (35%) and non-exporters (32%).

However, the findings of the Q1 Business Monitor also reveal a strong level of business and consumer confidence.

A greater number of firms are reporting a growth in sales in Q1, up from 59% last quarter to 63%. Across all sectors more businesses have increased their employment than reduced staff numbers, and looking ahead confidence remains positive.

“The results from the Q1 Business Monitor show the economy remains buoyant but operationally challenging, with many counter-balancing issues to deal with,” said Aidan Gough, director of strategy and policy at InterTradeIreland.

“InterTradeIreland’s message is simple, while we recognise the pressures facing small business owners dealing with the here and now, there is, nevertheless, a window of opportunity that must be grasped to prepare for the challenges and indeed the opportunities that will be presented by a new cross-border trading relationship set to emerge over the next few years.”