Irish high street battles digital commerce boom

The Irish high street will be at a disadvantage compared to online shopping until a broader vaccine rollout occurs, new research from IEDR and Digital Business Ireland indicates.

Nearly three-quarters (71pc) of consumers say they will not feel comfortable shopping on their local high street until a number of conditions are met.

According to a new research report published today (10 March) by IEDR, the company that manages Ireland’s .ie domain, in partnership with Digital Business Ireland, just 23pc of consumers are currently fully comfortable shopping on their local high street.

“More businesses anticipate that consumers will spend online as well as offline, and that fewer will do most of their shopping in bricks-and-mortar stores”

The 2021 .IE Tipping Point report, Irish e-commerce and digital business in the Covid vaccine era, the second in a series of reports analysing consumer and SME behaviour and attitudes since the pandemic, shows that 28pc will not feel comfortable until Covid cases are much lower than they are now.

The research shows that 27pc will not feel comfortable until vaccines are available to the general adult population, not just at-risk groups.

16pc would prefer to wait until the government declares that social distancing and masks are no longer required, while 6pc say they will never feel comfortable shopping in-store on their local high street ever again.

Overall, just 45pc believe that life will return close or completely to pre-Covid normality by the end of 2021. The other 55pc believe that life this year will be more or less the same as life in 2020, or even more restricted.

“While vaccines offer Ireland a way out of lockdown, until a critical mass is reached and the population is immunised, our economy and society are set to remain in a state of flux,” said David Curtin, Chief Executive of .IE. “This flux is accelerating major trends in how consumers spend and how SMEs sell their goods and services.”

2021 online shopping boom will be bigger than 2020

68pc of consumers reported spending more online in 2020 than they did in 2019.  Looking ahead, 58pc will prioritise online shopping over in-store shopping in 2021, up from 52pc last year. 42pc of consumers said they will do most of their shopping in bricks-and-mortar stores this year, down from 48pc in 2020.

Among consumers who say they will do most of their shopping in physical stores in 2021, 61pc said it is more convenient. 39pc said they will shop mostly in physical stores because it is a chance for social interaction and to go outside; interestingly, this figure has dropped from 55pc in 2020, presumably as cases have increased since Christmas.

For those consumers who said they would do most of their shopping online, social interaction had the exact opposite effect: 66pc said shopping online is safer and means less social interaction. 52pc say it is more convenient and 46pc say it saves them time.

The 2020 .IE Tipping Point report, published last summer, showed that 53pc of consumers reported doing the majority of their online shopping with Irish SMEs since the start of the pandemic, compared to 47pc from international retailers. The 2021 report shows that this figure has now swung back to international retailers: 49pc now say they have done the majority of their shopping with Irish SMEs since the start of the pandemic, 51pc with international retailers.

“Irish consumers want to support local businesses through a difficult period, but SMEs can’t expect that goodwill to last forever. A stable, long-term e-commerce strategy cannot be built on crisis solidarity alone,” said Mr Curtin.

“Irish SMEs have a number of unique, competitive advantages that consumers recognise and value, namely trustworthiness, reliability, and delivery speed. SMEs need to focus on these factors, on honing the customer experience online and off, rather than trying to undercut overseas retailers on price and range.”

SME hitch their wagons to digital

Almost a third (30pc) of SMEs now claim to sell a product online in some way (either through a website or third-party platform), up from 25pc in 2020. Almost 9 in 10 of that group say they have noticed an increase in their online sales numbers since the Covid pandemic began.

“Unquestionably, the future of business is ‘omnichannel’, with a physical and digital footprint”

The number of SMEs that have invested in their online presence has increased dramatically since last year.

Now more than half (55pc, up from 21pc in 2020) claim to have spent money on improving their digital platforms, with most either launching or improving their website. 78pc of SMEs say that they are busier than or as busy as before the pandemic because of their online investment, up from 46pc in 2020.

61pc of SMEs say their online services will be more important to their business in 2021 than they were in 2020, and 79pc will continue to invest in them this year. It is clear that a greater number of Irish businesses accept that their business model is likely to be permanently changed by the pandemic.

“A growing number of Irish SMEs recognise that having an online presence is absolutely crucial to their business’s survival,” said Curtin. “Compared to last year, more businesses anticipate that consumers will spend online as well as offline, and that fewer will do most of their shopping in bricks-and-mortar stores. This knowledge of consumer trends is positive news for these businesses and for the Irish economy overall.”

Lorraine Higgins, Secretary General of Digital Business Ireland, a .IE Tipping Point report partner, added: “Unquestionably, the future of business is ‘omnichannel’, with a physical and digital footprint. It is important to stress that these concepts are not mutually exclusive; what’s bad for one permeates the other. Therefore, adequate policy responses are needed to ensure a robust shopping landscape where online and bricks-and-mortar co-exist.”

Curtin said it was crucial that local and national decision-makers consider shifts in consumer and SME behaviour during the pandemic when planning digital policy for the country’s post-Covid economy.

“The pandemic is a continuum, not a standalone event. Shifts in consumer and SME behaviour are still occurring, some now at a faster rate, others slower. From a digital perspective, it is clear that the pandemic is having an accelerant effect,” he said.

“Behaviours and ways of working that boost sales, cut costs, or increase convenience are likely to become permanently ingrained. Policymakers must consider these factors if their digital development plans are to be effective in the Covid vaccine and post-Covid eras.”

By John Kennedy (john.kennedy3@boi.com)

Published: 11 March 2021