.IE Tipping Point Report 2022

Foreword Contents 1 Key findings 2 Insights 4 Section 1 Preparing for the post-Covid era 7 Section 2 The Covid consumer 10 Section 3 The Covid SME 13 Methodology/About The onset of the Covid-19 pandemic initiated a significant shift in the operations of traditional bricks-and-mortar businesses. Prior to 2020, SMEs were slow to embrace the potential of a fully integrated e-commerce website capable of accepting payments and fulfilling orders. Public health restrictions soon dictated the need for businesses to rely on their digital operations and, as a result, many SMEs began to pivot online for the very first time. This transition was coupled with the enhancement of businesses’ payment functionality, affording consumers a cashless experience that instigated a surge in the popularity of digital payments and the ‘cashless wallet’. This .IE Tipping Point report demonstrates these pandemic-era trends are unlikely to be reversed, with 62% of consumers reporting that they rely less on cash since the onset of the pandemic. Evidently, consumers have become accustomed to the convenience and flexibility offered by cashless payments, and businesses across the country have been steadfast in their response because robust payment infrastructure helps to keep Irish SMEs competitive in the global digital marketplace. Equally, while digital payment technology has proved invaluable for many businesses throughout the pandemic, concerns persist in the area of cybersecurity. Given that just one third of Millennials plan to do the majority of their shopping in-store, the need for businesses to implement adequate cybersecurity measures has never been more evident. High-profile security breaches have prompted a shift in consumer behaviour, with three out of every four respondents asserting that they are either ‘very’ or ‘somewhat’ concerned about the security of their personal information when shopping online. In addition, discerning consumers are increasingly concerned about their rights when buying goods online. The Irish Government has been proactive in enhancing protections in this area, with the Consumer Rights Bill 2022 providing for the extension of consumer rights over digital goods and services. As further digital legislation emerges, particularly in the realm of cybersecurity, it is crucial that industry stakeholders work in tandem to empower SMEs to offer effective protection to their customers, which will enhance the trust factor of their websites and lead to further sales. Lorraine Higgins Secretary General, Digital Business Ireland Over the past two years, we have examined Ireland’s changing attitudes to e-commerce and digital business. Covid has accelerated many of the emerging consumer trends and behaviours that we observed in 2019, and that acceleration has forced businesses to adapt the way they operate, communicate and sell. Our research demonstrates that a tipping point has indeed been passed. This report shows that consumers have fully embraced the convenience of online shopping; in response, most SMEs have been forced to adapt, digitally and increasingly attitudinally, transforming their static brochure websites into e-commerce hubs and planning investment in their online stores. There are very strong generational differences emerging in consumer attitudes to online and in-store shopping, particularly among Millennials and Gen Z, who are least likely to want to shop in-store this year. Cash, too, looks set to further decline in usage in the post-Covid era, although a quarter of SMEs still accept only cash, and fewer still plan any significant investment in new digital payment methods in the next five years. Even as Ireland phases out its emergency responses to Covid, SMEs are not returning to a market under normal conditions. Indeed, the winding down of restrictions will no doubt reduce the sense of crisis solidarity among consumers for local businesses, which has been beneficial to Irish SMEs. Covid-19 has broken the mould of professional services delivery by adding a digital component, which eliminates the non-productive parts of service delivery for both consumers and SMEs - queuing, paper handling, re-keying data, travelling to appointments - thereby boosting productivity and efficiency for all. However, as competition intensifies, this is precisely the moment for SMEs to invest in their digital presence. While a small business is unlikely to be able to match the likes of Amazon on price, it can invest in and consolidate areas valued by Irish consumers, such as customer service, delivery options, sustainable production, and an improved online experience. These USPs will ensure long-term survival and prosperity. As pandemic business supports are withdrawn and Ireland prepares for the post-Covid era, now is the time for national and local government decision- makers to provide funding to build out new, innovative digital strategies and programmes. These will enable entrepreneurs, SMEs and communities across the country to take full advantage of the digital business tools and applications that can provide productivity improvements, new market opportunities and increased e-commerce sales. David Curtin Chief Executive, .IE