Covid-19: Shoppers have moved online – will they stay there?

The scale of disruption faced by the retail sector since the beginning of March is hard to overstate. All shops, save for those deemed essential, were forced to close for months and then when they were eventually allowed to reopen, have had to limit the numbers who could come through their doors.

As if that wasn’t challenging enough they also had to introduce all sorts of consumer-unfriendly measures while, in the background, lurked the virus that has caused all the upheaval.

In such a climate it is hardly surprising that many people decided the shopping palaver and the risks associated with crowds – even controlled ones – wasn’t worth it, preferring instead to take their business online.

It is also becoming clear that while Covid-19 was the spur that pushed people into the online world, many are now there to stay while many are also very keen to shop locally as an act of solidarity.

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It is even clearer that retailers should now be doing more to take advantage of the goodwill towards them by developing better online marketplaces where we can spend our money.

A survey published last month jointly by the Irish domain registry company IE Domain Registry and Digital Business Ireland found that 74 per cent of shoppers surveyed have been put off by the queues, capacity limits and social distancing requirements encountered during the pandemic.

The Tipping Point report also found that when – let’s say when, rather than if – Covid-19 is brought under control, 48 per cent of consumers surveyed say they will do the bulk of their shopping in physical stores while 11 per cent will continue to do most of their shopping online. The remaining 41 per cent will opt for a combination of both.

Consumers who said they would mostly shop online cited safety and time efficiency as their reasons while those who said they would prefer to shop mostly in-store cited convenience and a desire to go outside and be social. There are merits to be found on both sides of that fence.

An interesting part of the Tipping Point research suggests that the pandemic has seen a swing towards Irish ecommerce sites. In recent months more people than was previously the case looked to shop with locally-owned businesses. They said they were prompted by a sense of solidarity.

While international businesses are the first ones to benefit from any increases in Irish consumers’ online spending, the Covid-19 crisis has been different and consumers estimated that since the crisis began, 53 per cent of their online purchases were from Irish businesses compared to 48 per cent before.

Over two-thirds of consumers who had done most of their online shopping with Irish businesses stated that they wanted to help Irish small and medium enterprises (SMEs) through the crisis. Other factors played an important role. Online Irish businesses are seen as faster and more reliable than international ones, and more trustworthy.

In a somewhat gloomy prediction, the report concludes that the swing to Irish retailers trading in the virtual world will most likely be reversed once the economy returns to “normal” and people believe solidarity is no longer so important.

"Sustained online spending has been one of the few good news stories for Ireland's Covid-19 economy. Our research shows a swing in online retail sales away from international retailers, which have traditionally dominated Ireland's €16 billion annual ecommerce spend, to Irish SMEs. This is an important milestone," the chief executive of IE Domain Registry David Curtin said.

“This swing, welcome as it is, is not necessarily a permanent one, and this is an important point for business groups and the Government to consider as the country begins its economic recovery.”

Rosie Gogan-Keogh is the managing director of Hen’s Teeth Studio, a virtual and physical marketplace selling an eclectic combination of art and homewares and she is determined to take advantage of the shift in consumer behaviour to grow her business. For its online offering, it commissions and curates original and limited-edition contemporary and affordable artworks such as like prints and ceramics. It also sells clothing, homewares and books.

“We work with about 50/50 Irish and international artists and have always viewed our business as distinctly Irish but that it could sit comfortably anywhere in the world,” she says.

“If you lifted our store and plonked it in another city, it would still make sense. We’ve seen this international appeal from day one with our global online sales.”

She says April and May were her site’s busiest months since it launched more than four years ago.

“What was really noticeable was how many people wanted to shop locally although we also saw a massive surge in our international business too,” she continues. As Ireland and other countries exited the lockdown the surge eased somewhat but she believes the next step for Hen’s Teeth is to “double down and push the online marketplace. We have seen its enormous potential both locally and globally”.

More people with the same vision are needed in the Irish online marketplace as it is clear from the digital registry’s research that while online spending is becoming the norm, just 25 per cent of SMEs sell in that space leaving an enormous number who are still relying on the old bricks and mortar model. It is something they may end up paying a high price for in the years ahead.

FUNDING SCHEME

Late last month, a new scheme aimed at helping Irish businesses develop their online presence was rolled out with grants of up to €40,000 available to retailers, but time is running out for people to apply.

The €5.5 million Covid-19 Online Retail Scheme was announced in the Government's July Jobs Stimulus package but the application process has only opened just over a week ago. The fund is being administered by Enterprise Ireland, on behalf of the Department of Business, Enterprise and Innovation.

Targeted at indigenous retailers who already have an online presence, it is hoped that the fund will allow retailers respond better to both domestic and international consumer demand. The grant can cover of up to 80 per cent of an online project’s costs and will range from €10,000 to €40,000.

"The Government has been listening to retailers across the country and it is clear that the Covid-19 pandemic continues to make it an urgent priority for businesses to accelerate the growth of their online offering, said the Minister of State for Business, Employment and Retail, Damien English.

He called on retailers to seize the opportunity to “significantly enhance their online shop fronts and complement their traditional presence” and expressed the hope that not only would a better online presence lead to more customers and increased revenue it would also provide “consumers with more opportunities to support local businesses in their community, even when shopping online”.

The Great Outdoors, a Dublin shop which specialises in sports and adventure equipment, was one of the retailers who applied for a grant in a previous round of the funding and its owner Derek Moody said the opportunities the scheme presented to his business had been "eye opening". Prior to applying to the scheme he said, "online business was already very important to Great Outdoors. However, we were at a stage where significant investment was required to take the business to the next level".

The Covid-19 Online Retail Scheme closes for applications on Monday, September 28th at 3pm. See enterprise-ireland.com and a webinar is being held at 11am on Monday, September 8th for interested parties.

ONLINE SHOPPING: THE BEST AND WORST

Last week we asked Twitter users to identify the best and worst things about online shopping. These are just a selection of the responses.

Best: not dealing with rude people and bad customer service, plus eejits with noses hanging out of their masks. Worst: not all brands are online and not being able to see the real size and colour of items. Plus the wasteful packaging. – Darryl Bannon

Best: Doing the extensive research to get the best stuff, the rush when you take it out of the box, satisfaction when it lives up to expectation. Worst: Did I buy this out of boredom? Why did I blow money on this thing I don't need? Why is it taking so long to arrive? – Ian Collins

Best: It's convenient, easier, safer & in some cases saves money. I never enjoyed busy shopping centres anyway. Worst: But the packaging! Why so much? The transport? It does give me the environmental guilts. Also I try to buy Irish but more shops need to get online. A guilty pleasure. – Aisling Flynn

Best: Ordering stuff for other family members so they got "a package" in the post. Went down really well during the lockdown. Worst: Not being able to try things on and can be a pain doing returns. – Alan Kinsella

Best: Discovering new shops and brands, less impulse buying and getting on first-name basis with delivery guy. Worst: My bank account. – Jeanie McGrath

Best: Much safer way to shop during Covid and a way to support small and Irish businesses. Worst: The packaging and waste of paper/cardboard. – Antonina Ní Dhuinn

Best: I don't have to leave the house, I don't have to pay for parking, I don't have to queue outside a shop, I don't have to social distance. I'm keeping An Post busy. Worst: My dogs go mental at the postman. It's doing little for the local economy. – Áine Gannon

Best: It's delivered to my door. Worst: Having to get up to answer the door. – Johnny Fallon

Best: I like that I can do it from my kitchen table and during lockdown it was very exciting knowing you had a parcel arriving. Worst: I don't like not being able to feel the product and check the size and I actually hate sending the stuff back, it's a trek. – Claire Ronan

DINE-IN DELIVERIES

Not only has online retail seen a surge in business as a result of the pandemic, restaurants have been benefiting from increased online orders with hot boxes on bikes whizzing across all urban centres in the country now an everyday sight.

During lockdown, thousands of closed restaurants across Ireland pivoted from dine-in businesses to reopen as takeaway and delivery food businesses and over 60 per cent us ordered food from restaurants and takeaways during lockdown.

It has been one of the few good news stories of the crisis so far but, according to a survey published today, the news is not, perhaps, as good for the restaurants as we might think it is. One of the main ways food gets from restaurants to our front doors has been via delivery companies, notably Just Eat and Deliveroo. Such companies took in an estimated €75.2 million in just 12 months according to market analysis.

The money has come from restaurants who pay them a substantial commission.

The research from Amarach, commissioned by Irish digital food-ordering business Flipdish and published today shows that 77 per cent of people are unaware restaurants can be charged up to 30 per cent commission per order by online food delivery companies.

Flipdish is an app that connects restaurants with customers and competes in the sector with the delivery companies. The survey also found that nearly everyone surveyed thought fees of that level are unfair.

The chief executive of Flipdish, Conor McCarthy, said that while people wanted to support local businesses by ordering food online, they could ensure more money went directly to the restaurants by ordering directly from them.

“[There is] A welcome shift in Ireland towards more conscientious decision-making when it comes to spending money locally and ordering directly from restaurants. Restaurants having control over their digital ordering system [using Flipdish] which also allows them to control customer data – allowing them to directly target return customers with marketing promotions and loyalty programmes,” he says.

It does not, however, solve the problem of how the food gets from restaurant to customer and so there is still going to be a role for delivery companies. Although maybe it would be better for us all if we were the ones cycling to collect our takeaways from the restaurants we love the most. It would certainly be better for our waistlines.