The Government’s Budget 2019 should prioritise retail-focused solutions in order to protect the industry, as almost two thirds of online spend leaves Ireland, an industry body has urged.
Retail Excellence, Ireland’s largest retail representative body, warned that the recent figures on Irish online spend is impacting retail, town centres and the Exchequer.
Out of the €5 billion spent by Irish consumers online in 2017, €3 billion (60%) went to online retailers abroad, according to the new Consumer Market Monitor report published by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business school.
Getting Up To Speed
“Retail is evolving to the extent it is now boundary-less and that is precisely what we are seeing with the figures pertaining to online spend,” said Lorraine Higgins, deputy CEO, Retail Excellence. “We need to get up to speed as a country to counteract this through progressive, retail-focused measures and Budget 2019 presents an opportunity.”
Currently, three in four Irish websites are not e-commerce enabled, meaning that retailers can’t process payments on their sites leading to them missing out on online spend, according to Higgins.
“With over €600 billion estimated to be spent by European consumers over 2018 it is clear that further steps need to be taken to increase funding to get businesses online,” she said.
"Moreover, we have been long calling for State supports for retailers who are seeking to internationalise their operations like linguistic, logistic and network supports in new markets. With the advent of Brexit this need is increasingly acute.”
Price Disparity
“With the huge leak in spend out of the country and, plausibly outside the EU, it is virtually impossible for the authorities to intercept all parcels coming in from the various jurisdictions so this leads to unfair price disparity where VAT and duties have not been applied,” Higgins continued. “This clearly comes at a cost to the Irish retail industry but also to the Exchequer in lost VAT receipts”.
“Hence why we need to take progressive action and make those online platforms who are advertising such products jointly and severally liable for the collection of VAT and duties,” she continued. “This would not only ensure tax fairness but would also help with extra revenue collection for the State.
“We cannot ignore the evolution of consumer spending habits. If we do, we risk the 282,000 jobs dependent on the industry and retail failure which will rip the heart and soul out of town centres.”
Targeted Investment
Prof Mary Lambkin, author of the report, voiced similar concerns over Irish online spend leaving the country:
“The rapidly expanding labour market and rising incomes are two significant factors fuelling spending, however, a significant amount of retail spending is leaving the country.
“This is something that can be improved upon, but will require investment in websites and e-commerce platforms, as well as access to decent broadband infrastructure."
Pre-recession Levels
According to the report, retail sales on the whole were up 7% for the year with €40 billion in sales, levels equivalent to those before the recession.
This was due to increased number of people employed, increases in hours worked and a substantial surge in the amount of disposable income in the economy.
Disposable income of Irish households grew by 5% to €102 billion, up from the previous peak of €101 billion in 2007.
“It is great to hear the cash registers ringing again for Irish retailers, and signs are positive for continued growth,” said Lambkin.
© 2018 - Checkout Magazine by Kevin Duggan
