Digital economy continues to accelerate
- Virgin Media report -
Online consumer spend to double in five years to €14.1 billion
Multi-billion euro opportunities being missed by Irish retailers
Digital winners will be the companies who best understand customers’ emotional response to technology
Wednesday 21st September 2016 - The Virgin Media Digital Insights Report has forecast a near doubling in online consumer spending in Ireland to more than €14 billion annually between now and 2021, with significant opportunities for Irish SMEs in the process.
You can check out the report online at VirginMedia.ie/Insights
- The digital economy is now worth around 6% of Ireland’s GDP
- 94% of Irish internet users shop online
- Online shopping spend has increased by 13% to €7.5 billion over the past two years - greater than the 9% growth in overall consumer spending in the same period
- Average online spend has grown by 13% since 2014 to €80 per month per person
- About 60% (€4.5bn) of Irish online shopping currently goes abroad. If consumer spending continues on the current trajectory, that could rise to €8.5bn by 2021
- Consumers would demand compensation of €390 per month if their broadband service was removed (more than tripling from €130 in 2014).
The report also found a significant change in the reasons for buying online rather than in store:
Reasons to purchase a product or service online rather than in a store:
The product is not available in local shops
I can get it online at a lower price
More convenient to purchase online
The research was carried out on behalf of Virgin Media by Amárach, across a representative sample of 1,000 adults throughout the Republic of Ireland, exploring their experiences, behaviours and intentions in relation to the digital future.
Commenting on the Report, An Taoiseach, Enda Kenny T.D., said:
"I very much welcome Virgin Media's Digital Insights Report 2016, which provides very useful insights into current digital trends in Ireland, and highlights the significant opportunities for Irish businesses in an expanding digital economy, which is now worth around 6% of Ireland’s GDP. It is clear that the digital economy is growing at a very fast pace and it is essential that Irish businesses, in particular SMEs, capture this increasing market.
“This report clearly highlights the huge opportunity for Irish businesses to increase their share of online sales. Taking the leap to trading online can be a big step for many Irish businesses. It is important that businesses are encouraged to trade online and to maximise the opportunities of the digital economy. Supports are in place to help, including the Trading Online Voucher Scheme, which was launched in 2014 as part of the Action Plan for Jobs and provides matching funding to establish an online trading presence."
Tony Hanway, CEO of Virgin Media said:
“This is our third Digital Insights Report since 2012 and it shows how rapidly the Irish digital landscape is changing.
“The report found that Irish people place a very high value on digital technologies with a significant consumer surplus built into the compensation they would require if their broadband service was not available tomorrow. This is testament to the major extent that digital technologies have become central to daily life in Ireland.
“Ever increasing numbers of Irish consumers are shopping and using services online. This is seen in the increase in spending over the last two years and the projected forecast for online consumer spending to grow from €7.5 billion to €14.1 billion in 2021.
“Irish websites account for just 41% (some €3.1 billion) of Irish online purchases, with a further €4.4 billion euro being spent offshore. If that trend continues to 2021, over €8 billion euro in goods and services will be bought offshore at that time. This represents a significant potential loss of trade to the Irish economy and Irish businesses.
“With online spending by Irish consumers set to almost double in value in the next five years, there are opportunities for digital-savvy Irish SMEs and start-ups to capture their share of the fastest-growing sector in the economy, but they have to act fast.”
The Digital Lives section of the report looks at the psychological, social, and emotional impacts of increasingly pervasive digital technologies and draws important conclusions for society and industry.
There are some very positive results in relation to the impacts of digital technologies, such as the internet and smartphones on areas of our lives including work and study, but decidedly more mixed outcomes when it comes to personal relationships.
Among the key findings were:
- Some 53% of respondents felt that digital technologies helped them with their work while 71% said they helped with studying and learning new skills
- 39% of respondents believed that digital technologies helped relationships with current or previous partners; 30% found them a hindrance
- Just 24% said they helped with intimacy while 37% said they hampered it
- 32% said that technologies were an obstacle to relationships with their children and 33% saw them as an aid
- 49% of respondents were worried about the impact of digital technology on their privacy
- Overall, 65% of respondents said they felt more connected to family through digital communications
Virgin Media CEO Tony Hanway concluded:
“While people are comfortable and knowledgeable with digital technologies, a clear value proposition needs to be offered before they will adopt them.
“One of the biggest challenges to SMEs, start-ups and even large companies in the future, will be persuading already satisfied customers that they really should try the new products and services that digital technology will make available in the coming years.
“There will be opportunities for businesses to invent and launch new products and even to create new markets. Meeting that challenge will demand a deep understanding of the needs and circumstances of Irish consumers, especially their emotional drivers and expectations.
“Businesses must start with the customer and the emotional and the relational impact they want them to experience when they use a new product or service. The ability to develop a more customer centric approach will decide the winners during the next wave of the digital economy.”
For more details of the report at VirginMedia.ie/Insights
Research Methodology - Extensive market research was conducted independently for Virgin Media by Amárach Research. It involved a survey of 1,000 customers of all telecommunications providers on an entire market wide basis.
Published by Virgin Media and Amárach Research, the content of the report may be used and republished freely once The Virgin Media Digital Insights Report is credited.