A ‘Digital Safety Net’ has helped European small businesses during COVID-19. This analysis specifically looks at the importance of digital tools for SMEs in the retail industry, which are defined as small businesses directly selling goods to consumers. It is based on a subset of responses from a survey of 5,011 small and medium-sized enterprise (SME) leaders in 28 European countries across a variety of business sizes and industries conducted from Nov 16–Dec 21, 2020.
Our research identified three categories of SMEs in the retail industry, based on how they characterized the pre-pandemic importance of digital tools to their business operations, and their actual use of digital tools entering the pandemic.
are Digitally Advanced (-8% below general EU average);
they view digital tools as an integral part of doing business and use a larger number of tools (>10)
are Digitally Evolving (+1% above general EU average);
they view digital tools as important but use fewer tools (<10), they are in transition
are Digitally Uncertain (+7% above general EU average);
they remain unsure of the value digital tools can have and use significantly fewer tools (<10)
While 8% fewer of Europe’s Retail SMEs are digitally advanced compared to Europe-wide averages, those that are had significantly better revenue and did more hiring than less-advanced peer SMEs.
European Retail SMEs that increased digital tool use during the pandemic
Increase in revenue performance during the pandemic by Advanced Retail SMEs (-17.7%) vs. Uncertain Retail SMEs (-31.9%)
Number of net new employees hired during the pandemic by Advanced SMEs vs. Uncertain SMEs
On average, sole owner/operators or women-led SMEs had an especially challenging time if Uncertain, but found outsized benefits if they were Advanced. Female-led Retail SMEs saw similar results to the overall, with Advanced SMEs significantly outperformed their Uncertain counterparts.
Increase in revenue performance during the pandemic by woman-led Advanced Retail SMEs (-18.4%) vs. woman-led Uncertain SMEs (-32.9%)
Number of net new employees hired during the pandemic by woman-led Advanced SMEs vs. woman-led Uncertain SMEs
Not all European Retail SMEs use and value digital tools the same way, thus their outlooks and future plans for adopting tools reflect this. Additionally, not all digital tools are equally helpful to European Retail SMEs, with E-commerce, data analytics, employee management and collaboration tools, conferring a more competitive advantage on the SMEs using them.
European Retail SMEs who felt comfortable using digital tools pre-pandemic
European Retail SME leaders’ top concerns about digital tools are:
- Uncertainty of return on investment (28%)
- Not knowing where to start (22%)
- Lack of skills and knowledge (22%)
European Retail SMEs who are planning to increase their use of digital tools post-pandemic
See their Stories
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