The Covid-19 Online Retail Scheme offered grants of up to €40,000 to help Irish-owned retailers to enhance their digital capability and to develop a more competitive online offering that would help increase their customer base and build a more resilient business in the domestic and global marketplaces.
Grants are issued on a competitive basis following proposals from retailers. In the most recent call, issued in May this year, 133 retailers were initially approved for a total of €5 million in funding, with 90 of them coming from outside Dublin. Overall, 292 retailers applied for funding.
The successful applicants received funding ranging from €14,080 to €40,000 with an average grant value of €37,500.
“Minister [of State for Business, Employment and Retail] Damien English extended it to €6.3 million after the initial funding awards were made,” says Conor McManus, director of technology consulting with BDO Eaton Square. “That enabled an additional 40 applicants to get through, so 173 were successful in the end. The take-up for the scheme has been very good. We worked with a number of clients on it and a lot of very good project proposals were submitted.”
Mazars partner Emer O'Riordan also says the take-up has been strong. "A number of our clients have availed of it," she says. "Businesses were able to use the scheme regardless of their level of sophistication in terms of their online offering. Retailers who were at different starting points in terms of their online presence were all able to avail of it, even those who had no online presence at all."
Indeed, that latter group had more need than many. “If they had no online presence but had lots of stock, they needed to get it out to customers,” O'Riordan explains. “For example, we saw hardware stores using it to go online for items in high demand during the first lockdown like garden furniture. Businesses also used it to serve local needs online with click and collect. We work with a number of medium- to large-sized retailers and they were able to use the scheme to expand capacity and improve security.”
Wage subsidies
KPMG partner Niall Savage points out that the Covid-19 Online Retail Scheme was by no means the only support scheme on offer to retailers. "There was a huge take-up of the temporary wage subsidy scheme [TWSS] and the employment wage subsidy scheme [EWSS]," he says. "They were very efficiently administered and easy to use. If you had one or 1,500 employees, you were able to use it. It enabled many businesses to keep going and kept in employment and on the payroll. That was very important for the retail sector. It was a very expensive scheme, but it was very successful. Some of the other schemes were more complex and businesses needed some support to avail of them."
O'Riordan agrees. “To be honest, although the Covid-19 Online Retail Scheme was very good it paled in comparison to the support which came from other schemes like the TWSS the follow-on EWSS,” she says. “Also, the ability to warehouse taxes, and the relief from rates provided vital lifelines of cash for the retailers who needed it to get through the lockdowns. But when the music stops, we will have to see who is in a strong enough position to repay all that debt.”
Those schemes and reliefs were critically important to the survival of many businesses, she adds. “At the start of the pandemic it was all about cash and the supply chain for retailers. Getting supplies into Ireland was difficult and we saw freight costs increase quite significantly. There were very significant issues with supplies from China as well. Retailers were very quick to react to those challenges, they are at the coalface of any kind of consumer confidence issue. Their initial focus was very much on cash and those supports were vitally important in taking the heat out of the issue for them. The TWSS and the subsequent EWSS were transformational.”
Access
Ease of access to the wage subsidy schemes was a decisive factor. “Revenue did try to make the TWSS easy to avail of,” O'Riordan notes. “There was a bit of hesitancy at the start. Businesses were asking themselves if they were eligible and didn’t want to apply if there was any doubt. Revenue came out very early on to say that it’s a support with the aim of protecting employment and companies wouldn’t be penalised if they applied and weren’t eligible. We advised a lot of clients about whether to go for it or not.”
The warehousing of taxes also had a huge impact on cash flow. “The ability to defer VAT was particularly valuable for retailers,” she adds. “We have many clients who have been able to repay the taxes and they are back up to date already. But there is some nervousness about the ability of some businesses to repay.”
Support for the retail sector was not exclusively State provided, O'Riordan points out. “There has been some commercial support as well. At the start, landlords were very hesitant to reduce rents or give breaks or change the rental model. As time went on, they took a more pragmatic approach and came to more flexible rental arrangements with things like turnover rents, pop-ups and other short-term arrangements. Thirty-year rental periods now coming down to 10 and we are seeing a lot more sharing of risk and success through turnover rent arrangements.”