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ITALY DURINGCORONAVIRUSGOING ALL-DIGITAL What is happening, contradictions, implications

© Ipsos | Italiani e CORONAVIRUS | April 2020 |

23 April 2020

Yuval Noah Harari: the world after Coronavirus *«This storm will pass. But the choices we make now could cha nge our lives for years to come»

“Many short-term emergency measures will become a fixture of life.

That is the nature of emergencies. They fast-forward historical processes. Decisions that in normal timescould take years of deliberation are passed in a matter of hours.

Immature and even dangerous technologies are pressed into service, because the risks of doing nothingare bigger. Entire countries serve as guinea-pigs in large-scale social experiments.

What happens when everybody works from home and communicates only at a distance?

What happens when entire schools and universities go online?

In normal times, governments, businesses and educational boards would never agree to conduct suchexperiments. But these aren’t normal times.”

*published on Financial Times, 20th March 2020

Digital tools have played a pivotal role during the crisis,

connecting people with information and people with people

As the Coronavirus pandemic forced schools and offices to close, people to practice “social distancing”, internet has provided a lifeline for many people around the world. Digital tools have allowed some semblance of normality , enabling people to speak, listen, assemble, and act from anywhere.

Internet has been the public square to accesscritical information, meet with friends and relatives, work at home, buy products and services.

Internet has basically enabled rights to education, health and religion.

Internet has been essential for sustaining peoples’ livelihoods and key parts of economies, has kept the economy running in spite of shutting the physicalpresences of most every business.

Digital Daily life in isolation: with immediate functional needs

satisfied, people have engaged themselves in a wide range of digital

activities

Online shoppingRemote workingHome schooling / Distance learningDigital services/ebanking (bills, payments, …)Online grocery deliveryHealthcare advice – online diagnostic servicesRemote health/connected healthMedications delivery/ Digital prescriptions

Streaming music, podcast, videos, movies, seriesSocial media and chat/videochatOnline/digital gamingOnline gym – livestreaming exercise classesSelf improvement – online courses or skillsLivestreaming music/clubs/eventsTravel by proxyCultural sights/commentary

Home and Health Entertainment & Connecting

New behaviours have been pushed by the emergency

While in isolation Italians have been (ipsos data):

1.8X MORE LIKELY TO USE VIDEO TO COMMUNICATE WITH FAMILY/FRIENDS

2.5X MORE LIKELY TO USE FITNESS/WELLBEINGAPPS/ONLINE VIDEOS

28% 35%13%

51% 38%

44%

6% 15%

12%

16% 12%31%

France Germany Italy

More frequently

Less frequently

No change

I rarely/never use e-commerce

Buying digitally has become a necessity

While self-isolating Italians... (ipsos data):

Use e-commerce more frequently (31%)

Have 3x more frequently food & grocerydelivered online

CLICK & COLLECT(Source: IRI)

climbs to 14% of sales(vs. 6% the previous year)

in march click & collect growsup to + 433%

Apps have been crucial enabler for Italians during

self-isolation

App download in italyq1 ‘20 vs q4 ’19

Time spent on apps (not gaming) q1 ‘20 vs. q4 ‘19

Increase in downloadweek of 15 march vs. pre-crisis+30%

+15%

SOURCE: App annie

+ 140X

+ 423X

+ 55X

+ 30X

Ultimately, times of crisis present many challenges to business,

but they can also accelerate change

1

2

3People driven by

new needsIn times of crisis, people are not

just responding to want, theyhave a new set of pressing

needs that can manifestly change their behaviors

ConsolidationThe duration of the crisis enables consumers to experience and habituatethese new services. And once the crisis subsides, the best of these new offers can maintaintheir appeal and relevance

Accelerated business developmentBusinesses who respond quickly to these

needs, can open up new areas of business and quickly develop a user base or create new modes of connection and service delivery

Airbnb has launched Online Experiences , which allows hosts to continue earning income by offering their experiences on videoconferencing platform Zoom .

Italians seem open to embracing heavier digital behaviours

Opinions on use of digital media services due to coron avirus (COVID-19) in Italy in 2020

62%

57%

46%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0%

I expect this situation will encourage schoolsand universities to provide their services through

digital media more in the future

If I have the chance in the future, I would beopen to use more digital services as a citizen

and for business activities

If I have the chance in the future, I would usemore the work systems I experienced during this

emergency (smart working, work from home)

Note : Italy; 18-65 years; 1.000 RespondentsSource : Tradelab (via Statista)

But there are challenges for Italy:

Digital skills

While 75% of Italians have access to broadband internet, only approximately 29%, according to the National Institute of Statistics, can rely on high digital skills (45% among 20-24 years old)

The lack of basic digital skills is visible in comparison with other EU member states, as reported by the DESI (Digital Economy and Society) Index . This shortfall in digital skills is also reflected in a below the average use of online services.

Challenges for Italy:

Digital equipment

Despite the improvement in recent years, Italy still performs below the EU average as regards Connectivity (Desi Index: rank 19, score 57.6 vs. 59.3 EU)

Most Italians access internet by smartphone, a device which is not fit for an extensive use of digital services and for specific activities such as remote learning. A fair share of kids 3-10 years old live in households NOT equipped for remote learning.

The availability of laptop for remote working is also a crucial issue. Among businesses with at least 10 personsemployed, only a portion of employees is equipped with portable devices with mobile connection.

Enterprises with 10+ employees providing to the persons employed

portable devices that allow a mobile connection to the internet for

business use

Enterprises with 10+ employees providing to more than 10% of

persons employed portable devices that allowed a mobile

connection

Enterprises with 10+ employees providing to more than 20% of persons employed portable devices that allowed

a mobile connection

62,4 % 48,4% 32,3%

Source: Italian National Institute of Statistics, Year 2020

Challenges for Italy:

Barriers for e-commerce

As regards the Integration of digital technology by businesses, Italy ranks 23rd among EU countries in the Desi Index, well below the EU average. There has been some progress in recent years, however, Italian enterprises continue to lagbehind in taking advantage of the opportunities offered by online commerce. Only 10 % of SMEs sell online (well belowthe EU average of 17 %).

Italy has faced this emergency with a notoriuosly underdeveloped e-commerce system .

There are several and significant barriers in terms of infrastructure and logistics which could not be solved during a crisisof such proportions as the current one.

So, while demand growth rates (which, pre-crisis were +44% year on year) jumped, after the crisis, to +92%, the supplycould only handle a fraction of it.

According to Nielsen estimates, with more developed infrastructures and logistics,, demand would have potentiallyincreased by 400-500%

Long term sustainable change

Businesses willing to operate/develop digital servicesmust think their “post-crisis” activities to cater to the changing needs/behavior of consumers and clients

They must be aware of the peculiar challenges existingin the Italian market, making sure that their business model is fit for the “digital readiness” of Italianconsumers.

Those companies able to use technology well to keepgoing and fast-tracking digital transformation will be the ones ahead of their competition.

CONTACT:

CLAUDIA D’IPPOLITOclaudia.dippolito@ipsos.com

www.ipsos.it