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A digital revolution is underway among retail SMEs, according to new research from Direct Line business insurance.

Over half (52 per cent) have either invested in new technological services or ramped up their online presence since the beginning of the pandemic.

Eighty-five per cent are sticking with the new digital services or products they introduced, demonstrating how Covid-19 has permanently reshaped the small business landscape.

The revolution is showing no signs of slowing down either, despite high streets having reopened. Over half (52 per cent) plan to increase their digital presence over the next six months or introduce bold new virtual offerings.

This is because technology is now seen as fundamental to business success. Half (50 per cent) made these strategic decisions because it allowed them to reach new customers, while 43 per cent did so because they believe that customers have higher expectations of a business’ digital journey after Covid-19.The pandemic has changed consumer shopping habits dramatically, with eCommerce booming. Not surprising, then, that when it comes to their technology strategies, small retail businesses are prioritising online ordering systems and deliveries (27 per cent) to ride the wave.

Digital marketing (16 per cent) is the second most common area of technological change, as SMEs seek to connect with consumers who are still staying away from the high street.

Table One: Top digital services to be introduced or increased by small retail businesses over the next 6 months

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Digitisation doesn’t come cheaply. Research carried out last year found that to rapidly adapt to Covid-19, a quarter of small businesses spent between £1,000-£5,000 on launching the new digital service or product offering.

With businesses investing so much to digitally transform their businesses, it’s worrying that nearly half (46 per cent) of senior decision makers at small retail businesses are completely unaware they need to let their insurer know they’ve moved some of their services online.

Equally concerning is that only 23 per cent have invested in cyber insurance to help protect their business and get them back up and running again in the event of a successful cyber attack.

45 per cent of decision makers at small businesses don’t feel that cyber security is a risk to their business while 27 per cent are totally unaware of how important the cover is.

Jane Morgan, SME Product Manager at Direct Line business insurance, said:

“Small businesses responded admirably to the challenges of COVID-19. And it’s great that they’re continuing to adapt by stepping up investment in digital services - whether that involves continuing to move their products online or introducing innovative online marketing methods.

“But it’s worrying that so few have taken out cyber insurance to help protect their business and recover their finances, systems and reputation in the event of a cyber attack. This has the potential to devastate an SME and completely derail digital progress.

“Our comprehensive cyber insurance provides cover for the cost of fixing a cyber issue, restoring systems and data and investigating a data breach. It also provides businesses with expert advice and support, ensuring they’re not alone in the event of an attack.”

Additionally, in the event a business is held responsible for a data breach, it can help with costs of fines and compensation, if insurable under applicable law.