Address by Mr. Noel Treacy, T.D., Minister for Science, Technology and Commerce at the Launch of EU Commerce Information Campaign, EU Offices, Molesworth Street, Dublin on Wednesday 7th June, 2000 at 6.00 p.m.

This report is extremely valuable both in terms of broadening the understanding of the sector as a whole and in highlighting the key challenges to be faced in a dynamic and rapidly changing environment. The report will help ensure that appropriate actions can be taken to ensure the retail sector continues to make a significant contribution to employment and wealth creation in the economy. Indeed it is this Government’s view that the retail service sector contributes enormously to the Irish economy at all levels.

The study provides an insight into the changes underway in the sector such as the continued internationalisation of the sector, the growth of own label or retailer brand products and the move to centralised distribution. Structural change is being driven by the search for economies of scale, increased market share, vertical integration of the supply chain, consolidation among the major companies and the co-ordination of information and communication technologies.

The changing retail environment has major implications for manufacturers, retailers, their suppliers and intermediaries such as distributors. To assist with the change process a number of new state supports have been put in place.

The Supplier Development Programme operated by Enterprise Ireland helps manufacturers address the quality, hygiene, safety and relationship management issues which they face. Forfás concludes that this programme has a key role to play in both increasing and sustaining the competitiveness of the retail sub-supply base. Enterprise Ireland will continue to assist Irish suppliers to respond to new challenges and to take advantage of new opportunities.

The Government is fully aware of the far reaching consequences of developments in the area of centralised distribution and has arranged for the Director General of the National Institute for Transport and Logistics to talk to relevant associations such as RGDATA and IBEC’s Food, Drink and Tobacco Federation about how best to raise awareness of the issue and develop a co-operative strategy between the players in the industry.

The National Institute for Transport and Logistics is an initiative of our Department of Enterprise, Trade & Emmployment, to support companies in Ireland in achieving competitive advantage and to help Ireland become a major international centre of logistics excellence. The NITL offers information, training and education programmes as well as facilitation and consultation to manufacturing, process and service companies in Ireland.

Enterprise Ireland has also commissioned the NITL to carry out a study into the logistics capabilities and requirements of its client companies. This study will highlight logistical problems faced by companies throughout Ireland and identify the steps required to improve competitiveness in this area.

The industry itself and representative associations also have a key part to play. The Forfás report makes the point very well by saying that the major responsibility for the development and growth of the retail sector must be with the industry itself and its representative associations, with the state mainly providing a facilitating and enabling support role.

A number of actions are required on the part of trade and representative associations and others to assist retailers prepare for and adapt to the changing environment. These include raising awareness and disseminating market information to retailers of the strategic and operational implications of the changes underway; and encouraging retailers to formulate and implement strategies to fully exploit information and communications technologies and electronic commerce for business operations. This exhibition is important in raising the awareness of these changes. I understand that as part of this exhibition there are demonstrations on e-commerce as well as a seminar tomorrow on e-tailing. These initiatives will be of invaluable assistance to business everywhere.

Suppliers need to assess their ability to meet the requirements of retailers for competitive supply. They will need to make the necessary investments in information technology to implement supply chain strategies and Efficient Consumer Response. The stringent quality, hygiene and food safety management systems required for supplying the retail sector in the future, need to be monitored continuously to ensure high standards are constantly maintained.

Distributors will be required to develop closer partnerships with, and adopt the structures of, the major retailers into the future. Increased investment in Information and Communications Technologies (ICTs) and tracking systems will be required. They will need to work with the NITL in preparing for the changes underway.

E-business incorporates both E-commerce and the wider use of Information Communication Technologies (ICT’s) in how enterprises now do business. ICT’s allow both products and services to be delivered faster and at a lower cost. ICT’s impact on supply chain systems and the instant availability of important information in relation to the overall effectiveness of a company’s business processes. Companies must adapt to e-business if they are to survive into the future.

Forfás maintain that the availability of low-cost broadband telecommunications services is critical to increasing the efficiency and competitiveness of the retail supply-chain in Ireland and to enable Irish based suppliers serve the international markets. National and international connections to the Internet backbones are also required to realise the full benefits of electronic commerce in retailing.

The provision of the required broadband telecommunications infrastructure and logistics services could enable Ireland to develop a leadership position in Internet related shopping activities.

An integral part of this Government’s e-business strategy is to provide virtually unlimited bandwidth at competitive prices. I am happy to report progress by both the public and private sectors to enhance international connectivity. The Global Crossing submarine cable was landed in March and the terrestrial cable has also been completed. Another broadband cable was laid just last week by 360 Networks Ireland.

This Government recognises the great challenge facing us all in the development of E-Business, and we are working closely with industry to ensure that the best possible operating environment is in place. We have adopted a broad-based approach built around the development of five priority areas:

• Telecomms infrastructure and costs
• Education in the use of ICT’s
• Upskilling in the existing business sector
• Effective regulation, and
• Research and development.

Our Government is also encouraging business to seize the opportunities available to them. Enterprise Ireland’s e-business initiative aims to promote an awareness and understanding of the significance and business implications of e-commerce and e- business, and assist clients in developing an appropriate Internet strategy and presence.

Enterprise Ireland’s own e- business resource website provides information on all aspects of electronic business. Enterprise Ireland has also established a £10 Million e-business fund to boost the number of Irish companies transacting business across electronic networks.

The County and City Enterprise Boards have developed an E-Commerce initiative for their client base. This initiative involves providing services and incentives which will increase the use of the Internet, e-mail and E-Commerce among small businesses in Ireland.

This Government is determined to deliver on the e-business agenda – the time and resources being invested in this area is indicative of our commitment to this area. I particularly welcome the fact that this exhibition has a focus on e-commerce as the importance of this area cannot be underestimated.

Looking ahead Forfás predict that the retail sector can be expected to continue to grow in line with the overall growth of our national economy. I am confident that the Irish retail sector has the ability to rise to the challenges which it faces as a result of changes, which are currently taking place in the industry, and to deliver its services to world-class standards. It now gives me great personal pleasure to formally open this very important exhibition.