Retailers are working in an increasingly challenging environment. The aftereffects of the pandemic, inflationary pressures in supply chains, and the looming cost of living crisis create the perfect storm of uncertainty. This is one of the key findings from new research they’ve conducted into the state of retail.
But it is not all bad news. If the past two years have taught retailers anything, it’s that agility and speed can turn adversity into opportunity. Yet, whereas progress in the past has been about making significant investments and bold plans, today’s narrative is around frugal innovation. By focusing on the fundamentals and optimising the basics, the data suggests that retailers can do a lot more with what they already have.
The Global Retailers Handbook, the new report, makes a case for the continued need for retailers to analyse and optimise every aspect of their e-commerce experience as consumers become more deeply connected to digital shopping and payments.
E-commerce maintains its bounce
Despite stores reopening their doors post lockdowns, e-commerce has retained its recent converts. Indeed, consumer attitudes to e-commerce are emboldening: 33% say that shopping online allows them to budget more effectively and make their money go further. At the same time, 15% more people than last year recognise the benefits of ease and safety.
Market View: France
Rising prices affect shopping habits: 31% of French consumers are more likely to shop online than in-store to identify the cheapest options and find deals easily.
For e-commerce only businesses, the challenge is to meet the expectations of this increasingly mature audience in what will inevitably become an increasingly competitive market. For retailers with bricks and mortar stores, their e-commerce business must now be the star of the show.
Payments must follow. The research found significant year-over-year growth in the number of consumers engaging in digitised payments experiences. From using digital wallets and Buy Now Pay Later (BNPL) options to opting for biometric authentication, consumers are showing fast-growing maturity regarding new and emerging digital payments. And their expectations are also growing, with more than half (56%) saying that they would abandon their cart if their preferred payment method was unavailable.
The rise and rise of marketplaces
Unsurprisingly, those ecommerce brands yet to join the marketplace revolution are considering doing so, and fast. 38% tell us that they’re planning to increase their use of third-party marketplaces to reach more customers. While 26% of retailers with revenues over $1 billion are planning to add a marketplace offering in the coming year.
Market View: US
The marketplace era: 64% of US consumers report that marketplace platforms are their number one preferred channel for shopping online.
Winning on trust, not tricks
Payment security has become more of a priority for consumers—80% will abandon their cart if concerned about security—while innovations such as personalisation, gamification, and social media shopping have faded into the background of needs. The last of these is particularly stark, with a halving of consumers saying they want to shop via social channels and live-streamed influencer channels, to just 17%.
Retailers have several ways they can demonstrate trust. The research shows they should start at the checkout—displaying security information on the payments page has become shoppers’ number one non-price-related priority.
Market View: Germany
Digital payments gain ground: 57% of German consumers used a digital wallet in the past year, up from 38% in 2021.
But this is not an invitation for retailers to ignore the customer experience, and expectations rarely stand still. The 30% of online retailers that plan to improve their checkout and payment experience in the next 12 months have the right idea. So do those who demonstrate they understand the financial challenges of their customers. The research also finds loyalty schemes have become increasingly valuable to shoppers.
Fighting false declines, friction and fraud
There are fewer successful ecommerce payments this year. Only a quarter of enterprise retailers achieved approval rates of 90% or more, a 6% drop since 2020. This decline in performance couldn’t happen at a worse time, as consumers tell us they’re less willing than ever to accept a false decline. 44% said they’d give up on a purchase if they experienced a false decline.
The data also unveils a worrying uptick in fraud, especially friendly fraud. 27% of retailers have faced an increase in chargeback rates in the past six months. While 10% are happy to admit they’d initiate a fraudulent chargeback if necessary.
Market View: Southern Europe
New rules are leading to false declines: 50% of shoppers in Southern Europe report suffering at least one false decline.
Detail is critical, with the best strategies considering the individual transaction, customer, product, issuer, and the retailer’s risk appetite. Yet getting the data is a problem, with 80% of retailers saying they can’t access the insights they need.
More than ever, it’s essential that retailers have partnered with long-standing experience, deep expertise and an ability to solve complexity by combining human ingenuity with leading-edge technology.
The bottom line
The research shows the need for retailers to adapt once again. On the front end, they need to prioritise trust. On the back end, they need to optimise every transaction.
The Global Retailers Handbook Key Takeaways:
- Retailers must prioritise customer safety and instill confidence in their shopping experience by implementing safety measures and communicating them clearly to customers.
- Retailers need to embrace technology and innovation to stay competitive, such as implementing AI-powered chatbots and leveraging augmented reality to enhance the customer experience.
- Personalisation is key to driving customer loyalty and increasing sales. Retailers should use data and analytics to understand their customers’ preferences and tailor their offerings accordingly.
- Sustainability is becoming increasingly important to consumers. Retailers can make a positive impact by adopting sustainable practices such as reducing packaging waste and investing in renewable energy.
- Social media is a powerful tool for retailers to connect with customers and drive sales. Retailers should leverage social media platforms to build brand awareness, engage with customers, and offer exclusive promotions.
- Collaboration is key to success in the retail industry. Retailers should seek out partnerships and collaborations with other businesses to drive innovation and create value for customers.
- Offering flexible payment options to customers is a great way to increase sales and provide convenience.
Retailers must remain agile and adaptive, using the Global Retailer’s Handbook as a guide to identifying potential growth opportunities and strategies for success. To further ensure success, retailers should leverage their partnerships with third-party providers to gain access to innovations and data-driven insights.
This article has been republished with permission from Checkout.com.
Checkout.com is a member of our Payment Service Provider Panel.
If you enjoyed reading this article and would like to be notified when future articles are posted, please sign up for our email newsletter.
Are you interested in reading articles on a particular payments topic, company, payments industry executive or author? Click the search icon, it’s that magnifying glass on the top right-hand side of the website, and type in the keywords that interest you. You will then be presented with a list of any articles that match your search criteria.