Everyone is navigating a new retail landscape as the fallout from the pandemic continues to impact consumer behavior. Here’s how digital transformation can help merchants be truly omnichannel.
Consumer expectations continue to unfold and become more complex even as merchants and retailers aim to gain a bigger slice of market share while improving operational efficiency. Consumers — many of whom are “digital natives” — have voiced their preferences with their wallets for some time now. The resounding message is that they want to pay when, where, and how they want to and they expect retailers to be there, ready and waiting. The pandemic has also accelerated the shift toward digital and omnichannel as consumers seek to mobile order ahead for pickup in-store and favor other contactless payment methods.
This marks the true age of omnichannel, where consumers are hybrid shoppers who engage in cross-channel retail and prefer the convenience and speed of online shopping and digital payments. Aberdeen notes that companies with strong omnichannel strategies retain an average of 89% of their customers, while those with weak omnichannel strategies retain just 33%. Even those that are shopping at brick and mortar stores expect speed to be a priority when it comes to checking out and paying. Customers have been clear that retailers who do not offer omnichannel options will be left in the dust as they will gladly purchase from competitors who cater to more tailored experiences.
The COVID-19 Effect
The pandemic has accelerated changes that were already taking place in the retail market, including the adoption of digital payments and other emerging technologies. Ecommerce sales grew 76% in June, with order online, pick up in-store options showing record year-over-year growth. Even retailers that don’t normally see huge amounts of online activity — like grocers — have had to implement ecommerce and digital payments technology to keep up with demand.
Before the pandemic, the U.S. was lagging behind its counterparts abroad in the adoption of contactless payments. With people staying home and with the recent push by card issuers on contactless issuance, this payment method has also seen an uptick during the pandemic. People are interested in making online purchases that they can pick-up curbside or with a streamlined in-store visit. The goal is minimal interaction with retail employees and other customers. While the push to improve contactless payment options is good, it also calls into focus the need for even more personalized options, including the ability to automatically know when a customer who has already paid arrives, so that the goods can be delivered seamlessly.
The Bottom Line for Omnichannel
There are a few priorities for retailers that are not new but have been thrust into the spotlight once again due to the consumer needs during the pandemic.
Payments have always been about balancing convenience with security while guarding against fraud. Removing friction from payments requires a finely-tuned fraud prevention mechanism that is able to be accurate in stopping bad actors while minimizing false positives. False declines can significantly hurt retailers via lost revenue and lost customer loyalty. On the other hand, added friction at checkout leads to higher cart abandonment rates and lost sales. The goal should be a perfect balance in flagging fraudulent transactions while maximizing approvals of legitimate sales.
As mentioned earlier, contactless payments that are interwoven into a mobile and ecommerce payments strategy are table stakes. As consumers become acclimated to minimizing time spent in brick and mortar stores and prefer to complete purchases online or while social distancing, merchants must be prepared by accepting NFC-enabled and mobile payments.
Consumers are still looking for the most convenient ways to pay and engage with retailers along every step of the purchase experience. Retailers must accept a wide array of payment types to satisfy all the ways customers prefer to pay. Truly omnichannel retailers will offer mobile order ahead, order online, and pick up in-store, and any other browsing and payment combinations that consumers prefer.
Digital Transformation to Meet Demand
The pandemic is shifting consumers to digital channels in droves, though only time will tell how much of that behavior sticks for the long term. Even as some verticals see shoppers returning to brick and mortar stores, digital and mobile payments are here to stay. Offering many different payment options facilitates more purchases from more people. The other side of that coin is that more opportunities and methods to pay come with increased fraud.
Digital transformation is no longer optional for retailers that plan to be around for years to come. The payments landscape is constantly in flux and, as the pandemic has highlighted, unforeseen circumstances can have devastating impacts on those who are unprepared to change and adapt quickly. Legacy payment systems and operations make it incredibly difficult to adapt and pivot, but digital transformation can help retailers refocus on providing customer-centric, personalized experiences.
The ability to adopt technological innovations quickly helps retailers to stay focused on the core business and on meeting and exceeding customer demands. Digital transformation also presents an opportunity for retailers to reduce costs and experiment with new business models that can yield additional revenue streams. Partnering with future-oriented technology partners and leveraging API-led architecture can ensure that retailers remain flexible enough to meet the dynamic, evolving needs of customers no matter what the future brings.