It’s no news that the retail industry has been flipped on its head by the COVID-19 pandemic. Due to the lockdown, most in-store operations have been shut down, and nationwide furloughs, reduced pay and steady streams of income at risk have fuelled a change in consumer spending priorities and trends.
We need to band together to determine how retailers can strengthen current operations, support their loyal customer base, and continue to grow in the midst of the virus and unpredictable changes to purchasing behaviour.
The UK Government’s April retail analysis revealed that the monthly retail sales volume fell by a record 18.1%; the largest fall it has ever recorded since the retail analysis series began. This defeated the previous record of 5.2% drop from March, showing us that COVID-19 is negatively impacting parts of the retail industry. Clothing store sales saw a particularly sharp drop when compared with the previous month, plummeting to 50.2% when compared with the 34.8% drop seen in March.
Not all sales channels are facing the same plight, though. Online sales as a proportion of all retailing reached 18%. While not as high as March’s record-breaking increase of 22.3% it is still a substantial increase and is showing us that consumers are still willing to make purchases, they have just switched to online shopping instead.
We can be thankful in these times that online retail is now an established form of commerce, and now even ‘a vital lifeline’ – as described by the UK’s Business Secretary, Alok Sharma, in a letter to the retail sector.
As a novel lifeline for consumers, many retailers are experiencing a boom in online sales from those ordering essentials or bored consumers stuck at home. Others, on the other hand, are losing sales – particularly those with lower brand awareness or either no ecommerce structure in place, or smaller businesses who have limited online operations.
Aside from updating – or creating – ecommerce stores and building awareness of a brand, how can the retailers who haven’t seen the same recent sales boom get a piece of the action? What’s more, how can the retailers who are currently benefiting from a sales increase ensure that the boom isn’t temporary, based on consumers seeking new ways to entertain themselves while they adjust to life in lockdown?
There’s a lot of uncertainty that lies ahead, that we can count on.
One way to safeguard a retail business for the long-term is by implementing an interest-free credit offering. It empowers consumers to split up payment for their purchase over a series of months, helping them better manage their finances.
It’s becoming an increasingly popular way to pay and, with awareness of credit lending growing, many consumers will be actively seeking out this type of payment support over the next few months as they face the financial impact of COVID-19 – choosing to shop with the businesses who offer this option.
For retailers, point of sale finance can encourage upselling, cross-selling and product bundle sales, resulting in an increase in average basket value and more browsers converting into buyers. Our retail partners see sales conversion increases of 70% when opting to work with us, helping them bring in new sales quickly and expand their consumer base in the long-term.
In a further attempt to ease the burden, we’ve also decided to offer a payment holiday on the small subscription fee we typically charge to sign a business up, as well as deferred payment for the first three months in partnership.
Not everyone is fighting the same fight, though. With an already large customer base and more money to spend on marketing or website development, bigger established brands are better placed to weather the storm. So, we’re now enabling smaller retail businesses to offer the same interest-free credit solution.
Our hope is that this payment option will allow consumers to continue to make the purchases they need, while encouraging spending with smaller retailers – helping to keep them stable and easing the financial burden on the hardest hit through this economic crisis.
This means that retail businesses who have been operating for six months or more will be better placed to compete with bigger online players, and can provide an attractive, affordable option for consumers who want to keep spending, while doing so with care.
When considering credit lending options to implement, retailers should seek a responsible lender. Because, ultimately, if a consumer is not confident that the lender has their best interests in mind then they shouldn’t commit to a contract with them.
For example, when a consumer borrows money to make a purchase, it is vital that the lender takes accountability in making sure this is done responsibly – particularly at this time. To achieve this, appropriate checks need to be put in place to confirm that the customer can actually afford to pay for the purchase before a payment plan is agreed.
This also means opting for a lender that clearly explains to customers what they are expected to pay and when, giving consumers the confidence that they’re entering a plan with no unforeseen costs. And a lender that takes on the fraud and credit risk, as well as giving complete protection to buyers.
By working together as an industry – solution providers and retailers – we can all ensure that online sales remain high and in-store sales get back to where they used to be, safely and in a way that puts the customer first.