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GUEST COMMENT The future of retail: from physical to digital

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Covid-19 has fuelled a revolution in the retail industry, pushing it five years ahead in the space of only a few months. With bricks-and-mortar outlets forced to close their doors and consumers rapidly moving away from cash payments due to health concerns, online retail has boomed more quickly than ever before.

The pandemic has changed everything. Digitalisation now needs to be the priority for businesses, and retailers will need to invest throughout 2021 to find new ways of merging the physical aspects of the industry with the digital.

Merging the physical with digital

2020 has been all about digital. Stores have been focused on making digital shopping as easy and convenient as possible, and this has led to options for free returns and exclusive access to help build trust and loyalty.

The next step for retailers is to bring consumers the benefits and experience of being in store, from the comfort of their home. Technology including augmented reality (AR) and artificial intelligence (AI) can be used to achieve this and create more ‘physical’ experiences at home and online. 

AI can allow customers to shop for clothes in a number of ways. It can allow customers to fine-tune their searches by describing variations on a product image, while it can also suggest products which go with items the customer has already selected. It can also merge different products from different pages on to a model so customers can see how an outfit would look. Amazon are already using AI with their Style by Alexa feature of the Amazon Shopping app, which suggests, compares, and rates clothing using AI. 

AR applications are also expected to be on the rise over the coming year. Virtual “try-before-you-buy” experiences are now common, allowing customers to preview furniture and products in their home, while AR can also allow customers to virtually try on clothes. AR could also lead to a gamified retail social experience, with digital stores and virtual closets using an AR game, where customers are able to play, explore, and shop with friends. Once a nice-to-have feature, AR and AI are quickly becoming essential technology for retailers. The challenge for retailers is how to redefine the final stages of the buying journey so consumers can make the payment and fulfilment without interrupting the experience.

The new role of the store

High street retail still has a place alongside the digital stores, but shops need to adapt and ‘pivot’ what they are about and become ‘destination stores’ that focus on the customer experience, offering a personalised service.

Payments have always been a pain point of the in-store shopping experience. No one really wants to pick up a product and wait in line at a till before they can pay, so concepts including scan and go are expected to take off. This is where the shopper downloads an app and uses a QR code on the product to make payment. There is also the option for stores to use pay by link, and this involves the sales colleague sending a URL or shopper code to the customers phone to finalise the payment.

Other innovations include the ‘Amazon Go’ concept which uses just walk out technology that automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. Payment is then made when the shop sends the receipt to the customers account. This technology has been around for a number of years and while it has attracted a lot of attention, roll out thus far has been limited – the pandemic might just provide the right use case for greater traction and 2021 may be the year we see more brands adopting this innovation. 

Social shopping is the new normal

Before the pandemic it was mainly younger generations who were driving social shopping, but Covid-19 has pushed social media to all generations and over 50 percent of global shoppers are now likely to buy on social. The Generation Pay report from Worldpay from FIS® found that for Gen Z, Gen Y and Gen X, between half (51 percent) and two thirds (67 percent) have purchased something through social media.

Social media is no longer just a marketing tool for retailers, it is now a transactional tool too. The old buy buttons, which are used to re-direct the customer to the retailer’s website, are no longer what customers are looking for. They slow the shopping process down and they do not provide the best user experience.

Instead social media companies need on-site shoppable features which enable payments without leaving the experience. Facebook Shops is an example of this, and it allows retailers to upload product catalogues and take payments from customers who do not leave the experience, meaning the process is seamless and frictionless. 2021 will see more technology providers partnering with payments experts to expand the social media as a buying channel.  

BNPL goes mainstream

There has been a huge rise in shoppers using Buy Now Pay Later (BNPL) since the beginning of the pandemic. BNPL allows the shopper to buy a product and only pay when they receive the gifs or by paying in a number of instalments. 

It is already the fastest growing payment method globally, with over 70 percent of shoppers already using or considering using it. Retailers are now noticing that BNPL helps increase the average customer’s basket size, making it crucial for them to add to their payment strategies. Currently the most popular BNPL methods are Klarna, affirm and afterpay and these platforms have prioritised the user experience, making it clean and simple for the shopper to pay. 

Subscribe to subscriptions

More and more businesses are enhancing their offering by embracing subscriptions. It’s no longer just about digital media and food, other areas of retail have pivoted to using subscriptions as the basis of their business model from fashion to cleaning products and coffee, this method of consuming goods has become increasingly popular with during the global pandemic.

Subscriptions are convenient for consumers, enabling access and security but they can act as a discovery channel, allowing customers to find new items and products. Businesses who collaborate with other complementary products or services as part of a curated offering also benefit by being able to drive loyalty and expand their customer base. Some retailers are also now exploring ways to use smart speakers and the Internet of Things (IOT) to replenish items automatically.

But subscriptions need to be personal. Most consumers who cancel their subscriptions are frustrated by their inability to make changes to their plans, so they need to be flexible to become a permanent fixture of business models.

Alexa, what is voice commerce?

Another big trend we are expecting to take off is voice commerce. There are now more IOT devices in people’s homes than ever before and retailers can use these to interact and engage with their customers. 

These devices are becoming more conversational, allowing them to ask a shopper about their skin tone before recommending a purchase for makeup for example. They are acting as a personal assistant, making the customer feel at ease and comfortable, while offering them a user-friendly experience. Voice remains the most natural way to interact and engage with customers and retailers are starting to realise this and optimise their channels to take advantage. Shoppers can also shop using voice assistants while doing other activities making it a convenient way to purchase items. 

The future is now

The pandemic has rapidly changed the way retailers will operate forever. Businesses will now have to merge the physical aspects of the industry with the digital as the two aspects of the industry become more and more entwined. 

Ecommerce has the ability to support, not replace, the retail store, and it is now the time for businesses re-imagine retail and bring the immersive shopping experiences of the future into the present.


Maria Prados, vice president of global retail at Worldpay

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