Retailers have demonstrated incredible resilience and adaptability over the past few years. In the face of a once-in-a-generation challenge, they invested and innovated. But now, as the cost of living continues to increase, and supply chain challenges and inflation impact prices, businesses are navigating a new set of challenges that are significantly impacting on operations once more.
In the light of the economic downturn created by the pandemic, businesses that made investments in digital transformation during the pandemic have fared better. They now need to continue to build on these investments during the cost of living crisis.
The uncertain economic environment today is changing the way people shop and hitting retailers hard. But, as learnt during the pandemic, technology could help retailers to find new efficiencies and shape new experiences for customers that actually increases transaction volumes.
Our global research – surveying more than 40,000 consumers and 11,000 businesses across 26 countries – reveals how consumers’ habits have changed and gives clues as to where businesses should look to invest. Here are some top-level findings:
Consumers have the appetite for tech-enabled shopping experiences
Most importantly, our research found that those that invest in technology to improve their businesses will outgrow and outperform the rest. This is particularly the case in the UK where less than half of consumers (49%) say they prefer to shop in store – one of the lowest markets of all countries surveyed, and well below the global average of 59%.
That’s not to say physical stores are dead – that’s a long way off. But it needs a tech overhaul. For shoppers in the UK that doesn’t mean magic mirrors or VR. They want technology to create a frictionless, easy shopping experience on any channel. In fact, 41% said they are more likely to shop with retailers that use technology to improve the shopping experience.
Indeed, the key to a great experience for UK shoppers is getting the basics right. It’s about building a seamless link between online and offline channels and having a choice of how to pay. One in four consumers have left a store because they haven’t been able to pay the way they want, with a fifth preferring to shop with Apple Pay or Google Pay. The numbers are similar when it comes to online shopping – 25% will abandon their basket if they can’t pay how they want.
Retailers need to stay on top of this, and offer technology across the entire experience, in order to benefit from customer loyalty. This extends to making reward schemes easier and more effective. With the majority of shoppers (59%) encouraging more intelligent use of reward schemes, it’s clear they are receptive to the greater use of tech, whether in-store or online.
Businesses now need to decide how to best build on these opportunities, namely where they should prioritise investment and therefore innovation.
Streamlining processes shape shopping experiences
And while we’ve seen that customers are keen for a smoother shopping experience, there is a slight disconnect. Only one in five (21%) of UK retailers connect their payments and CX systems across the business such as operations and inventory/supply chain management. Using technology to connect systems and break down silos throughout a retail business creates a virtuous circle, which has two very important benefits.
First, it will help the flow of data and insights across the entire organisation to identify ways to improve operations, provide more data for decision-making, enhance productivity, and ultimately make the business more profitable.
Secondly, customers say they are more loyal to retailers that enable a smooth, seamless experience. Unified commerce can help to create more opportunities to improve customer interactions, either through more efficient processes, or better data insights to deliver a better service.
Digital transformation will fuel growth
We’ve seen this in action. 47% of British retailers say unified commerce has improved their customer experience, 39% say it has increased sales and 41% say it has increased customer loyalty. This is so important for retailers.
Experience and loyalty will be vital in the current climate where discretionary spend is completely under threat. Digital transformation is the key to enhancing customer experience, as well as finding efficiencies across the entire business.
Taking full advantage of this opportunity requires a mindset shift. Data, intelligence and insights should be constantly fed across the business, from customer-facing elements, to marketing and operations, and vice versa.
That’s why now is the time to double down on digital transformation. Those that do this look set to outperform their competitors and thrive in the next era of retail.
Colin Neil, managing director, Adyen UK