As we ponder what 2014 has in store, Ed Chandler CEO of Kalixa Group takes a look at the results of his company’s Payment Generation Gap research, and wonders whether the high street is truly in decline, the frustrations that are putting off customers… and what retail in 2020 may look like
According to figures from the British Retail Consortium visits to British high street dropped by 2.9 per cent in October 2013. With footfall dropping by 9 per cent in August and then 2.4 per cent in September, it is clear the high street is struggling.
In response to this decline, retailers are investing in online and mobile channels in the race to attract new customers and better serve existing ones. In a highly competitive omni-channel environment, merchants face an ongoing challenge to transform browsers into buyers.
We commissioned research to analyse UK shopping preferences speaking to 2,126 adults. We wanted to discover what customers find frustrating about shopping, what channels are the most popular and what the future holds for retailing.
Key research findings
By better understanding where and how people shop, what they don’t like and what they’d like to see more of, we gained valuable insight that will help us, as well as our customers and partners, deliver the best services possible. The top level findings were:
• 81 per cent of the public prefer to shop in-store, only 59 per cent prefer to shop online
• 60 per cent of shoppers cite long queues as their number one shopping frustration
• 65.5 per cent predict a cash free 2020 with 54 per cent predicting contactless payments as the main way to pay
In-store shopping trumps online… for now
The research revealed that 81 per cent of shoppers prefer to shop in-store. This revelation about the near universal popularity of in-store shopping regardless of age, sex and income bracket is surprising given the recent downturn in footfall. However, it should come as a welcome statistic for high street retailers across the UK.
In fact, the survey revealed that 93.3 per cent of respondents would favour the high street for immediate or next day purchases, over other channels such as online, mobile, mail order or phone order.
Despite the hype around new channels, customers are still preferring to shop in-store and favoring the high street. Retailers must invest in new infrastructure and payment methods in order to make sure that the traditional shopping experience is enjoyable and rewarding for customers.
Face to face frustrations
While the research highlighted a clear preference to shop in-store, it also revealed that customers have several frustrations. 60 per cent of respondents find long queues at the till their main frustration, with slow transactions also highlighted as off putting for customers. Self service till points were also cited as one of the biggest bug-bears for shoppers.
Retailers must look to new payment methods such as NFC, contactless and mobile point of sale, in order to alleviate these frustrations. They need to find a balance between the cost of implementing queue busting measures such as self service tills, against customers experience, frustration and ultimately churn.
New channels, new challenges
Despite our survey showing the popularity of in-store retailing, all signs point towards the continued growth of newer channels such as online and mobile. In fact, 59.2 per cent of respondents cited online as their preferred shopping channel. Again, this is not without customer frustration however.
Time-consuming registration for online purchasing and tedious login/password verification are just two problems that are off putting for shoppers and can often lead to customers abandoning transactions at the check-out. Mobile App and website security is also a major frustration for customers, with only 0.7% of respondents having confidence in the security of mobile apps. Retailers need to address these frustrations. They need to ensure customers have confidence when paying via new payment methods. In addition the online checkout process needs to be streamlined in order to minimise the steps to purchase, as well as give customers a variety of ways to pay.
Shopping in 2020
As shopping continues to evolve, retailers and merchants must use new payment methods such as NFC and contactless to speed up purchase times and drive customers in-store. The research revealed that more than 65.5 per cent of customers believe that cash will be obsolete by 2020, citing contactless payments as the preferred new way to pay. Similarly, 52.2 per cent of respondents believe that paying with a mobile will be the norm. These are bold predictions and they highlight that the high street has a long way to go in order to meet the demands of consumers and how they want to pay in the future.
What should retailers do?
As we have discovered the high street still represents a crucial source of revenue for retailers and an unrivalled opportunity to upsell and cross-sell. Based on our research, Kalixa has three key recommendations for retailers:
1. Make queue busting a priority – Browsers will not become buyers if the payment process is time-consuming and frustrating. Retailers must adopt a pro-active policy of queue busting through offering an increased variety of swift and simple transaction choices for customers.
2. Customers value face time with retailers – Contact time at the till is the ideal opportunity for retailers to upsell and promote loyalty schemes, offers and new products.
3. Understand and address security concerns – As retailers expand into new channels for shopping and payments, these are worrying figures. Retailers in partnership with banks, payment providers, card issuers and app providers must work together to address concerns.
The successful future of the high street ultimately lies in adopting an omni-channel approach. Our research demonstrates that there is consumer willingness to adopt new and faster methods of payment. From contactless technology to mobile tablets, there are a wide variety of options to be explored. The retailers that are successful will be those that make balanced investments across channels to ensure that the customer experience is compelling regardless of how they shop and pay.
