Most European retailers are planning to grow in 2021, making cross-border expansion and the ability to rapidly adjust to a changing environment their top priorities.
New research published by the payments and treasury platform Stripe and conducted by Forrester reveals most European retailers plan to expand, rather than contract, their business in the wake of COVID-19. But while the pandemic has generally accelerated the shift to a more online economy, business expansion still comes with some challenges.
The study – which surveyed 495 respondents across the globe in September 2020, with 221 respondents coming from Europe – finds that European retailers are adapting to the current crisis with a surprising resilience. A third of surveyed companies have felt an overall positive impact on their sales, and more than half (57%) are planning to expand to other countries. Improving customer experience also ranks high in priorities, with 56% making it a high or critical objective over the next twelve months.
Retailers do not only want to grow, but they also understand that they need to become more agile to better anticipate and adapt to market changes. After a very eventful year, a majority of businesses (56%) have made it a critical or high priority to speed up their ability to respond to such changes. 51% of respondents say they are considering adopting a new business model, such as a subscription service, over the next eighteen months.
What is more, as retailers operate in a context of a global crisis that makes every single euro matter, they are faced with increasing fraud attempts. 38% of European retailers report an increase in fraud attempts over the past 12 months, which the 2021 roll-out of Strong Customer Authentication (SCA) might help tackle. Unsurprisingly, a majority of them (57%) say improving fraud detection and mitigation is a high or critical priority for their company.
A majority of retailers find international expansion challenging. As they move into new global markets, they face new sets of payment-method preferences, localization nuance, and regulatory hurdles. Being able to localize payment options is a challenge, but to truly support a particular market, it requires comprehensive language support. However, 42% of respondents said their firm doesn’t have that capability.
To fluidly function within different markets and regions, firms also will need to adapt to different rules and regulations. But 44% of respondents said their firm lacks the local expertise to understand country-specific policies and regulations around payments.
These hurdles can be damaging to a company’s ambitions abroad, as they can result in lower revenues and a higher cost of entry to the market (31%). They make executives more reluctant to support international expansion (29%) and can lead to regulatory fines (29%). Sometimes, they even prevent companies from expanding into a new market altogether (33%). All this threatens to slow down growth and recovery in Europe.
European retailers’ appetite for growth is also reflected in their payments priorities. Their first concern is to increase revenue and profit from mobile channels (26%). Improving cross-border payments capabilities (21%) and the choice of payment options (20%) also rank high.
Businesses are expecting payments to provide them with a competitive advantage to acquire more customers and improve their strategy in response to COVID-19. Retailers in Europe plan to make implementing new payment methods (36%) and gathering more customer data and insights from payments (27%) their top priorities over the next eighteen months. They are looking for state-of-the-art payment capabilities from their providers, such as loyalty services (55%), card linked offers programs (47%), and white-labelled consumer lending services (45%).
“As the economic effects of the pandemic are being felt across Europe, European retailers have shown impressive resilience and are forward-looking despite significant hurdles and challenges. Stripe has a strong track record of helping online businesses find their way through regulation, and we will continue to support these businesses’ efforts to scale internationally from day one,” says Max Roberts, UK Country Lead at Stripe.