Before Covid-19 hit, there was plenty of brick-and-mortar retailers that lacked an online presence. Being a part of the high street was enough to get by but with the arrival of the pandemic, and the enforced lockdown, many of these stores had to close and some, even famous brands like Topshop and Burton’s, had stores that never reopened. In order to survive, many retailers needed to build an online store as consumers had shifted their purchasing power online. This was both due to the necessity of the pandemic but also because of the ease and flexibility of online shopping.
But recent research from PXP Financial - looking at the consumer habits across the UK and five other European countries, demonstrates traditional retailers still have a fighting chance - as long as they embrace the power of fintech. Forward-thinking merchants and payment players will adapt to the “new normal” by using innovative payment technologies to replace cash usage. By working together to better understand consumer behaviour, retailers and payment players can capture consumer imagination with personalised promotions and value-added services that will deepen customer loyalty.
Surviving past the point of no-return
Starting with the bleak news, when combining answers from respondents across all the countries featured in the PXP survey, over 42% agree that the high street is past the point of return and online shopping will continue to take over. Respondents in Germany (50%), Spain (50%) and Italy (48%) rank the highest in believing high street retail will become a thing of the past, closely followed by more cautious UK respondents at 44%.
However, people were still using the high street throughout the pandemic based on the contactless payments data from the survey. Contactless payment is primarily used in bricks and mortar retailers, so the huge surge in contactless use in 2020 and through 2021 proves that people are still purchasing on the high street.
The survey results show that the new appetite for contactless won’t subside as the retail landscape moves to a new normalcy. Respondents stated that they were now more likely to spend money at retailers that offered contactless/contact-free payment options than before Covid-19, with 65% of all respondents saying yes.
Looking solely at the UK results, Covid-19’s impact on ecommerce has been dramatic, even as the situation extends into 2021. Figures from IMRG Capgemini Online Retail show that UK online sales grew 74% year-on-year in January 2021, the largest rate of growth since the start of the first lockdown in March 2020. Omnichannel retailers enjoyed a 99.8% year-on-year rise in sales across their online channels compared to their online-only counterparts, while mobile ecommerce sales soared by 169.1%.
It’s not a surprise then, to see that when asked if they would be more likely to spend money at a retailer that offered contactless than before Covid, over 61% of UK shoppers answered positively, while nearly 30% said it had no influence on where they chose to shop.
UK respondents are already savvy online shoppers and will expect merchants to offer more incentives and rewards for frequent purchases. In an increasingly crowded online marketplace, merchants and payment players need to get much more creative in their marketing to stand out.
Forging partnerships with your payments
Retailers and payment organisations need to work together to understand what their customers need in this new normal, and how they can ensure continued customer loyalty even as the face of retail changes in line with the widening array of payment methods. Added-value services like loyalty schemes, promotions and in-store rewards through QR codes are all valuable tools that retailers can use to offer their customers convenience, speedy footfall and payment security.
If merchants use solutions which can generate data insights from customer payments, they can quickly identify how best to optimise the retail experience for their customers – whether that’s through targeted personalised promotions, in-store-only redemption of rewards, or online discounts. Only by getting a deeper understanding of their customers will merchants be able to foster deeper loyalty and greater sales volume.
This new retail landscape that retailers and consumers find themselves in doesn’t have to mean the end of the high street. It can also offer a prime opportunity for merchants to join with payment organisations to promote safer, quicker and more efficient cashless payments. At the same time, European retailers can gain valuable insights into their customers, enabling them to adapt to changing consumer needs much more quickly and efficiently than before.
The make-up of the high street may change in the future, but merchants can always count on the continued loyalty of their customers as long as they can offer them a good shopping experience. This requires the retailers to offer a quick, secure and enjoyable payment experience in store that can match the benefits of online shopping. An experience that is optimised for the ‘new normal’ that we all now find ourselves a part of.
Koen Vanpraet, Group CEO, PXP Financial