Why is technology at the heart of any retail strategy?
Why is omnichannel imperative?
Why would retailers accept new payment methods?
The findings of the Advanced Payment Report will give you answers to these and many more questions.
Note: This article is part of our #DigitalRetail series - click here for an overview
Here is a brief overview of some of the report’s most interesting results:
1. Technology is at the heart of any retail strategy
In earlier times, pure e-commerce was often the focus of retail innovation.
But customers today are more demanding than ever and want to buy everything, anywhere, at any time. And they don’t communicate with merchants or service provides over only one single point of interaction:
For example, they discover an interesting product online, but visit a physical store to get a hands-on experience. Maybe at the end they still buy it online, but when they buy it in the shop, they might want to get it delivered to their home – but also take advantage of a downloaded special offer.
This is just a random example to show how much of a challenge a customer journey has become. Consequently, to ensure a seamless omnichannel and payment process, you need very sophisticated technology in the background.
Hence, as payment complexity has significantly increased, a vast majority of retailers said they would consider using third-party providers for hosted or cloud-based services for payment-related processes. When asked in 2014, only 60% had considered to do so.
2. Mobile Wallets and Social Commerce are very wide-spread
Which technologies are retailers already taking advantage of today?
Nearly half of all respondents already offer mobile wallets to their customers and of those who don't yet, 55% plan to do so within the next 12 months. Integrating social commerce into the retail strategy is also getting more and more common.
Besides open application program interfaces (APIs) and wearables, beacons are also starting to play a role, although currently still a small one. A beacon is a small wireless device transmitting a continuous radio signal which communicates with nearby devices like smartphones. So for example it can individually alert customers in a shop about a sale of certain product categories that interested customers in the past.
3. Omnichannel technology is not an option, but imperative
In order to enable clients a positive and seamless customer experience, many retailers are currently using significantly more channels than three years ago. Almost no one operates without a website, but in particular the number of mobile websites has grown significantly.
4. What makes merchants accept new payment methods
When retailers were asked what would convince them to accept new payment methods, the vast majority of nearly 8 out of 10 responded that they would do so if they could offer better customer experience. This is hardly surprising in times when customers are as well-informed, technical savvy and demanding as never before.
For #Retail, both the major trend and challenge is to offer a seamless cross-channel interaction
But new forms of payment are also often accepted in order to reach new audiences, for example mobile payment to attract people under 35 or regionally popular ways of payment, e.g. Alipay in China - or abroad in order to attract Chinese customers who are visiting Europe.
5. The key challenges in accepting payments
What retailers worry most about is not only fraud and security issues, but also the need to deliver simplicity and speed in order to offer a positive customer experience.
Due to the fact that the acceptance of mobile and other new forms of payment is expected to double in the next two years, merchants need to ensure adequate levels of security for accepting payments. In addition, the fear of too high payment fees distresses retailers, who fear sales profits will consequently decrease.
6. These trends are expected to have the most significant impact over the next 2-3 years
A seamless cross-channel interaction – this is the answer an overwhelming majority of retailers gave when they were asked about what will have the greatest impact on the retail industry. The authors of the study underlined that instead of merely improving the customer experience, the goal has shifted to creating a single customer journey regardless of the sales channel.
In addition, the idea of selecting products you want in-store, paying and leaving without ever having to queue at a POS system is compelling. A successful application of this idea is e.g. Starbucks with their app that allows customers to order and pay for products in advance, without waiting in line and paying at the cash desk.
When it comes to immediate payments, undoubtedly Amazon Go is a forerunner: customers enter a shop, identify themselves with their mobile, take items from a shelf and are then automatically charged when they leave the store with their purchase.
tl;dr? Retail transforming technology trends in a nutshell:
Complex customer journeys demand a sophisticated technology in the background, best provided by experienced third-party providers
Taking advantage of mobile wallets and social commerce wallets is becoming standard
The most important channels to customers are stationary and mobile internet
If a new payment method improves the consumer experience, retailers are very likely to accept and integrate it
In terms of key challenges of accepting payments, besides fraud management and fees, delivering simplicity and speed has gained major importance
Seamless cross-channel interaction is supposed to have the greatest impact on retail in the next years
If you want to learn more, find on our Market Knowledge site the complete Advanced Payment Report by Edgar, Dunn & Company for free download. This blogpost refers to the article “Technology is Changing Retail – A necessity to adapt” (p. 41 ff.).