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Payment technology will fuel the UK’s retail resurgence 

Payment technology will fuel the UK’s retail resurgence 

By Andrew Howell, Global Marketing Director, K3 

The UK’s retail sector has gone through some drastic changes over the past year. So drastic in fact, that it’s beyond recognition. Consumers are now balancing shopping requirements with personal safety, and buying behaviours have been flipped on their heads. Due to the national lockdowns of 2020, online retail spend rose from 20% of all sales in January, to 36% of all sales in November last year. We’ve also witnessed a demand for contactless and self-service options in high street stores — to put this into context, contactless payments have increased by 30% since the beginning of last year.

But, lockdown restrictions are easing and non-essential bricks and mortar stores have reopened — and they are all vying for consumers’ attention. To win over customer’s hearts and wallets and come out on top, retailers need to recognise the importance of payment options. Recent K3 research demonstrates that people will choose where to shop based on the payment methods being offered. So, how do retailers get payments right?

Demands are changing

One in ten consumers would avoid a retailer if it didn’t offer contactless payment options at the checkout. If retailers want to avoid losing a big chunk of their customer base, they need to start taking this seriously.

In addition, more than half of shoppers (51%) actively try to avoid interaction with assistants when in-store. There is a growing demand from consumers for retailers to introduce self-service options in-store, and this has only been exacerbated by the pandemic. To demonstrate this notion further, K3 research found that 41% of consumers would like to have more self-service tills in shops, and another 16% want checkout-free stores similar to Amazon Go introduced more widely on the high street.

COVID-19 has shone a light on the need for minimal contact experience in-store, and we’re unlikely to see these preferences reverse post-pandemic. Retailers need to take them seriously or see consumers walk away. However, there are other factors in addition to the pandemic that drive this shift, most notably a growing demand for convenience and new retail services. Crucially, payments options are a key facilitator for both.

Payments and convenience go hand-in-hand 

Convenience is of huge importance to consumers. The majority of respondents said they used Amazon more this past year, with convenience being cited as their number one reason. But, the pressure retailers are under to offer shoppers convenience stretches back to pre-pandemic days. The brands that have done this have thrived – think of the likes of ASOS and Boohoo, which offer consumers seamless browsing, payment and return options. But others – such as high street stalwarts Topshop and Debenhams – failed to innovate and keep up with the competition.

When it comes to convenience, the in-store experience is currently found lacking. One of the top frustrations for shoppers is long queues, with 31% stating it as an issue forcing them to shop with competitors. However, it’s a problem that can easily be fixed with the right payment technology. For example, M&S recently rolled out a widespread installation of self-service tills and smartphone-based ‘mobile checkout’ services, giving customers the freedom to pay how they wish.

It’s this type of mobile service that is a key area for retailers to focus on if they want to win and retain customers for their convenience. Physical stores used to be black holes when it came to digital. While consumers could browse online and fill their digital baskets before visiting the high street, once they were on the shop floor, these digital touchpoints became irrelevant. But, with mobile payments, retailers are able to capture a single, digital view of shopper behaviour. In turn, this creates a bespoke, omnichannel experience.

Lastly, as part of their omnichannel strategy, retailers should be tying these digital payments to a loyalty scheme. And with 30% of customers feeling that not enough retailers offer such schemes, it’s a huge oversight. If retailers end the shopping journey at the point of purchase, they are ignoring the fact that the majority of their revenue will come from returning customers. Rewarding purchase through a loyalty scheme will mean customers are encouraged to come back. It also gives retailers vital data about their most valuable customers, providing them with another way to connect their physical and digital worlds and prevent physical stores from becoming digital black holes.

Powering new services 

On top of increasing convenience and customer loyalty, payments can also be used to create more enticing purchasing options for consumers. The likes of ASOS have triumphed when it comes to buy now, pay later payment options such as Klarna – a hugely smart investment with over 7 million shoppers using Klarna to date in the UK. Echoing this, the K3 research found that 15% of shoppers want to see more of these buy now, pay later options – which should be a wake-up call for retailers.

As we ease out of lockdown, payment technology is becoming a critical enabler for a retailer’s success or failure, and this doesn’t mean a retailer should consider its payment offerings in silo. Instead, they should look at it holistically, incorporating it into their physical and digital experience. If used wisely, payments can entice customers back for more. However, retailers have to act fast. In today’s retail climate, they only have one chance to get their strategy spot on.

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