If there’s something the Covid-19 pandemic has pushed businesses to do in 2021 it’s to reassess their business model and identify new routes to engage customers.
Technology is a powerful tool in the hands of retailers, constantly revolutionising and bridging the gap between offline and online trading worlds. At the same time, ensuring personalised and experience-rich buying journeys where shoppers feel valued remains a priority. Companies have also rolled up their sleeves to diversify their payment options so they're in alignment with consumer sentiment and choice. Contactless payments are ushering cash aside, riding the wave of new preferred payment methods for fast and convenient transactions. This article casts the spotlight on three B2C trends that we predict will rebuild the retail and payments landscape.
What’s in store for retail and preferred payment methods
Despite the challenges the retail and consumer market has faced, there are signs of optimism and novelty for 2022. The impact of Covid-19 forced brands to reshape their business strategy and address any operational weaknesses. PaymentsJournal forecasts that the year ahead will see a surge in software points of sale, while payments will become faster and fraud awareness stronger.
Demographically speaking, younger generational groups appear as the keenest to embrace new shopping formats, according to McKinsey, underlining speed and flexibility as the main drivers. This suggests that retailers need to consider their omnichannel capabilities to meet consumer expectations across touchpoints. On a regional level, 51% of the 1,000 US respondents participating in a Mastercard survey admitted that they started favouring contactless cards over cash in 2020, 56% of which won't cease to use them after the pandemic. These findings could work on par with another Mastercard report arguing that the need for health and hygiene induced a preference for contactless payments in the Asia Pacific amid the pandemic, fuelling the decline of cash usage.
As the above figures illustrate, retail is forging ahead in a digital era and there’s no way back to singular and traditional ways of paying – the lines between physical and digital buying patterns will continue to blur. Fundamental shifts which were afoot within the retail world accelerated with the pandemic’s outbreak. Disruption has thrusted businesses into a future state – one that enables multiple yet unified customer touchpoints and payment solutions to facilitate a shopper's journey.
Reimagining shopping experiences
As 2022 creeps closer, there’s plenty of new possibilities for the retail industry. Nowadays, you can purchase anything from a cappuccino to a dining table with a single tap of your payment card, your smartphone, or your Apple watch. Gone are the days where you had to stand in line or grab your wallet to complete a transaction. New ways of purchasing goods or services are emerging, and businesses must adapt to evolving consumer behaviours and payment preferences. That said, a seamless and intuitive shopping experience where payments can be processed through different technologies is key here.
Frictionless payments are a must-have
A promising trend that's making inroads and catches up with consumer demand is that of frictionless and experiential retail. Businesses are expected to create a hassle-free and purpose-driven customer journey by relying on omnichannel technologies with minimal contact involved.
For instance, X5 Retail Group, Russia's leading grocery chain has collaborated with Visa and Sberbank to implement biometric payment services in their Perekrestok and Pyaterochka shops in an attempt to ease payments. This solution applies 3D biometric technology which authenticates a customer’s identity by scanning their face through a USB camera. Sberbank clients can now “pay with a glance” at X5’s self-checkouts by opting in for this payment method, while Sberbank is responsible for the storage and encryption of the buyer's biometric information. This is a win-win situation, as consumers shop with convenience and safety while the company achieves repeat custom and brand trust.
Evidently, biometric transactions are winning ground in the payments arena with an estimated growth to $63.4 billion in 2026 according to Facts & Factors, encouraging the adoption of this payment solution for a timesaving and fully secure transaction processing.
Hybrid retail and mobile transactions will thrive
Brands are embracing hybridity, recreating their concept of shopping experience in physical stores online.
Nike's 'speedy experience' is testament to these innovations. Having the information at their fingerprints, consumers can visualise products at home by looking through stock inventory online and reserve the shoes they wish to try on in store. Upon their arrival at the shop, customers can quickly purchase their shoes with near-autonomy via mobile payment – namely, without having to join a queue or engage with a salesperson. As this indicates, mobile payments are on the rise. In fact, emerchantpay’s New World, One Market report showed that transactions conducted through mobile phones are most prevalent between two demographic cohorts as of 2021, with 46% accounting for Gen X and 36% for Baby Boomers.
Digital discovery and store browsing online are also gaining traction. A host of mature technologies, such as QR codes, magnetic chips, or AI systems, allows consumers to get a feel of products on demand through their devices or in-store machines. In essence, consumers can replicate the online shopping experience by sifting through anything from customer reviews to the sheer volume of stock availability and many more.
App usage peaks as virtual showrooms go mainstream
Mobile card and point of sale terminals have been massively popular within the hospitality sector. The effects of Covid-19, however, brought the mobile terminals to the fore in use for customers who practice social distancing while grabbing takeaway. Managing footfall to ensure a safe experience for consumers and offering them payment methods of choice at the checkout will be a non-negotiable for fashion retailers too in 2022.
Zara's virtual showrooms are a promising substitute to physical changing rooms. When you download the Zara app on your phone, you can point your camera at any given spot in the brick-and-mortar store. Holograms of fashion models sporting the latest Zara collection will fuse with living spaces, unfolding the augmented reality (AR) experience on your phone's screen. From there, shoppers can click and shop the item(s) with minimal effort, reaping the benefits of this virtual try-on feature.
Apart from the above technologies of online realities, Zara’s interactive way of purchasing is supported by other investments, one of which is a London pop-up for digital sales aimed to integrate commerce and eCommerce shopping for an altogether rewarding customer experience. Looking further ahead, The Boston Consulting Group predicts that the global market size of virtual reality (VR), mixed reality (MR) and augmented reality will reach up to $300 billion by 2024.
Subscriptions will continue to surge
Subscription offerings grew in popularity during the pandemic thanks to digital entertainment, stay-at-home deliveries and consumer reluctance to getting essential goods.
Freemiums are here to stay
Despite the revival of physical retail in 2021, eCommerce subscriptions show no sign of being a mere fad. emerchantpay’s New World, One Market report found that subscriptions rose by 29% in 2020 compared with 2019, with Gen Z having the strongest purchasing power of any other age group – averaging on £31.46 per month. What started off as an initiative of brands to build stronger relationships with their customer base and glean insights into what drives sales, freemiums and subscriptions are forecasted to scale up to a global market worth $1.5 trillion by 2025.
The Gadget Discovery Box stayed ahead of the curve and maintained customer service at the highest possible standard with engaging subscription boxes from £22.99 that elevate a consumer's brand experience. The company delivers an exciting device to their user's doorstep on a recurring monthly basis, building intrigue on what's coming each time and inspiring consumers to keep renewing their subscription.
Akin to the above strategy, Beauty Pie grants their customers access to their luxury skincare and premium beauty goods from £59 for a whole year without the hefty price tags the products would normally be sold for by high competitor brands. According to Recurly Research, April 2020 experienced the biggest spike in subscriptions (85%), while new trials soared the most during the last two weeks of March 2020 (120% and 101%, respectively). It only remains to be seen how much and how quickly these numbers will grow in 2022.
ReCommerce will boost brand loyalty
A customer-centric approach is the way to go for both commerce and eCommerce players in the years ahead. The pandemic has enlarged buyers’ scope of interests, encouraging them to keep raising the bar for the brands they support. Consumers are looking for goal-driven brands that reflect their own motivations, demonstrating social consciousness in ways that enact positive change and repeat custom.
In this case, reCommerce and the customer to customer (C2C) business model are building momentum as consumers are expressing more sensitivity towards sustainability. Whereas the second-hand market is no stranger to the pre-Covid-19 world, it flourished during the pandemic mainly due to budget cuts and the enforced closure of physical shops.
Gen Z is the generational group of online shoppers with the biggest appetite to explore rental and resales forms of shopping that are more affordable, socially interactive and sustainable. As a result, the stigma surrounding this “thrifty attitude”, (i.e., the process of buying pre-owned goods) is fading among young people compared with their older counterparts. Depop is an apt example of this, since it's a second-hand online retail hub of independent sellers who offer well-curated items to their socially and environmentally responsible community.
The outdoor supplier North Face is also pivoting towards an eco-friendly and recycling business model under the 'North Face Renewed' programme. With the aid of renewable materials, the brand is planning to minimise their environmental footprint by 2025. Research from GlobalData foreshadows that by 2030, the overall spending on resales will shoot as high as $353.9 billion – marking a 153.5% surge from 2020.
According to a PwC survey, one of the determinants that informs customers’ purchasing decisions is trust. In fact, 70% of respondents set trust as a critical component for buying something, urging businesses of any size and industry to remap their brand positioning. The element of trust dovetails with similar buying considerations such as convenience, value and quality, all of which could apply to both customer service and ease of payments. The Edelman Trust Barometer special report of 2020 stated that 71% of participants are likely to lose trust in a brand that prioritises profit over people. Therefore, keeping their finger to consumers' pulse and accommodating their needs with a relevant value proposition is a resounding “Yes” for brands.
H&M, the multinational clothing firm, weighs heavy on social awareness focusing on messaging and solutions rather than selling. Earlier this year, they upgraded the “five-pound recycling voucher” policy. The customer still needs to donate their bags of unwanted garments or textiles on the cash register but in exchange of a digital voucher, scanned via the customer’s mobile app QR code, which adds loyalty points to their membership account. Not only are these so-called “conscious points” serving a good cause, but they're also redeemable upon a shopper's next purchase with a value of 25 pounds and beyond, which gives them a good incentive to spend more both in-store and online.
From a payments standpoint, flexibility and data security against fraud during transaction processing remain paramount. Whether your customers are browsing through your eCommerce website using their digital devices, you should give them the freedom to pay how they want to as well as safely store their card data, so any subsequent purchases become possible with just a click.
How emerchantpay can help
Given the growing magnitude of the aforementioned trends, it’s worth leveraging multiple digital payment methods to meet your consumers' preferred ways of paying and set convenience as a priority for your customer experience. If you’re searching for a payment service provider who can help you streamline your payment flow and support with recurring payment capabilities, search no further. With emerchantpay’s tailored solutions, which can help you boost your payments systems’ performance and profitability, you’re well placed to cultivate brand loyalty and initiate fruitful upsell opportunities. Operating on cutting-edge technology and a customer-first mindset, we empower brands to craft seamless and engaging payment experiences for their consumers.
Rehaul your payment strategy in 2021. Visit our Online Payments page to learn more about the different payment types you could be offering your customers and get in touch with our payment experts.