Retail and the new age of flexibility
By Colin Neil, Managing Director, Adyen UK
Retail has undergone a massive shake up in the past five to ten years. And now the Covid pandemic has fuelled the biggest sea change in retail for the last century.
Decade’s worth of innovation and adoption of new technology has taken place in a matter of months. McKinsey has even dubbed it “the Quickening.” 10 years’ of e-commerce growth took place in just three months in the US alone and 75% of consumers tried different stores, websites and brands in 2020.
Unsurprisingly, clothing sales dropped at the start of the pandemic while other categories like groceries, alcohol and home improvement materials increased.
With the UK going in and out of lockdown, retailers were forced to close shop for extended periods of time. It’s only natural that the shift to online shopping was so noticeable.
By February 2021, 75% of consumers had said they had been shopping more online during the pandemic than before.
Somewhat counterintuitively, retailers had an opportunity to reach more customers than ever before during the pandemic – even the small independent stores opening an online presence to cater to their customers.
With more merchants online, consumers were given more choice than ever. This mass availability of products also created a growth in competition, and niche independent stores were able to go up against the established chains in the digital high street.
Merchants were forced to deliver quick, easy and enjoyable checkout flows in order to keep customers satisfied.
What remains to be seen from “the Quickening” is which trends are reversed and which become permanent shifts. Here’s three things that will become permanent fixtures on the retail scene.
Change is the only constant
Adyen’s research from 2020 found that 31% of people are less likely to shop in physical stores now because of their positive experiences shopping online during the pandemic.
Furthermore, 72% of these consumers want retailers who started an online service during the pandemic to continue operating it in the long term.
This isn’t to mean that the high street is seeing its much vaunted death.
In fact, while the pandemic accelerated a shift to online shopping out of necessity, research from 2021 found that 54% of Brits said they prefer to shop in physical stores, up from 50% in a similar study conducted last year.
Businesses therefore need to ensure that their omnichannel strategies are watertight to cater for those who like to shop in-store but appreciate and prioritise the convenience of online retail.
Retailers have used the time in lockdown to make changes to enhance the customer experience, which has not gone unnoticed by consumers.
Our research in April, when non-essential retail had just reopened, found 24% of respondents saw retailers create links between physical and online stores, 22% noticed efforts to improve the in-store shopping experience, and 21% appreciated retailers using technology to reduce physical touchpoints.
Platforms continue to rise
Platforms and marketplaces aren’t new. The likes of eBay, Etsy and Not On The High Street have been around for years.
The pandemic has increased the sales from platforms across the world and their marketplaces and payment features are ideal for retailers looking to sell online but don’t have the resources to develop their own e-commerce portal.
To deliver the maximum experience for those retailers using platforms, it’s crucial that platforms and marketplaces can offer streamlined onboarding processes and rapid pay outs.
Platforms also give merchants access to tools which they may not have understood, or been able to implement themselves. Payment tokens are the perfect example of this. Tokens replace sensitive data and improve the payments experience.
Sensitive data, such as primary account numbers are replaced by a token in real time meaning sensitive data is never used in a transaction. This dramatically cuts down the chance of fraud because the one time token can’t be hacked or used again.
Tokens therefore enable consumers to securely save or share their payment details with merchants across a platform, opening up the possibility of one click – or even no click – payment experiences.
For merchants, tokens help to improve payment authorisation rates and conversions, meaning more satisfied customers and increased pay outs.
Importance of ethics
The pandemic and the greater acceptance of social values, as well as the growing climate emergency have ensured that values now play a bigger role in the how consumers shop.
Our research found 62% of consumers felt that as a result of the pandemic, a retailer’s ethics, like paying staff fairly, contributing to the community, or environmental support, was more important to them and plays an impact in their shopping decisions.
Understanding this and being able to show it to consumers while being genuine, is an important step in building brand loyalty and winning over new consumers.
Final thought
Retail has evolved more in the past 18 months than in previous generations. The challenge now is maintaining the new services and solutions that have been rolled out.
Even when the pandemic subsides, as research has found, many of the habits and experiences developed will remain. Being flexible and agile to adapt to market changes will be essential in the new retail age.
