The future of retail is frictionless
As we head towards the end of 2020 and the approaching festive season retailers will be looking to end the year on a high. But they also need to think further ahead, to the future of retail generally.
Believe it or not, the festive season is fast approaching. With less than 12 weeks until Christmas, and even fewer to Black Friday and Cyber Monday, if this were a typical year now would be the time that stores would traditionally begin ramping up their activities in preparation for their most profitable months.
Of course, 2020 has been far from typical to date, and looks set to continue on the same unique path through to its conclusion. Spearheaded by the global pandemic and subsequent social distancing measures, much of what has previously been taken for granted no longer applies. And where the ‘new normal’ hasn’t turned the status quo completely on its head, there has been rapid acceleration of consumer trends and the move to digital.
So what does that mean for high street shopping? Retail businesses are of course desperate to end the year on as positive a note as possible, but will have to dramatically re-think their seasonal strategies to do so.
From sticky to frictionless
Before the COVID-19 outbreak, the overriding objective of retailers was to keep customers in stores for as long as possible in order to maximise the potential of making a sale. Features such as protracted one-way systems, in-store samples or demonstrations, and temporary attractions e.g. a Santa’s Grotto, are all designed to prolong the amount of time a customer interacts with the retail experience.
Moving forward, the opposite must be the primary concern of retailers. With health concerns at the forefront of many shoppers’ minds, and government rules mandating a limit on the number of visitors to stores at any one time, making the shopping experience as frictionless as possible is going to be paramount for sales.
There are many ways retailers might think about making their customer experience frictionless, but they will want to do so in a way that still facilitates quality engagement with the brand. So the most obvious point in the retail experience to reduce friction, which would unequivocally have a positive impact on brand experience, is to reduce queuing times and interaction at the checkout.
The checkout experience is already having an impact on retail. In our latest research report Lost in Transaction: The impact of COVID-19 on consumer payment trends, 11% of consumers across seven countries told us during the height of the pandemic that they were no longer shopping in stores, and a further 30% said that they were only using contactless payment methods wherever possible to limit interactions at the checkout. These percentages were even in higher in the UK; 15% of consumers had stopped shopping in stores altogether and 35% were only using contactless payment methods.
In contrast, only 16% of all the people we surveyed said that they actually preferred shopping in stores to shopping online.
In addition, 38% of international consumers said that they would be shopping online more frequently even if COVID-19 was no longer a factor. When asked why, 40% of these consumers had health and safety concerns, and 65% valued the convenience of online shopping.
Overhauling the checkout
The number of retailers which accept contactless in the UK today is already very high, but for smaller shops upgrading wherever necessary to accepting contactless payments would be the first step to reducing checkout friction. The value of doing so has been increased by the raising of the contactless card limit in many jurisdictions. Over half (54%) of consumers said to us that making more contactless payments during the COVID-19 pandemic has made them more comfortable with the payment method and a similar number (55%) said they will be making a greater percentage of their payments via contactless in the future due to health and safety concerns.
Offering a more sophisticated omnichannel checkout experience is also a possible way to upgrade. Removing the physical checkout from the sales process would remove a bottleneck; customers could pay for items digitally either before (click and collect, curb side delivery etc), or during their visit to a store via a smartphone and completing their shopping experience without interacting with any members of staff.
This second example of omnichannel checkouts can be taken even further. M&S, for example, has rolled out a checkout-free, mobile self-scanning and payment option to at least 50 of its stores in the UK. While this type of checkoutless experience may still be some way off there is no doubt that the COVID-19 pandemic has accelerated society in this direction.
This article was originally published in Fintech Finance.