The coronavirus pandemic forced brands to transform their businesses in multiple ways that are set to stay.
Not only has it accelerated digitisation, it’s also bought about customers who regard experience and brand values as highly as the quality of the product or service they are purchasing. The ABS’s recently released retail trade figures, point towards the post pandemic recovery signs in the sector, and with increased consciousness around hygiene, data security and quality of service, the integration of digital payments and associated trends will play a critical role in helping retail industry to bounce back.
The payment trends of 2021 are being shaped by this changing consumer, as well as the lasting impact of COVID-19. Businesses cannot myopically assume that their digital customers are limited to younger, tech-savvy shoppers. COVID-19 has changed that for good, with every generation moving online in some regard.
To attract and retain these customers in 2021 and beyond, brands and retailers should pay close attention to four key payment trends:
1. Consumers will drive demand for Unified Commerce
The businesses that consistently performed well throughout 2020 were those that combined their physical and digital worlds to create a fluid, channel-agnostic experience that prioritised the customer. With payments from all of their channels feeding into the same system, this practise – known as Unified Commerce – allows merchants to act with greater agility. With everything connected, they were able to identify and support new customer journeys quickly and more.
Over the past few years, savvy first-movers in retail have taught consumers to expect a seamless integration of offline and online service delivery. Other merchants have raced to catch up, but the pandemic has exacerbated this need tenfold. With bricks-and-mortar stores closed, fusing offline and online became an issue of survival for businesses, who quickly pivoted to make app-powered curb side pickups, delivery, and virtual experiences a reality.
Despite stores reopening, consumer demand for this digital infrastructure remains. Shoppers prefer the convenience and experience it offers, and retailers are forging better customer relationships thanks to the rich data generated by digital transactions. This demand will grow even stronger in 2021. 74 per cent of Australians expect businesses to maintain the flexibility they’ve shown in selling across multiple channels during the pandemic, as shown via independent research for Adyen’s Agility Report.
2. Contactless will extend its reach into every corner of retail
The pandemic also increased demand for contactless payments. Consumers want to make purchases without worrying about their safety and they expect businesses to meet minimum hygiene standards. Contactless payments are now the method of choice for half of all Australians surveyed in Adyen’s Agility Report, and most want to see retailers make use of technology to reduce person-to-person contact.
As alternatives to handing over cards, touching keypads, and handling cash; digital wallets, tap-n-go and QR codes have become more prominent payment solutions. Over the last year, Adyen platform data shows the use of services such as Apple Pay and Google Pay has significantly increased – as shoppers opt to pay with their phones instead of their wallets. The pandemic has simultaneously proven the value of QR codes in anchoring a seamless, often delightful experience – not just at point-of-sale but at multiple points along the customer journey, such as viewing menus and placing orders.
Payment links are also becoming more prominent. In Australia, brands like Michael Hill and Incu have used Pay by Link technology to generate and send personalised payment links to customers within emails, during video calls, and through social media and website chat functions.
3. Instalments will become an everyday way to pay
The twin forces of increased convenience and tightening household budgets have brought pay-by-instalment options mainstream—a trend that is growing even stronger in 2021.
Driven by millennial consumers, this modernised version of layby offers an appealing simplicity compared to credit cards. For small and mid-ticket items, shoppers know that, say, instead of paying $100 now, they'll pay $25 per fortnight for two months. That kind of transparency makes it easier for shoppers on the fence to commit, which appeals to merchants hoping to avoid the dreaded abandoned shopping cart.
Providers of "buy now, pay later" options themselves will start to diverge, as some focus on higher-end, multi-year agreements, while others seek to offer instalment plans for ‘no minimum spend’ shopping baskets. For households increasingly accustomed to paying by the month for everything from streaming services to food delivery, instalment plans start to look like subscriptions that just happen to have a fixed end date.
4. Loyalty should not be assumed it must be earned
The coronavirus pandemic encouraged consumers to reassess their priorities, with many choosing to shop closer to home and with merchants they’ve bought from previously. But it’s also made consumers more discerning. Adyen’s Agility Report research shows 72 per cent of Australians won’t return to a retailer if they’ve had a bad experience, either in-store or online.
Across 2021, retailers must deliver a renewed focus on loyalty. Two-thirds of Agility Report respondents say that merchants need to improve the ways they reward shoppers – a sentiment shown equally across all age groups. Australians want loyalty programs to be automatically linked to their payment card, and many prefer retailers who remember their preferences to create a more tailored shopping experience.
Furthermore, retailers should optimise the full customer journey to ensure high quality experience at every touchpoint. Letting Australian shoppers purchase an out-of-stock item in-store and have it delivered to their home, or buy things online and return them in-store breeds brand loyalty.
It’s here where unified commerce can really pay dividends for retailers. With seamless links between channels, retailers can open up new shopping experiences that are proven to boost loyalty and create new avenues to reward repeat custom.
Michel van Aalten is Country Manager ANZ Adyen.