In the retail industry, like many other sectors, the maxim ‘innovate or die’ seems to be growing in authority and relevance by the day.
Financial institutions (FIs) that count merchants and retail businesses among their clients should be making every effort to encourage them to embrace change and technological evolution, particularly where payments are concerned.
This point was emphasized in a recent report from Worldpay, which showed that small, independent retailers are putting up a fight against larger competitors thanks to their savvy use of technology.
‘Digital dinosaurs’ at risk of extinction?
Analysis of the number and value of card transactions processed by Worldpay across 20,000 UK businesses showed that small, independent stores have experienced year-on-year revenue growth of up to eight percent. This was partly attributed to smaller firms’ strategies of offering a combination of in-store and online shopping options.
Specifically, florists that have given customers the choice of browsing and purchasing online, as well as in-store, have seen revenues rise by 8.34 percent on average in the past year. Bricks-and-mortar-only retailers, by comparison, have experienced a decline of 0.41 percent.
A similar trend was noted for bakers and cake shops that have taken steps to make it as simple as possible to order from them online.
It’s no secret that ecommerce has experienced a massive boom in recent years and growth in online shopping shows no signs of abating, but Worldpay suggested that the benefits the more tech-savvy retailers are enjoying go deeper than this. The firm said offering greater flexibility is “having a broader impact on customer perception and loyalty”.
James Frost, UK chief marketing officer at Worldpay, said: “Far from killing off traditional high-street businesses, easy access to technologies like ecommerce is helping small business owners to reinvent their relationship with customers by being more flexible to their needs.
“UK shoppers still love heading to the high street, but it is not always practical, possible or convenient to do so. It’s fantastic when a regular customer pops in to see you for some advice, but our data shows that real loyalty stems from giving customers a choice.”
Is choice now the defining principle in payments?
This latest piece of research gives further credence to the argument that, in all segments of the financial services industry, but particularly in payments, choice is a fundamental principle and a key driver of the consumer experience.
Modern-day consumers have become accustomed to choice in every aspect of their lives, with unprecedented diversity in everything from mobile phones to supermarkets to television streaming services. Financial services may have been slower to get onboard with this trend than other industries, but it is making big strides to catch up.
As far as purchases and payments are concerned, consumers now have the option to shop on their home computer, on their mobile, in person and possibly even in the realm of virtual reality. They can pay in cash, by card or via their mobile, with even more options – such as wearable technology – set to join this list in the near future.
Consumer choice and market diversity look set to become even bigger concepts following the launch of PSD2. This forthcoming legislation will give people the option to use payment initiation and account information specialists to complete transactions on their behalf or access their account data for purposes such as product comparison.
FIs that want to keep their customers happy will need to show that they are willing to invest and evolve to stay in touch with these trends and maintain relevance.
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