Technological and digital progresses have brought deep changes to the retail industry in recent years. Users currently demand high service levels, frictionless user experiences and one-click payments. This is especially true in today’s multichannel, always-connected, hypercompetitive consumer markets.
Buyers are constantly moving between online and offline stores, trying to obtain better services or products at lower prices. To illustrate, 54% of European citizens buy products online monthly or weekly; 34% use their smartphone to buy online; and reviews and comments on social media influence the buying behavior of 67% of customers. (IDC Retail Insights) The proliferation of customer interaction points requires brands and retailers to invest in the engineering of a customer experience conveying consistency of service and experience across channels.
A recent survey by the Milan Politecnico Observatory of Digital Innovation reports the majority of retailers are trying to develop an omnichannel strategy, concentrating their investments on: innovative payments (22%), new systems for couponing and loyalty acceptance (19%), kiosks, totems, touchpoints (15%), advanced POS terminals (15%), digital signage and smart shop window (13%)
Regional trends across Europe
Trends vary significantly between countries, as shown in the latest research of PAC “Omnichannel Retail in Europe – Strategies, Challenges & Measuring Success.” In the Nordic countries, merchants are already selling through mobile channels, whilst in Italy less than a quarter of retailers think mobile is important. Similarly, in Germany 85% of retailers think the physical store will remain the most important channel.
The vast majority believe online shopping will become increasingly important as a channel for their retail business in the next 5 years, with only a small fraction (4%) say it will be less important. However, an interesting 73% also think that the brick and mortar stores remain extremely important for most retailers, and will continue to do so in the near future.
The most important elements of an omnichannel strategy are:
a) Diversification of consumer touchpoints to sell and accept payments when the consumer is ready
b) Tracking and monitoring consumer behavior with both purchase and payment data
c) Acceptance of the same payment method preferred by the consumer across all channels and touchpoints
d) Focus on payment security as a key driver affecting the retailer’s brand image: avoiding “no trust, no purchase.”
One of the main goals of an omnichannel retailing strategy is to simplify and shorten the checkout process. Today’s consumers expect absolute efficiency from retailers during every stage of their purchasing experience. In fact, saving time is a recurring rationale for shopping online but it is a reality for in-store purchases as well.
As explained in the research “Omni-channel Retailing” by Ingenico Group, in order to shorten the checkout queue, 43% of consumers would appreciate being able to pay using a tablet or another mobile device in-store.
Consumer expectations for retail services will be a seamless omnichannel shopping and a payments experience combined with added-value services across all channels can increase customer loyalty and retention. Consumer research shows key insights on their shopping experience wish list to be:
a) Faster Shopping: 52% of customers abandoned purchases due to a long queue at checkout.
b) Flexibility: 92% would appreciate out of stock items being shipped to their home.
c) Multi-payment services: 71% of the consumers want more payment options at their touchpoint of choice.
d) Bridging technologies that connect consumers’ mobile devices with physical instore options: contactless NFC/RFID, QR codes, Bluetooth Low Energy (BLE).
Modelling the customer experience
In developing an omnichannel retail model, we should review the opportunities for the customers to choose amongst different touchpoints made available by the retailer when designing the purchasing experience: face-to-face POS terminals at traditional brick-and-mortar stores, ecommerce websites, mobile apps enabling in app or remote payments at the checkout point, MoTo transactions, etc. Moreover, each channel may support one or more payment methods, ranging from debit and credit cards, to bank transfers based on proprietary protocols (like MyBank and Sofort), SDDs, PayPal and locally developed systems.
The most important thing to consider is the purchasing experience cannot be reduced to one simple payment method. Adopting an omnichannel strategy involves leveraging many other elements including social advertising, product pricing, predictive customer analysis and logistics.
Payments and payments methods should be transparent in this context and enable a frictionless experience. This usually requires investments in technology and in potential new collaborations with third parties. Yet, standard all-in-one solutions are considered inadequate to provide seamless and customized purchasing experiences across channels and throughout the buyer’s journey.
Investing in mobile technology and security
Providing a consistent omnichannel shopping experience may require the development of
tokenised acceptance points. Tokenisation is a key enabler in offering digital payment methods and contactless form-factors – like NFC stickers, wearables, Apple Pay, Samsung Pay, Android Pay and virtual wallets – without having to store sensitive card data. Consumers have widely embraced mobile technologies and connected mobile devices which allow them to shop cross-channel and across borders. Contactless, mobile apps and mobile devices will increasingly become the new norm for consumer shopping, offering retailers greater potential for competitive differentiation.
eCommerce Payment Gateways
In the ecommerce field, competition between gateways is fierce. However very few solutions have been designed to be flexible enough and adapt to merchants of different sizes and with different requirements. The reason for this is most gateway vendors are interested in volumes and therefore target a specific type/size of merchant to reduce investments and costs. Most of them tend to offer all-in-one-package solutions with standard plug-ins to standard gateways.
Standard gateways are good for many merchants but all-in-one solutions do not take into account new regulations, nor do they consider the variety of payment services currently being deployed in Europe. Moreover, they do not offer the possibility to switch acquirer or service provider if the service levels are considered poor.
With the competitive opportunities being created by PSD2, retailers can leverage third-party payment service provider to reduce fees while integrating eCommerce platforms with card acceptance and other payment instruments at both their virtual and physical stores. Flexible PSP platforms that can connect to any acquirer selected will enabling the merchant to negotiate better prices and services compared to other well-known gateways.
Payment services should also extend beyond local acquirers with licenses by the international payment schemes to process cross-border card transactions for an optimal merchant and customer experience.
In the shift to omnichannel retailer, the focus is no longer on analysis of single interaction points but expanding your scope to understand the entire customer journey.