Few years have been as tough on the retail sector as 2020. While Australia’s response to the pandemic has been the envy of much of the world; COVID-19 still caused mass casualties as businesses navigated rapidly changing regulations, as well as store closures, supply chain challenges and the pain of letting staff go. As consumers clamped down on non-essential spending, securing customer loyalty became more critical than ever.
The retailers that prevailed across this period are those that adapted their businesses to create strong online offerings and efficiently manage cross channel payments. With sales channels in flux, businesses were challenged to implement unified commerce by combining their physical and digital worlds to create a fluid, channel agnostic experience that prioritises the customer. While the trend was already growing in advanced retail markets, unified commerce played a fundamental role in stabilising some Australian retailers’ sales during the pandemic by offsetting lost in-store transactions with an increase in ecommerce.
In late 2020, the Centre for Economics and Business Research (CEBR) quantified the value of unified commerce. In research conducted for Adyen’s Agility Report, their modelling revealed that countries with a higher degree of unified commerce saw stronger retail sector performance amidst the pandemic. This is further demonstrated by data from Adyen’s payments platform which showed globally, 50 per cent of unified commerce retailers saw transactions remain consistent during the pandemic. Further analysis from CEBR also suggested that increasing Australia’s unified commerce preparedness by five points could have improved national retail performance by 2.6 per cent ($7.3 billion) across the pandemic.
With so many channels available to reach consumers, and a finite number of resources to manage them, retailers need to be discerning when setting and evaluating their distribution strategies. Sales channels are expected to remain in flux across this year, as the world navigates the ongoing impact of COVID-19. In Australia specifically, retailers are also likely to see some economic impact when JobKeeper and JobSeeker payments are wound back in March. Despite this, there are clear signals from consumers on what they expect from today’s shopping experience that can help inform retail strategies.
Independent research commissioned for our Agility Report shows that 33 per cent of Australians plan to shop online more often following the pandemic, but our thirst for in-store shopping remains. 72 per cent of consumers say they still prefer to shop in-store (more than any other country surveyed) and 63 per cent look forward to shopping in-store for pleasure. The magic for retailers lies in harnessing the best of both worlds to both satisfy and captivate customers. By allowing cross channel payments, customers can select their preferred payment method and move seamlessly between digital and physical transactions.
The ultimate goal of cross channel payments is to create a frictionless experience that allows customers to pick up right where they left off – and consumers agree. 39 per cent of Australians say they would be more loyal to a retailer that enabled them to start shopping in-store and finish online, or vice versa. Similarly, 60 per cent of respondents say they would be more loyal to retailers if they would let them purchase an out-of-stock item in-store and have it delivered to their home. Another 53 per cent say they would be more loyal to a retailer that lets them buy things online and return them in-store.
In addition to providing seamless transactions, unified commerce can also be used for cross-channel loyalty programs – whereby a customer’s payment method can become their loyalty card to automatically trigger discounts, tailored recommendations and other rewards. Such features are beneficial considering Australians have high expectations for loyalty programs. 65 per cent of consumers want retailers to improve loyalty programmes and 63 per cent now want programs to be linked automatically to their payment card, similar to what we’re seeing in Singapore and Hong Kong with 81 per cent and 61 per cent respectively, and 63 percent globally.
No matter the channel selected, experience remains key for Australian consumers. 72 per cent won’t return to a retailer if they’ve had a bad experience, either in-store or online. But they also want to reward those who help them out, particularly when times are tough. The vast majority (78 per cent) say they will continue to support the retailers they relied on during the pandemic. And given the love for physical stores, it’s also significant that most (67 per cent) prefer to shop with retailers located nearby because they want them to stay open.
Retailers wanting to secure customer loyalty in an ever-changing world need to match their customers’ expectations for flexible, multi-channel experiences. Unified commerce is a key tool to help businesses achieve this. Not only does it enable cross-channel payments it can also provide data driven insights to fuel business transformation and help retailers keep at the forefront for years to come.
Michel van Aalten is country manager for Australia and New Zealand at Adyen.