No industry has undergone more change as a result of today’s ongoing digital transformation than the retail marketplace. Ecommerce continues to grow as a dominant force affecting nearly every player. According to the U.S. Department of Commerce, consumers spent a little over $500 billion online in 2018, which was up 14.2 percent from the previous year. These online purchases represented more than half of all retail sales growth last year.
As more and more brick-and-mortar business shifts to digital channels, retailers must ensure they are delivering the best possible ecommerce customer experience. Much of the digital transformation taking place today is driven by changing shopping habits of consumers. “A good example of this can be found in how my 22 and 26 year old adult children shop,” explained Tom Tucker, Head of eCommerce Sales for First Data. “When they need an item, even an item as simple as deodorant, rather than driving the mile and a half to the nearest store to buy it, they order online. With the advent of free, one or two-day shipping on many of these online purchases, and the ability to conveniently order on a smartphone or through an Internet-of-Things (IoT) personal assistant device, its little wonder online purchases are skyrocketing.”
Many retailers are adopting omni-channel strategies to meet customer needs. A major market survey found that 46 percent of respondents are focused on the practice of clienteling, where customer sizes, style preferences, wish lists, past purchases and additional shopping habit indicators are tracked via tablets, smartphone and computer apps and programs. The same survey found another important retail trend. Sixty-one percent of retailers stated that the buy online, pick up in-store model (BOPIS) and the buy online, return in-store model (BORIS) are of growing importance to consumers and therefore of growing importance to retailers. The survey found that 90 percent of retailers anticipate offering such options within the next few years.
Branded currency, also known as gift cards, is another important opportunity for retailers to increase sales, build brands, enhance customer loyalty and reduce the overall cost of payments. First Data’s 18th Prepaid Consumer Insights Study found that for the fifth year in a row spending lift from gift cards is on the rise. In fact, for every gift card purchased, consumers are typically spending on average $59 more than the original value of their card.
In this increasingly digital world, retailers must think globally, yet act locally when it comes to completing transactions. While the internet levels the playing field, allowing smaller businesses to sell goods around the world, they must at the same time ensure customers can choose from a range of popular payment options, such as credit and debit cards, Venmo, Paypal, Zelle, Alipay, or Pay With My Bank. This also means enabling customers to transact in local currencies.
At the same time, it is vitally important to protect transactions against fraud and stay compliant with stringent data protection policies. Advanced digitization solutions, such as tokenization, afford the opportunity to protect data on both the issuer and merchant side of the transaction, while providing higher authorization rates to improve the customer ecommerce experience.
By extracting data from transactions and combining it with other rich data sources, retailers are just beginning to provide deeper, more meaningful customer experiences. Using cutting-edge data science technologies such as artificial intelligence and advanced analytics is allowing retailers to harness data to accomplish a range of critical tasks that will lower the cost of customer acquisition. “The goal for retailers is to effectively target the right offer to the right person at the right time,” stated Glenn Fodor, Head of Insights and Data Analytics for First Data. “Relevant offers provided in the right context have the potential to be a game-changer for those that get it right. Knowing a customer recently purchased running shoes will empower the retailer to offer suggestions on shorts or socks, instead of another redundant advertisement for running shoes.”
According to Scott MacKay, Head of Universal Commerce for First Data, the next wave of innovation will begin to fulfill the promise of connected commerce. “Not too far into the future, we will link the full commerce journey across many connected devices,” postulated MacKay. “So, a customer will eventually be able to tell the personal electronic assistant in their home to order a particular piece of clothing at a specific store. Then, when they get in their car, the car will automatically recognize the clothing order and ask the driver if they need directions to the store. In the parking lot of the store, the car will alert the clerk, who will have the merchandize ready. Now all the customer has to do is scan the QR code into his or her phone and the transaction is complete. That’s the future we envision.”
In order to meet the changing demands of consumers and the marketplace, retailers will need to put an effective digital transformation strategy into place. This is not only smart for business, it is literally imperative for survival.