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Retail's future depends on correct understanding of the new consumer behavior

Retail's future depends on correct understanding of the new consumer behavior

Updated: 25 June 2021 • Reading time: 5 minutes

Increase in Ecommerce sales and decrease in offline purchases are apparent consequences of lockdown. This is a simplified description of the pandemic’s impact on purchases world-wide. However, we know that there is much more to it and that a more detailed data analysis can give us a broader perspective on what exactly has occurred, and above all, on the potential framework of a retail context. Which in reality at the moment provides a unique opportunity of innovation that would bring us an enormous step closer to a completely omnichannel customer.

The approach to meeting needs is changing

A large part of the UK population suddenly found itself forced to resort to digital services to meet needs that, they had preferred to satisfy offline until then. According to the DESI¹ 2020 report, an index that tracks the digitisation progress of the EU's members – the UK was in the 8th position in Europe in 2019, slightly behind Estonia, with Finland in the first place and Bulgaria coming in last.

Purchasing habits have changed and the lockdown has favoured Ecommerce, but the transformation has also affected other aspects. GroupM², the largest advertising media company in the world, analysed consumer behaviour in four digital areas during the pandemic emergency in 2020: media consumption, health and well-being, improvement of the living environment and social relationships.

The video content consumption via OTT and smart TV increased by 51% and the per capita average of TV broadcasting increased by 77 minutes. More time to devote to oneself and the family, along with the impossibility to go out, also resulted in an increase in visits to websites dedicated to cooking, in some cases even by 60%.

In the UK specifically as of June 2020, 67% of respondents preferred to watch TV at home, 51% resorted to cooking, around 45% to cleaning, video streaming, social media and reading and 55% to following the news. Video gaming increased by 29%.

A testimony of people's desire to take care of their homes while in isolation is a 56% increase in video views dedicated to home decor and in visits to the websites selling household products, +57% visits from desktop and +44% from mobile.

The most striking data of all, however, is that of voice calls and video calls, which increased up to 900% in order to allow to maintain social relationships, even if at a distance.

Axerve Ecommerce Solutions, a leader in the Ecommerce payments sector in Italy, serves around 40% of all online stores in Italy. And, therefore, has a privileged view, which allows it to monitor the sales trends closely. For example, significant changes were registered during the lockdown in Italy. In April 2020, credit cards use recorded YoY growth of +184%, while in May, despite the partial reopening of stores, there was +176% YoY growthAlternative payments, such as e-wallets and payment gateways, recorded YoY growth of +164% in April and +158% in May.

In the UK the traditional and alternative payments growth is not as drastic as in Italy. However, as soon as the pandemic started, 4 million credit cards were registered (from 47.66 million users to 51.64 million in a month, and up to 52.1 million by December 2020). And the revenue in Ecommerce grew from $82,402 million in 2019 to $97,031 million in 2020, with a projection to grow up to $103,916 million by the end of 2021.

Changing expectations of the in-store shopping experience

With the increase in the digital services usage, customers' expectations of companies have also changed. Until recently the ability to satisfy a need through the use of digital services, compared to the more traditional ways, was unknown or considered irrelevant by many people in many countries.

The gradual return to normal, while we are getting closer to the "Freedom Day” in July, does not necessarily correspond to a return to the old ways that soon, because the expectations of customers have changed along with their habits, and they are increasingly more difficult to identify within clearly distinct categories: the separation of traditional from digital customers are categorisations that have less and less meaning.

For example, in the UK the digital payments’ transaction value in mobile POS payments grew from $33,648 million in 2019 to $68,316 million in 2020 and is projected to grow up to $97,615 million by the end of 2021, while online is still a preferred way of many of purchasing goods and services.

This does not mean that companies' offline channels are destined to disappear, but instead that they need to be transformed and quickly respond to a new consumer’s needs. Therefore, the in-store purchasing experience is bound to change through introduction of digital elements that will enrich an ever more complex customer journey.

Cashless, flexible and digital payments also in store

Along this path of change in customer behaviour, the payments phase plays a strategic role. The moment we are living in provides a great opportunity to accelerate the retail revolution that was already underway.

"Our point of view regarding the payment systems in use today in the physical world has led us to look critically both at contactless cards and alternative payments that aren’t able to fully guarantee the social distancing that the consumer expects." Alessandro Bocca, CEO of Axerve.

Integrating tools that digitise cash within the purchase process, advanced POS terminals that allow apps integration thanks to Android operating system, or adopting digital payment solutions that reduce timing of payments by sending a link via e-mail or by taking a picture of a QR Code. All these solutions can make a difference and satisfy a customer whose expectations are ever higher and are aligned with the big online players’ offer.

Martino Boselli, Elena Mirò Brand Director of the Miroglio Group, said about Axerve Pay by Link: “Thanks to this solution, we have developed the 'shopping at home' service for all the Miroglio Group stores' loyal customers: Elena Mirò, Motivi, Oltre, Fiorella Rubino and Caractère. During dedicated video calls, our personal stylists show the collections and offer advice on outfits. Customers receive the desired items at home and use their credit card to pay for only those they wish to keep. It is a particularly interesting solution for those customers who do not want to give up a personalised shopping experience, but prefer to enjoy it in the complete tranquility of their home".

In short, reducing friction thanks to flexible solutions that can be integrated into the sales path without generating barriers to entry, in order to meet the customer’s ever transforming needs: this is the challenge physical retail is facing today and which, with the right tools, it will be able to overcome brilliantly.

Source
1

The Digital Economy and Society Index (DESI, 2020)

2

Marketing Interactive, 2020

TagEcommerceDigital payments

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