Retail in 2021: What to expect
How does the UK retail market recover from three national lockdowns? Is this the death of the High Street? Will our shopping experience ever be the same again? If you want to learn more about the impact our retail sector has experienced in the past year and the direction we are heading in, read on!
It will come as no surprise but the retail sector in the UK has been deeply affected by the outbreak of Covid-19. But the effects of the pandemic have been far from uniform.
Take “essential” and “non-essential” retailers for example. Retailers considered as “essential” during lockdown include petrol stations, pharmacies, and other food retailers, and despite having to enforce social distancing measures and other restrictions, they were permitted to operate. In other words, it was business as usual for them, with a few changes. However, as we know “non-essential” retailers were forced to close. As a result, they were presented with two options: 1) sit still, do nothing and wait for this to pass over. Or 2) modernise their payment solutions and find ways to remain in business. One such method is via online payments, which rose throughout the UK, with over 25,000 stores experiencing a digital transformation and beginning to accept online payments.
Structural changes are already taking place in the market, as the reopening of stores post initial lockdown, has borne witness to changes in consumer behaviour.
Changes in Consumer Behaviour
Hoarding and panic buying witnessed in the early weeks of the pandemic, and the sight of vacant shelves and long queues outside shops have generated a crisis around the retail sector, producing negative headlines for the media, resulting in the slogan ‘death of the high street’ to take greater precedence.
However, some areas of the sector have benefited. For example, food retailing witnessed a huge increase during the lockdown, with supermarkets benefiting as a result of the pandemic, as transactions were taken online. Many shoppers are finding this transformation from in-person shopping to online increasingly convenient, with the multiple payment methods being offered on their websites creating a far simpler checkout experience. This is allowing the food retailers to expand their total addressable market and thrive in an environment where many businesses are heading in the opposite direction.
The Pandemic as a whole has altered consumer behaviour across all spheres. For instance, there has been a recent surge in preference for brands who were previously online and are already trusted, compared to shops found on your local high street that are building their websites. With the reduction in-person shopper experience, customers want a smooth online encounter that will reduce the friction undergone when they proceed to checkout.
Some companies within the entertainment area of the sector have also benefited from the Pandemic, as streaming has become the main viewing option as opposed to visiting the cinema. Many opportunities have been materialized because of this. For instance, what took Netflix 7 years to achieve, Disney Plus completed in just a few months. The streaming industry sales in the UK saw a growth rate of 87% in April 2020 from the previous month. This was just at the beginning of lockdown and the numbers have only been escalating.
Additionally, to the changes in the entertainment industry, there has been a focus on health and wellbeing, with the acceleration of fitness and fresh, natural, organic goods. Individuals, who had previously resented exercise, have now developed a passion for it (ourselves included), which is noticed in the increase in sporting equipment sales. Brands such as Peloton could not have wished for a better time for the nationwide lockdown to be put in place. The indoor cycling machine has become a revolutionary addition to many homes across the UK.
Ensuring Safety Online
During the Pandemic, the need for accessible and fast information peaked, generating a surge for apps like Facebook and WhatsApp, which experienced a 40% upsurge in their incoming website traffic. It's simple to say that those industries that innovated themselves and adjusted to the times, lived long enough to survive the virus and tell their tale.
As we wrote in our previous blog on the topic of Online Fraud, we explained how “friendly fraud” cases have shot up adjacently with the rise of online shopping. A Survey conducted by CEPR (Centre for Economic Policy Research) found that 33% of respondents admitted to committing friendly fraud in one way or another. This will eventually become a burden on many SMBs that have not included 3D Secure as part of their risk profile. When businesses implement this application, the liability will be shifted from the merchant itself to the issuing bank.
An increase in shoppers using mobiles to conduct their online purchases has made it vital for merchants to understand the benchmarks for conversion. Despite the fast-paced growth in online sales, cart abandonment and checkout conversions are still a problem for many retailers. Ways that businesses could reduce bounce rate while also increasing conversion rate is by providing a smoother user experience, avoiding pop ups, and improving the storytelling of their brand. Merchants are looking for solutions to reduce the friction shoppers experience on course to the checkout. By hiring a strong web developer and integrating various payment methods onto your website, merchants will witness a reduction in their bounce rate.
If this is something that you as a merchant are interested in applying to your business, get in touch with a DNA Payments representative today. Our spokespeople are happy to provide assistance to ensure your digital transformation and optimise your search engine capabilities.
Have you been notified of the increase in interchange fees that are due to come into effect October 2021? With the departure of the UK from the EU, VISA and Mastercard interchange fees are expected to increase by 5x the current rate.
The partnership will bring Ecospend's Open Banking innovative payments service to DNA Payments Group portfolio of 30,000 merchants. Sitting alongside their existing suite of products, this latest solution will offer a new alternative way for merchants to accept payments.