New York - FashionUnited interviews Lee Jones, director of Sales and Business Development at Ingenico Enterprise Retail on how advanced technology and new payment methods are shaping the future of retail in an ever digitalised, cash-less world.
Lee and his team focus on Northern Europe, helping organisations implement solutions and technology that “deliver real value”. Currently, Lee is leading Ingenico into new markets where cashless payments are just starting to emerge.
What consumer-driven trends influenced both payments and the retail industry in 2019?
More than anything, the consumer appetite for speed and convenience. Whether it’s the fact that 50 percent of UK consumers are now shopping online or how card payments are dominating retail spend, people want simple, easy, fast shopping and payment experiences. I would even argue that the last year demonstrated that. (Lee is citing recent retail research by GlobalData and BRC’s latest Payment Survey.)
In 2019, the industry realised that seamless, convenient shopping is the key to winning over customers. Whether it’s through simplified checkout processes or seamless omnichannel shopping experiences, consumers have declared loudly that they want buying goods to be uncomplicated.
What are three key trends you see shaping this year's retail?
I think we’ll see a big push towards Scan & Go on customer devices. Consumers are leading increasingly busy lifestyles, so there’s growing interest in being able to scan, pay, and go on their smartphone. It can speed up the shopping experience significantly, so it’s appealing to customers and will drive competitive edge for retailers that implement it well. Some supermarkets are making use of these systems already, but I believe we’ll see many more businesses try out Scan & Go in 2020.
Secondly, it’s been forecast by Gartner that 75 percent of organisations selling direct to consumers will offer subscription services by 2023. I think that we’ll see some major players offer these kinds of services in 2020. It’s a harder sell, but if retailers can convince customers of the longer-term benefits and rewards, it could be an industry gamechanger.
Finally, the environment will be a big preoccupation across all sectors in 2020. Customers are more concerned now with the impact their purchases are having on the natural world. According to recent research by Retail Week and DWF, 29 percent of UK shoppers have started shopping with retailers with more ethical or sustainable practices. This desire for socially and environmentally responsible retail will drive a lot of innovation in 2020, like our partnership with micro-donations charity Pennies, which offers customers the option to donate their rounded-up transactions. Other ethical programmes, like establishing more localised hubs for immediate delivery, or striving for zero packaging, will tick a lot of boxes for consumers.
Will cashless go mainstream in 2020?
Cashless has already gone mainstream! In the UK alone, cash only made up 28 percent of all payments in 2018 and will comprise less than one in ten payments by 2028. Of course, adoption varies from region to region, but in 2020 we’re going to see an even greater shift towards a cashless society.
Contactless payments, in particular, are continuing to grow in popularity, making checkout quicker and simpler. Merchants must stay up to date with the increasing demand, including small businesses such as vendors and kiosks, or they’ll be left behind. Similarly, mobile payments are on the rise and in 2020 we will see an increase in retailers using P2P payments via cards and mobile.
There's an increasing appetite for 'buy now, pay later' schemes, but what's in it for retailers, and what are the hidden costs of these schemes?
Buy Now, Pay Later is a very compelling proposition for a customer, which means that retailers that offer this payment option could win customers over. Spreading the cost of a purchase, especially potentially high-value purchases, could entice conversion from customers sitting on the fence.
In terms of the hidden costs to retailers, I’d actually say it’s well understood how the cost of lending is built into the instalments the customer pays – that’s the cut the payment service takes. And the messaging is very clear that the retailer still gets paid in the event of a customer defaulting.
I would argue that the true hidden cost could be reputational. There has been a lot of media attention recently about whether Buy Now, Pay Later schemes are harmful to customers and their credit scores. There could be a fierce backlash against these schemes, and retailers won’t want to be seen encouraging customers to spend money they don’t have. Now, I’m not saying retailers shouldn’t offer these payment methods, far from it. But I believe the customer safeguarding message is something retailers will need to prioritise.
What tech will shape payments in retail this year?
This year, we will see further advancements in voice commerce technology and it’ll have a huge impact on retail. Previously considered a “nice to have” feature rather than a substantial revenue enhancer, voice is clearly becoming an important new channel for merchants. OC&C Strategy Consultants recently found that, in 2018, 2 billion dollars was spent on voice commerce in the US market. By 2022, that number is expected to reach a phenomenal 40 billion dollars. As consumers increasingly crave quick and convenient answers to everyday tasks, voice commerce’s instantaneity is becoming hugely appealing to shoppers, particularly as the technology facilitating it advances.
Crucial to this uptake, however, is ensuring that customers feel that the payment systems are secure and not at risk when completing their transactions. The security credentials of any voice commerce solution will become a crucial differentiator for retailers employing them.