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Digital Payments are soaring in Europe – so what does it mean for retail?

By Natasha Toothill, Director Retail Engagement & Merchant Sales • Visa Europe

October 12, 2016

A recent Visa study reveals a huge uptick in digital payments adoption across Europe over the last 12 months. As online banking, digital wallet services and NFC technologies become commonplace, how can retailers adapt to meet the demands of today’s consumer?

As smartphones and tablets have become ubiquitous, so too have digital payments methods. The number of consumers that regularly use a mobile device to make payments – whether a smartphone, tablet or wearable – has tripled in the past year. Driven by the proliferation of contactless cards over the last 18 months, 54% of consumers now use a mobile device to make payments, compared to just 18% when the study was conducted last year.

It’s not just the uptick that’s noteworthy; there’s been a shift in the items consumers are purchasing through their devices. Low-value spending such as ordering a takeaway or a taxi is still prevalent, but consumers are increasingly willing to make high-value purchases through mobile devices as well, with consumers buying holidays, electronics and furniture through their tablet or mobile.

This shift in consumer spending habits presents an opportunity, but also a threat for retailers. New technologies and payment methods are giving people more choice and control, challenging traditional retail structures.

The new consumer - misconceptions

So what does this new consumer want and how do they act? Firstly, despite a selection of headlines to the contrary, bricks-and-mortar is still relevant to the digital payments consumer, although not in the traditional sense. “Showrooming” – the act of seeing an item in-store before purchasing online – is an overwhelmingly popular shopping method. Nearly seven in 10 (69%) consumers choose to purchase medium to high-value items this way, particularly here in the UK (80%).

A similar misconception revolves around digital technologies reducing our desire for human interaction. Consumers who prefer to buy in-store do so because they enjoy the interaction with staff and ability to see an item in person.

Adapting to the new retail world

Retailers shouldn’t take the growth of digital payments as anything other than an opportunity to engage with consumers through an additional channel, and some of the biggest retailers are actually investing in physical stores to complement their online offerings.

The challenge, of course, is ensuring that showroomers end up buying through your online store, rather than a competitor. Through the creation of a seamless, secure and, most importantly, convenient customer journey, retailers stand the best chance of converting browsers into purchasers.

The new consumer – winners and losers

What’s crucial for retailers to understand is that consumers are happy to take the path of least resistance, and it’s up to the retailer to lead them down it. Failing to do so could have a significantly detrimental impact on businesses. When a leading high-street retailer went into administration earlier this year, one of the complaints most versed by customers was that it had failed to properly develop a true multichannel customer experience.

In the US, however, retailers are leading the charge when it comes to multichannel. Recent research from customer experience agency Rockpool praised US department store, Sears, for its embrace of personalisation, equipping its staff with data, garnered from the online site, which allowed them to have personal interactions with visitors in-store.

Retailers will need to take stock of their investment in apps and websites, making sure each is furnished with the same functionality and services. If retailers don’t take advantage of every channel at their disposal - bricks-and-mortar, website and app - then they risk losing their customers in the pipeline.

The retail environment is changing, and with it come fresh challenges. Those retailers which adapt will thrive, whilst those that fight the turning tide may well be swept away.


View the infographic: What does the Mobile Payments user in Europe look like?

Note: All brand names and logos are the property of their respective owners, and used for the identification purposes only, and do not imply product endorsement or affiliation with Visa.

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