The UK retail market is going through a challenging time. New consumer behaviours are emerging, while expectations are higher than ever: from free delivery and returns to cannibalistic sales strategies, the retail industry needs some opportunities to balance out the threats. One area offering just that is payments.
A new report from independent retail consultant Richard Hyman, who has worked with the UK’s leading retailers over the past 30+ years, explores the new payment systems emerging in the UK market and the impact they’re already having (and could have in the near future).
According to Hyman, “issues with payments are a key driver of the incredible 60% shopping basket/cart abandonment rate quoted widely across ecommerce”, including account creation drop-off, payment security and complexity of checkout. He suggests that these new services can actually address around half of all abandonment issues. “This alone would make them significant, but” he continues, “there is potentially much more”.
We’re seeing a groundswell of new consumer behaviours shifting away from traditional credit card-based spending or adapting old methods to suit new tastes. 70% of consumers now budget on a weekly, not monthly, basis (Censuswide) while 80% of all UK consumer credit card spending is now by ‘full payers’ who clear their card every month. Extended borrowing via credit card is evaporating.
Combine this with an even deeper aversion to debt by post-millennial generations (those born after 1996) and it’s clear we’re seeing consumers driving a dramatic shift in budgeting and spending habits that no longer fit the traditional methods.
It’s about time payments matched seamlessly with consumer desires. It appears that Hyman agrees, suggesting that “new services are giving these established payment methods a run for their money, promising to deliver real benefits to both retailers and consumers.”
From dramatically increased average order values to significant reductions in returns, you can explore the report in full by clicking the image below or download the PDF (right click, save as):