A year of growth in Global Retail

Written by:   Maria Prados, VP Global Retail, Worldpay,  11 Dec 2017

As the sun sets on 2017, we caught up with Maria Prados, VP Global Retail, to get her thoughts on the year – and what to expect from 2018.  It’s been an exciting 12 months for ecommerce, with major developments in IoT and VR. We asked her how global retailers can maximise on the opportunities ahead.

1. What have been your highlights of 2017?

My highlight has to be the way that technology has started to play a very important part in retail. Retailers are finally turning into technology to further develop customer experience and engage with the shopper at a different level.

One great example of this, is China Singles Day and how Alibaba has managed to create a holiday/amusement park around the shopping experience. The combination of tons of interactive games (both offline and online) where the shopper gets excited and is offered limited or excusive discounts, with the added pull of celebrities like Nicole Kidman, resulted in a record $25bn spend this year.

2. What major eCommerce or payment developments do you see coming in 2018? And which ones excite you the most?

It is around technology here as well. For a while now we have been talking about Big Data, and retailers have been going the extra mile; collecting data from shoppers and demanding it from providers.

Staggeringly, 90% of the world’s data was created in the last two years but only 0.5% of it is currently analysed! There are way too many customer touchpoints for a human brain to process. So, for me, it is all around Artificial Intelligence, and how machine learning will be used to improve predictions.

The user cases are limitless, from inventory transparency and optimisation to customer personalisation. But, from a payment perspective, probably the most interesting use will be around fraud, and how machine learning can get way more accurate at identifying fraudulent transactions. 

"Staggeringly, 90% of the world’s data was created in the last two years but only 0.5% of it is currently analysed! Probably the best user case for big data in retail will be around preventing fraud"

3. Our research into the Internet of Things found that 44% of global shoppers are already using connected home technology. How do you think retailers can overcome shoppers concerns over security?

Shoppers fear the unknown. Initially, security was the main reason not to buy online, then the reason not to buy on mobile and now not to buy on any new device.

But in this case it is even worse as IoT means more devices connected to the internet and obviously the more devices, the more options for hackers.

There is a responsibility from the manufacturer to update devices as much as required to make sure the shopper is protected. And a requirement for the shopper to make sure they demand it and only buy fully secure smart products. Attitudes vary by region and age group - just two of the factors explored in our Connected Consumer research

Regulation will also play an important part to set the standards although it is still early days here.

4. Our Global Payments Report highlighted the importance of Silver Surfers. Do you think retailers are doing enough to attract this group of consumers?

Probably not enough, as 14% of the population will be older than 60 in 2022. And as people age they tend to buy fewer things and their retail spend decreases.  Plus major expenditure is usually concentrated around healthcare and services rather than retail stores. (To find out more, visit Worldpay Global Payments Report 2017)

Although we do see retailers introducing more and more retention strategies.  As the number of “new customers” decreases, retailers need to start thinking more about convenience and simplicity in order to retain existing shoppers.

From a payment angle, as we saw in our Pay That Way research, older generations value reward and loyalty programmes highly, so that should be included in every retailer’s strategy.

"Previously, we've seen cost of devices as a barrier for entry to VR. The whole game will change as the price point reduces. It’s an area retailers should definitely keep an eye on in 2018."

5. We researched consumer attitudes on VR this year, and found 57% shoppers hope it will provide better engagement. How can retailers meet this demand?

They already are! Probably the most common application is the immersive experience; such as Lowe’s “Honoroom how to” virtual DIY project tutorials or Natura’s “rainforest journey” mainly focused to drive traffic.

The largest barrier to entry as we saw in our VR research was cost of the device. But now that the iPhone 8 comes with an AR enabled camera, the whole game will change. It’s an area retailers should definitely keep an eye on in 2018.

6. Chinese shopping habits are changing, with a move away from luxury brands – what opportunity does this present for global retailers in other sectors?

The retail China market is overloaded with fake products, and that is the main reason Chinese shoppers look at foreign brands.

The top product categories they purchase are baby food, cosmetics and fashion. To be successful, the first thing a retailer needs to look for is brand awareness, which can happen by entering the market on platforms like Tmall, or targeting Chinese travellers through Alipay or Wechat.

Then, make sure you offer the local currency, as we have seen increases of 86% on sales when moving from USD to CNY. And of course, offer the preferred payment method: Alipay represents 80% of the Chinese market.

Abof (All About Fashion) uses blog-style content to leverage its sales in a 'Shop the Story' format to inspire shoppers.

7. We’ve added some new markets into this year’s Global Payments Report. Which of these do you think offers the biggest opportunities for global retailers?

We have seen that a lot of developing countries are starting to buy more and more online and especially from Africa. As these countries have skipped a technology generation (desktop and laptop) every new online shopper is 'mobile-only'.

One of the most surprising countries for me, was Nigeria. Here, m-commerce represents 46% of all ecommerce spend, ranking number 8 on the top m-commerce countries by % share. But, it is expected to overtake China (currently at 56% m-commerce share) to become the number 2 m-commerce market, by share, by 2022.

But in retail this raises some problems, as there is a physical product that needs to be delivered. So, retailers need to look into the infrastructure set up of those countries, and if it’s not in place, invest heavily on it. Also make sure you partner with a local player that understands the landscape. Learn more in our 2017 Global Payments Report here.

8. Recent research in the US showed that when it comes to delivery, price is more important than convenience. As the spending power of millennials increases, do you see free delivery becoming even more important?

This changes massively by country and by the level of ecommerce sophistication. For example, in the UK (probably the most advanced ecommerce market in the world), shopper expectations are extremely high and shoppers expect next day delivery, if not same day delivery options, to even consider a purchase.

Doing sensitivity tests to price delivery slots is a must for all retailers in sophisticated markets. And there must be full transparency from the beginning on cost so that shoppers don’t find any surprises when they come to checkout.

But, in countries like China, or the US, delivery times are on average 5 days. Until a disruptor in the industry (which tends to be Amazon) offers next day delivery, shoppers won’t see it as a necessity – and will therefore be more sensitive to the cost of delivery than the convenience. Find out how Millennials' retail habits are evolving here.

Bellroy, a great example of how simplification of the online retail experience can increase sales. 

9. Let’s fast forward 10 years. What do you think e-commerce will look like?

I don’t think we will hear this word any more. There will be no e-commerce or mobile commerce or store commerce, there will just be ‘commerce’. Shoppers will buy from whichever channel they want whenever they want.

Retailers will have to have presence at all touchpoints, either directly or by partnering with another retailer, not to lose the shopper.

10. Finally, which retailers are doing great things at the moment when it comes to customer experience?

I'm going to move away from Amazon and Alibaba for once and show some great UX examples from companies which are, perhaps, not as well known:

  1. MeUndies – an underwear website that has launched a subscription model based on the lifestyle of the shopper rather than pure product details.
  2. Abof (all about fashion) – uses a clever UX trick on their website. Hit up the homepage, and it doesn’t look like a traditional e-Commerce site. Instead, it looks more like a blog. It’s full of juicy content that inspires its audience. Within their stories and articles, they then highlight the clothes in a prominent section called ‘Shop the story’.
  3. Bellroy – a wallet retailer that really simplifies its differentiator from the first interaction with the shopper. Simple and effective.

If you’d like to find out more about any of these topics, or just talk to us about how we can help you increase sales through offering the right seamless payment strategy across your markets, get in touch here:

Written by:   Maria Prados, VP Global Retail, Worldpay,  11 Dec 2017