By Malcolm Berg - VP Sales UK and Eire, Stored Value Solutions (SVS)
SVS is the leading single-source provider of prepaid and stored value solutions, delivering gift card programmes for retail brands around the world. We manage more than 800 million cards and 1.3bn transactions in more than 50+ countries and 26 currencies every year. The pandemic has forced a massive digital shift in how consumers and retailers interact, which looks set to continue. Here are some of the trends we have noticed in the UK & Ireland, and how retailers are adapting to stay top of wallet.
PYMNTS’ national study of 14,000 consumers (US) recently, highlighted some interesting consumer trends, as a result of Covid, which are driving retailers and merchants’ adoption of new technologies….” We have seen 48.2 percent of the adult population embrace digital channels to interact with physical-world merchants in a way they never have—and 104 million (41.3 percent) more who say they will stick with it. If consumers do what they say they’ll do, we estimate the value of that shift now at $308 billion — up from the $186 billion we calculated only three weeks ago. That’s $245 billion in retail, $37.5 billion in grocery and $25.5 billion in restaurant/food ordering.”
By any measure this is a seismic shift!
The report continues – “They (the consumer) want order-ahead for delivery (67.4 percent), order-ahead for curbside pickup (63.4 percent) and touchless payments in-store without interacting with the terminal (59.7 percent). They want to engage with physical-world merchants, but they want to do so digitally, using integrated payments credentials that offer more than just a touchless checkout experience.
That digital, touchless experience is so important that 33.3 percent of the consumers we studied said it would influence their choice of merchants. More than 45 percent of the digitally-savvy 30- to 40-year-olds — which we call the bridge millennials with spending power — say that, too.
Retail’s winners will get this and will quickly adapt. So, too, will the ones who enable those experiences — issuers, card networks, PSPs and digital wallets—because being top of wallet has never been more important.”
We have seen this similar drive in the UK as well, admittedly, we were already enjoyed greater adoption of contactless than in the US, but the Covid situation has brought to the fore the desire for a merging of the physical and digital world. In fact, in SVS’ portfolio, we have seen a 300% increase in the number of gift cards provisioned in a mobile app or wallet this year alone. Retailers are moving at rapid speeds to integrate gift cards into their mobile apps or online payments – moving it from a roadmap item to a necessity ahead of the holiday season.
In addition, we have seen a huge growth in online gift card purchases – growing 71% year over year and making up nearly half of all gift card purchases since the beginning of the year (compared with 21% of all gift card purchases in 2019).
The downside is this new activity cannot offset the loss of gift card sales in stores. New gift card activations are down more than 20% year over year, with most of the loss coming from store closures and gift card malls. The loss of sales has slowed over the Summer months, however, which provides a more positive outlook for the holiday season.
More importantly than the near term results, there is an accelerated shift by retailers to mobile and digital first strategies, some already on the roadmap – some a complete change of strategy. The biggest challenge for retailers has not been the slowdown in business, but more the aggressive change in the way consumers are shopping and paying. This is why it is so important for retailers to have a technology partner that is always preparing for the future. A partner that responds “sorry that could take six months to build”, needs to be replaced with one who says “when do we need this by?” or better yet “we have that solution in place today.” A provider that is driven by agile thought as well as agile working practices.
This drive to digital and merging of the Physical/digital worlds will only continue and will be driven by consumers at a faster pace. SVS and our retail partners will continue to invest in technologies that support this – mobile wallet/app provisioning (including Apple VAS technology to enable contactless gift cards instore), hosted B2B and B2C storefronts, secure consistent e-card delivery, and of course backed by our continuous investment in fraud mitigation technologies.
The future is not some way off – it is here now. “The pandemic broke what had been consumers’ typical behaviours across nearly every pillar of their daily lives. An attempt to build a bridge to walk across that break to reach business as usual at some point in the future is missing the opportunity to take the consumer where they want to be — and in many cases, already are…
And that’s digital-mostly living in a physical world. That means time to embrace all the ways of reducing card friction at the point of physical sale, by putting some muscle into making physical fit into the digital world experience, instead of the other way around.”
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