With the nation preparing to emerge from lockdown, retailers will be gearing up to make the most of renewed footfall. Whilst many shoppers will look forward to returning to our high streets and the opportunity to test a TV, compare colour swatches or check the look and feel of a new home appliance, one thing’s for certain, the pandemic has changed the way we shop, possibly forever. BRIAN FLESK, Head of Retail at Hitachi Capital Consumer Finance (pictured), looks to the future and offers his thoughts on how you can get these customers spending with you.
Following the surge in e-commerce sales during the pandemic and the failure of many high street brands, you might think that the writing is on the wall for the high Street post Covid. But the reality is very different. Physical stores are in a unique position, being able to create the experiential factor that consumers have been missing over the last 12 months. Becoming true experience hubs and bringing the ‘theatre’ back to retail will revitalise the role of high street stores. Likewise, we are seeing more pureplay retailers adopting functionality to replicate the in-store experience. From live chat to replicate store assistants, to using AR and VR to ‘feel’ the product, or see what it would look like at home, helping consumers in their pre-purchase decisioning.
What we are seeing is a re-imaging of high street and e-commerce retailers, with change forced on both retailers and consumers. Customer expectations have changed, necessitiating retailers to enrich the customer experience in order to increase conversions.
In the post COVID-19 landscape, consumers are likely to demand more and expect a fast, seamless customer journey whatever channel they choose to purchase through, putting greater onus on retailers to provide a frictionless and interactive experience both in-store and across e-commerce platforms.
Ensuring you have the right tools in place to meet that demand is vital, which is where point of sale finance comes in.
Turning browsers into buyers
When lockdown restrictions were eased for the first time in 2020, Hitachi Capital Consumer Finance’s retail partners reported a notable shift in demand across bricks and mortar, with an increase in sales of around 20% on the same period in 2019. As the UK’s vaccination roll-out boosts consumer confidence to its highest level in almost a year, we’re likely to see a similar, if not greater spike this Spring.
Although we’ve seen a surge in demand from consumers making more purchases online, we are still seeing luxury and experiential purchases led by physical, in-store experiences. High-ticket merchandise categories still call for in-person product interaction, which can only take place in a bricks-and-mortar store, which supports the surge we experienced last year.
The availability of finance at the point of sale plays a huge role in converting these browsers into buyers, whether instore or online. It’s one of the key drivers for customers, with over 55% stating that’s one of the key reasons they chose to go ahead with the purchase. Within the electrical market that increases to 57%.
Preparing to meet pent-up demand
With reports that households have saved an average of £7,100 during lockdown, and based on the sudden surge in holiday bookings since the Government’s roadmap out of lockdown was announced, all the indications are that we will see a spike in retail sales over the coming months.
The challenge will be converting this potential demand into sales in a highly competitive market and again this is where point of sale finance can give you an edge.
Not only are customers choosing to go ahead with a purchase because of the availability of an affordable credit option, they are also more likely to spend more when finance is available.
A recent study from Hitachi Capital found 45% of customers will spend more on big-ticket electrical items when finance is available at the point of purchase. For electrical retailers this is particularly important and retailers who embrace alternative finance solutions with simple and straight-forward payment terms, will be in a much stronger position to capitalise on a surge in consumer spending.
Embracing an omnichannel-led future
It’s no secret that consumer habits have shifted online this year. At the start of the pandemic, many retailers rushed to create an online presence to meet consumer demand, a strategy which paid off reflected in a 31% increase in online spending year on year.
At Hitachi Capital Consumer Finance we saw a massive 63% year-on-year increase in the volume of business on e-commerce platforms alone after retailers integrated with our mobile optimised POS finance platform.
Many of the consumers driving this spend were exploring new categories, brands, and retailers for the first time as they were forced to adapt to life at home. Yet despite the shift towards online, there are certain aspects of bricks and mortar retail that cannot be easily replicated, which is where an effective omnichannel approach becomes more important and must be replicated in the point of sale finance solution.
Making the purchasing process as friction less as possible, whether in store or online, ensuring a seamless and interactive experience is felt across all devices and platforms a customer chooses to use is vital; it attracts consumers, reduces cart abandonment online and instore, increases spend and provides a great customer experience.
The pandemic has shaken the retail sector, forcing the industry to accelerate the speed of digital transformation, which has seen retailers adapt quickly, adding e-commerce channels. At the same time, we have seen a growth in the number of retailers integrating flexible point of sale finance solutions into the customer journey to accelerate purchasing decisions and drive sales, which will put those retailers in a strong position for a post-pandemic shopping spree.