The convergence of shopping and financial services is a growing industry trend. Consumers enjoy the flexibility to merge their shopping experiences across different channels. A new report by Adyen shows that 43% of consumers prefer starting their shopping in-store and finishing online, or vice versa.
“Retail operates on a multi-channel, multi-regional basis, with evolving customer preferences, which drives rapid shifts in the payments space to keep up with retail advancements,” said Davi Strazza, President of North America at Adyen.
Retailers, however, often struggle to manage these cross-channel shopping experiences while trying to keep costs down.
Challenges facing modern retailers: Adyen’s report also shows that 75% of retailers don’t facilitate easy cross-channel shopping, and 22% treat online and physical stores as separate entities because many businesses lack the infrastructure to support cross-channel shopping.
“Merchants dependent on outdated legacy systems struggle to meet customer demands for convenience,” said Strazza.
The array of channels makes it difficult to deliver smooth cross-channel experiences without a unified backend system. Such a system lets merchants accept payments across e-commerce, physical stores, and other sales channels, centralizing all transactions into a single backend for easier management. The issue is compounded when merchants use different payment systems for online and in-store channels, necessitating separate management of inventory, pricing, and promotions. Disconnected systems create data silos, making it harder to analyze consumer behavior in the channels.
“Siloed data and innumerable integrations make launching and maintaining customer experiences more difficult,” Strazza told me.
He also notes that retailers need to balance offering appealing payment methods like BNPL with integrating systems like Apple Pay to improve their processes and boost transaction speed.
How enterprise retailers are navigating multi-channel growth
A critical focus for brands and merchants is personalization.
A unified platform that centralizes transactions also gathers customer data into the same system, allowing for more personalized customer interactions, potentially boosting sales for retailers.
Adyen has been the primary payments provider for DICK’S Sporting Goods’ in the US since 2021, handling online, in-store, and in-app purchases. DICK’s Sporting Goods provides a personalized experience to half of its homepage visitors and those who receive this customized experience spend 10% more than those who do not, for instance. Additionally, over 65% of DICK’s Sporting Goods sales came from omnichannel athletes, who spend twice as much as single-channel athletes, as noted by the firm’s President and CEO Lauren Hobart during the third quarter earnings call in 2023.
Strazza explained that cross-channel insights enable more strategic outreach, highlight the added value of omnichannel shoppers compared to single-channel ones, and facilitate tracking customer relationships across channels. And connected payment data helps compare store performance, such as transaction frequency and volume, which can drive incentives and increase loyalty.
“Intelligently leveraging payment data enables merchants to foster loyalty and provide personalized advertising,” said Strazza. “As brands navigate the challenges of personalization following the decline of third-party cookies, payment data emerges as a potential solution.”
To build effective omnichannel experiences, Strazzae emphasized that enterprise retailers prioritize three issues:
- financial reconciliation efficiency
- enhanced payments for a unified shopping experience
- reduced costs
Adyen recently collaborated with fashion luxury brand Prada to introduce Tap to Pay on iPhone for in-store transactions in their US and Milan stores. This move is part of the brand’s larger strategy to align with evolving consumer preferences, as 51% of Americans now use tap-to-go cards or mobile wallets.
Adyen is also working with Prada Group in moving its payment infrastructure to a single omnichannel platform. By integrating online and offline payment data into a single system, Adyen will provide the luxury fashion retailer with improved insights into its customers’ shopping behaviors.
“We are working on scaling our omnichannel solutions on the platform to connect each sale across all channels,” said Cristiano Agostini, Prada Group’s Chief Information Officer in the press release. “We believe Adyen is the right partner to help us collect and manage all our payments data efficiently.”
The evolution of retail tech
The appetite and enthusiasm for new retail technologies are growing as new shopping channels emerge. 13% of consumers are interested in making purchases in the metaverse. Livestream shopping is also catching on rapidly, particularly making waves across the APAC region.
“As these technologies become more ubiquitous, it is key to support how customers want to pay and keep an eye on evolving preferred payment methods,” said Strazza.
The ease of implementing these technologies, however, varies depending on whether the shopping environment is open or closed. There are brand-owned channels and platform-owned channels. In the case of brand-owned channels like live shopping, Adyen works through partners who integrate their channels into its single, unified platform. Conversely, for platform-owned channels and marketplaces, merchants have to navigate the options provided by those platforms.
Strazza emphasizes that payments should be a central component for retailers addressing new channels and tech, crucial for an overall smooth retail experience.
“It is essential to include payments in these discussions from the start, as even the best shopping experience will fall short if customers cannot easily complete their purchases,” Strazza added.