$71 billion in lost retail opportunity
Negative shopping experiences are costing Australian retailers $71 billion in lost revenue each year, with out of stock events and long lines the factors most likely to see consumers seek gratification elsewhere.
These are the recent findings of a report by global payments provider Adyen, who surveyed consumers and retailers early this year, identifying eight key areas contributing to revenue loss.
Here’s an insight into the Adyen findings for 2019 and how retailers can address lost opportunity.
The report
Adyen notes Australia enjoys the highest preference for bricks and mortar shopping in the English-speaking world, with 50 per cent of all consumers preferring to shop in-store versus 27 per cent who strongly prefer online shopping.
Yet the retail landscape is not without its challenges, with connected customers asking more from retailers than ever before.
Convenience, context and control
Convenience, context and control are the key elements driving consumer behaviour, with fast, frictionless access to items, personalised experiences and offerings that allow consumers to engage with retailers on their own terms the prerequisites to a positive retail experience.
Here are the eight areas where the report found room for retail improvement.
1. Out of stocks – $14 billion lost
The report notes out of stocks “weigh heavily on purchase abandonment and loyalty” in retail.
Their research indicates 83 per cent of consumers have chosen to leave a store and not make a purchase due to the item they seek being unavailable.
2. Long queues – $13 billion lost
Two out of three consumers abandon a purchase due to long lines, the report found, with Gen Y the most likely to walk away from a purchase if they wait too long in a queue.
“Grocery, general retail and fast fashion rank as the top verticals where shorter queues would increase shopper loyalty,” the report states.
3. Online checkout friction – $9 billion lost
The easier the online checkout is to negotiate the more likely consumers are to buy, with lack of mobile automation and complex payment forms among the experiences that are most likely to put consumers off.
“Nearly two-thirds (63 per cent) of shoppers report having abandoned an online shopping cart at least once in the past six months due to difficulties in completing a purchase.”
4. Lack of contextual commerce experience – $8 billion lost
Buying in the moment matters, according to the report. Fifty per cent of shoppers say they have encountered an advertised product or service that they were interested in via channels like social media, but then did not make the purchase because too many steps were required to find where that product/service was sold.
5. False positives – $7 billion lost
False positives are when a shopper’s credit or debit card is falsely declined due to suspicion of fraudulent activity, and the report notes it’s costing retailers $7 billion in lost opportunity.
“In the past six months, 49 per cent of consumers have abandoned a purchase after their credit/debit card(s) were falsely declined due to suspicion of fraud during a legitimate transaction.”
6. Lack of cross-channel buying – $7 billion
Whether it’s buy online and pick up in-store or home delivery, consumers are increasingly seeking flexibility in the way they purchase, and failing to offer it also costs retailers $7 billion in lost earnings.
The report notes two in five shoppers have abandoned a purchase over the past six months due to a lack of cross-channel buying options, while nearly half (45 per cent) of consumers note that convenient cross-channel shopping experiences would encourage them to shop with one retailer over another.
7. Lack of payment options online – $7 billion
With increased consumer expectation comes the demand for the customer to buy using the payment method they prefer, and that happens both in-store an online.
Over half of all customers (51 per cent) abandoned an online shopping cart because they could not pay in the way they preferred.
8. Lack of payment options in store – $6 billion
Just as customers want a variety of payment options online, they also seek them in store.
Whether it’s cash, contactless payments, credit or digital wallet, the report found 44 per cent of shoppers have been unable to use their preferred payment method with a retailer in-store, prompting them to abandon their purchase entirely.
More opportunity to be had
The report goes on to note in addition to revenue that is directly being lost, retailers can improve their offering and encourage greater spending through additional positive experiences.
They note positive initiatives include:
- Cross channel buying ($8 billion opportunity)
- Cross selling ($5 billion opportunity)
- Personalised offers ($8 billion opportunity)
Coupled with addressing the $71 billion in revenue lost to negative experiences, these positive initiatives could see retailers add a potential $21 billion to the coffers, and together they could boost the industry by $92 billion a year.