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Lack of payment technology online and in-store costing SME retailers £8.7bn a year in lost sales

Wed Jul 19 04:00:00 EDT 2017

  •   SME retailers estimate one in ten transactions are abandoned because shoppers can’t pay the way they want to
  •   Lost sales extend beyond the high street as online shoppers want faster and more frictionless way to pay such as ‘one-click’ ordering
  •   Small businesses would also benefit from rewarding customer loyalty, as four in ten consumers say this affects their choice of retailer

SME retailers are struggling to keep up with consumer demands online and in-store, which is impacting both revenue and customer loyalty, new research from Barclaycard has found. 

The findings show that SMEs who don’t keep pace with consumer appetite for a range of fast and frictionless ways to pay including contactless, mobile payments and ‘one-click’ ordering, where card and shipping details are saved in advance of transaction, could be losing as much as £8.7bn per year*. This is despite the fact that almost four in ten (38 per cent) believe their size allows them to be more nimble than their larger competitors when it comes to responding to demands from shoppers.

Small businesses estimate more than one in 10 (12 per cent) transactions are abandoned because customers can’t pay the way they want to. The issue extends beyond physical in-store check outs, as 16 per cent of SME retailers believe they have lost customers in the last twelve months due to a lack of payment technology online.

Inadequate information becoming major barrier to payment innovation

Despite the apparent importance of prioritising payment innovation, the Barclaycard data suggests many SME retailers are yet to seize the opportunity to draw customers in and in-turn drive sales.

On average, SME retailers admit they haven’t updated their payment strategy for over a year (16 months), and less than one in five (19 per cent) have consulted a payment provider to discuss their options, with a lack of confidence cited as one of the main factors holding them back.

For example, the findings show that of the SMEs who have yet to start accepting online payments, 25 per cent admit they don't know how to get started , or think it would be too complicated. Yet, with ecommerce sales predicted to grow a further 14 per cent by the end of 2017, SME retailers who only sell their goods and services in-store are potentially losing customers to their more savvy competitors**. 

Turning thought into action

While SMEs are sometimes falling behind the expectations of consumers, a distinct cohort of forward-thinking smaller retailers is considering making changes. Six in ten (61 per cent) believe cash will eventually become redundant and 7 per cent have already prepared for this by becoming completely cash free. In addition, four in ten (38 per cent) small retailers plan to introduce next generation technology in the future, with one in ten (11 per cent) admitting they are making this step as a result of lost custom.

To spur their intention into action, SMEs can obtain the support and consultancy they need to get started from their payment provider or acquirer. A third (34 per cent) of SME retailers have held off introducing a new method simply due to a lack of know-how when it comes to setting up the technology, and 38 per cent admit that they don’t understand how new payment methods work.

SMEs missing a trick on loyalty

As well as keeping up-to-date with payment innovation, smaller retailers also have an opportunity to attract repeat customers by focusing on loyalty. Although more than four in ten (42 per cent) believe their size and setup helps them foster loyalty in a way that larger brands often cannot do, only 16 per cent think loyalty schemes are important, and only a fifth (22 per cent) say the same about providing discounts for repeat customers.

This is despite clear expectations from consumers to be rewarded: more than four in ten (42 per cent) people are more likely to choose a retailer if discounts for loyal shoppers are on offer; and a similar proportion (41 per cent) say they would be drawn to a retailer if a loyalty scheme was in place. By taking note of consumer feedback, SMEs can help to bridge the gap between what shoppers are calling for and what they offer which in turn should help to drive repeat custom.

Sharon Manikon, Managing Director of Customer Solutions at Barclaycard, said:

“Payment technology is continuing to evolve at pace and as our data shows, small businesses who don’t keep up with this rate of change are potentially missing out on both sales and customers. But keeping up with shoppers’ expectations needn’t be as costly or complicated as SMEs think; with the right partner, they can easily find a solution that works for both them and their customers.

“Speaking to payment and technology experts will help SMEs identify the most cost-effective options for their specific needs. As consumer demands vary from business to business, it is also important that SMEs seek feedback from their own customers to understand what support and services they see as most valuable, and develop their offering in response.”

For more information, please contact Chloe Wilkinson, Senior PR Manager, Barclaycard, on +44 (0) 20 3555 4036 or chloe.wilkinson@barclaycard.co.uk

Online interviews were carried out with 253 senior decision-makers from SMEs by Opinium research in April 2017.

*The figure of £8.7bn (£8,727,606,519) was calculated using the average total number of occasions within the past year a transaction was abandoned because a specific payment method was not available, multiplied by the average total estimated value of these transactions. The gross figure was then multiplied by the average proportion of total retail sales value made by SMEs over the previous twelve months (21.11%) to provide an estimate of the total amount lost by SME retailers.

**According to the 2016 IMRG Capgemini forecast