How Smartphones are Transforming the Retail Race

Physical space vs cyberspace

Shoppers are increasingly using their smartphones to augment their physical retail experience in markets across the world. In the UAE, 59% of shoppers said they had used their smartphone to assist their in-store experience². Consumers use their smartphones to check on prices; hunt for coupons, special offers and discounts; look up product reviews; and access loyalty programs. Notably, consumers surveyed in the UAE were more than twice as likely as those in the UK (23.6%) to use their smartphones in stores.

However, across many CEMEA markets, growth in eCommerce hasn’t slowed the opening of new brick-and-mortar locations. Across the border from the Emirates, Saudi Arabia has witnessed significant growth in physical store locations even as traditional retailers enhance their digital offerings. Louis Vuitton, for example, launched an online store to complement its physical presence in the Kingdom.

Morocco, which is expected to see 16% year-on-year eCommerce growth through to 2025³, is seeing physical retailers integrating omnichannel capabilities into their digital presence⁴. Substantial investment is also taking place in the North African country, as IKEA has committed 400 million dirhams towards building its second store in the market, and Decathlon is opening its largest store on the African continent in Morocco.

A shopping remote

“In the hands of consumers, smartphones are doing far more than just augmenting shopping experiences. From transacting to managing purchases through a mobile app, checking inventory, and making mobile wallet payments at a physical store’s Point of Sale (POS), consumers are using their devices at every stage of the shopping journey,” says Shaz Iqbal, Head of CyberSource CEMEA, Visa.

Across markets, the UAE has also stood out as being at the forefront for consumers who use their smartphone at least once during a shopping journey, as 64.5% said they did⁵.

Shopper demands can broadly be distilled into five categories. The first is an expectation that merchants know their customers’ preferences regardless of the channel – in-store, online or via an app – through unique digital profiles holding shipping information and shopping history to enable seamless experiences in future.

Meanwhile, loyal customers want to feel valued, expecting rewards in return for their patronage – these may be points, promo codes, or even relevant suggestions based on their purchasing history.

Timely information on stock availability is also the need of the hour, with consumers expecting real-time updates as merchants add new products to their inventory. Retailers are also expected to match their competitors’ prices on similar products.

Convenience is a core concern of consumers, too. They want ready access to product details, reviews, and recommendations to be available digitally, while delivery and pickup options are also a need – from free shipping to the flexibility of ordering online before collecting the items from a kiosk or retail outlet.

The final piece of the digital feature puzzle is protection, according to the report. “Buyers expect ease in resolving disputes with merchants, simple refund and return processes, their data to be protected, and – last but not least – live help when they need it via phone or online chat,” Shaz says.

The merchant move

With the pandemic highlighting the need for digital transformation⁶ across industries, retailers are working to cultivate a convenient, cross-channel experience that leverages the best of every shopping context.

However, not every feature or channel that merchants offer consumers for purchase is popular. This is most starkly highlighted in the UAE with voice-enabled shopping, with 70.2% of merchants offering the option compared to just 48.5% of consumers using it.

Europe presents an interesting case for voice commerce – 19% of German and 17% of Dutch under-35 respondents to a PwC survey said they used a smart voice assistant for shopping every week⁷. Across CEMEA, France was the highest-ranking country globally for usage of voice assistants for shopping, in eighth place⁸.

As per the PYMNTS-Cybersource report, not every feature offered by merchants saw a huge usage gap. In the UAE, 52.3% of consumer respondents said they had used buy now pay later (BNPL) services, which 67.4% of surveyed merchants offer.

Cost of convenience

Consumers surveyed in the global study agreed on one thing – it’s crucial to have the ability to choose their preferred payment method in a retail environment.

Across CEMEA, there is a usage gap between the number of payment methods consumers prefer using and those offered by merchants – 72.5% versus 46.3% in the UAE and 69% versus 47.4% in the UK, respectively⁹.

In Saudi Arabia, Facebook IQ’s 2021 Emerging Trends report highlighted something called the ‘convenience gap’ – where 90% of survey respondents were actively looking for ways to simplify their lives, of which 88% would pay for products or services that would save them time to focus on the things they love¹⁰.

Across the Middle East, a survey of payments practitioners pointed to eCommerce marketplaces and specialist fintechs as the most effective way to help merchants sell online or establish an e-commerce presence of their own¹¹.

Friction to failure?

The friction raised in pursuit of better business on the part of merchants – such as stricter refund protocols – has compromised the consumer post-sale experience across several markets.

The PYMNTS-Cybersource report does contextualize the reduction in “protect me” features against the backdrop of rising fraudulent disputes faced by merchants – 88% of e-commerce retailers said they had seen increases in this.

The right mix

Overall, consumers across global markets have reported being more satisfied with merchants that have been able to integrate mobile and digital features into the physical retail environment. Merchants looking to succeed in this new world need to look beyond a full range of mobile-enabled shopping features. Flexible brick-and-mortar pick-up options that allow consumers to obtain their online purchases more seamlessly and at their own convenience are also a must.

“By incorporating new cross-channel tools and features while investing in up-and-coming technologies, such as voice-enabled ordering, retailers can get ahead,” says Shaz.