If earnings season has a common theme, beyond the verticals – it doesn’t matter if it’s been the payment networks, the ride-hailing firms or the retailers – it’s that the consumer has been resilient. And also, they’re venturing outside their homes more, which means they’ll be spending in person more often – at least that’s the logic.
But getting outside may not mean that people are going to make beelines to the stores. And positive comps may be green shoots, thus far, but green shoots are fragile things.
In other words, the digital shift has proven itself sustainable – but the question is whether the foot traffic renaissance is also sustainable. To make it so, brick-and-mortar retailers are going to have to fine-tune their operations with the digital-first consumer in mind.
As we’ve spent so much time at home, on devices and ordering online, it’s worth mulling what will happens to the brick-and-mortar retailers when foot traffic comes back in force. Some things will remain the same, while some things will be decidedly different.
A disparate range of firms has put up numbers already. And we’ll get some real insight into traditional retail when, say, Walmart and Target report later in the month. Bellwethers are critical to get the lay of the land, so to speak.
But as to what we’ve seen so far: As noted earlier this month, foot traffic at clothing stores is coming back to levels that have not been seen since before the pandemic. We’re not at positive levels yet, but the declines have been muted and have been improving. Visits to apparel retailers were down 3.4 percent in the week that began April 5, as compared to 2019. The tailwinds are coming amid economies opening up and vaccines gaining traction. In-person visits to retailers such as Bed Bath & Beyond and Conn’s are recovering, measured on weekly traffic.
Separately, American malls are seeing a boom in foot traffic, and data are showing a bit of rebound – again, down from 2019 levels, off 24 percent from March 2019, but up 86 percent year on year.
It should be noted that positive comps for malls are not as shimmering as they might seem. Malls, after all, had been in decline prior to the pandemic, and climbing out of a very deep hole still takes time.
Digital-First Preferences
Drilling down a bit, the preferences of the digital-first consumer – honed by concerns over health and public safety, and by the convenience of digital commerce – become apparent. Mastercard said in its earnings call that card-present transactions are growing above 2019 levels for the first time since the pandemic. Visa has said that growth in card-not-present payment volume, excluding travel, has averaged at least 30 percent across several regions. Management said on the Visa call that card-present as a percentage of 2019 spend improved 11 points versus February.
In commentary, Visa CEO Al Kelly said that “the pandemic has accelerated the digitization of cash, and we see the impact in debit and tap-to-pay. When we look at cash usage in the last 12 months, just on the Visa brand, such as with ATM withdrawals, we see that global debit cash volumes have decreased by 7 percent, while debit payment volume has grown 16 percent.” Overall, Visa tap-to-pay transactions grew 30 percent year over year in March. In the U.S., one in 10 face-to-face transactions is done through tap-to-pay.
These data points and observations set the stage for what retailers – all merchants, really – must consider as they welcome back shoppers. Omnichannel has increasingly been a given, as we’ve browsed online, bought online and then gone to the store to pick up the goods we’ve purchased. But beyond that, the in-store experience is likely to shift.
As noted earlier in the year, PYMNTS’ surveys of thousands of consumers show that even as they embrace vaccines, 41 percent are shopping more via mobile than they were before the pandemic. When it comes to retail, 78 percent of respondents stated they will maintain all or some of their online shifts. This means that for retailers, offering touchless conduits to in-store commerce – QR codes, for example, which convey product information and cut in-store interactions with staff – will be important. So, too, will, contactless, tap-to-pay options, as signaled by the payment networks’ results and commentary.
A recent PYMNTS survey found that the availability of touchless payments would impact where consumers shop – 57 percent said that digital payment offerings would change their shopping decisions. Roughly 48 percent said they prefer paying with POS credit and will not shop at merchants that don’t offer it.
[catlist tags=”Retail” post_type=”post” numberposts=”4″ orderby=”date” excludeposts=”this”
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