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Contactless Payments Could Be Key to Retail Turnaround

Photo: Shutterstock

Looking only at the data for the first two months of 2020, you might have been tempted to declare—and not without good reason—that it was shaping up to be a banner year for brick-and-mortar retailers. In the last week of February, national in-store traffic was up 3.5% compared to the previous year. The U.S. had experienced 23 consecutive quarters of GDP growth, one of the longest such periods in modern history. It felt to many like there was nothing that could cool down America’s red-hot economy.

And then, beginning in early March, the bottom fell out. As the novel coronavirus outbreak proliferated across the country and around the world (and as state and local governments wrestled with how to control it), foot traffic dropped precipitously across the board. By the end of the month, nationwide retail walk-ins were at a paltry 27.1% of the previous year’s figures. The country hit its low point in mid-April when in-store traffic was down 75% from the previous year. Obviously, that is a huge decline, and to my knowledge we have never seen such a precipitous drop in foot traffic. 

From the period of mid-April through June, we saw a slow but steady increase in foot traffic, and we climbed back up to 50% of last year’s numbers. Now, that is still quite a bit down from normal, but the trends were looking encouraging. However, from July to mid-October, we saw a flattening of retail traffic, and in the past month or so we’ve observed some downward movement in the trend lines. Clearly, foot traffic to retail shops, restaurants, spas, fitness centers, and other offline venues with retail operations across the country remains depressed quite significantly.

And looking at the available data, it is obvious that the coronavirus pandemic is as bad as it’s ever been on a countrywide level. As fall trudges toward winter, the number of daily cases, deaths, and hospitalizations have risen significantly, as did test positivity rates among reported tests.

These figures are the clearest indication yet that COVID-19 is something that we will all have to live with for another several months at the very least. And understandably, a large portion of the population still has serious health and safety concerns about patronizing brick-and-mortar businesses in this environment.

The good news is that there are reasons for offline retailers to be optimistic. A number of studies have shown that despite the explosive growth of ecommerce, the tactile in-store shopping experience is still very powerful, as evidenced by the fact that even during a global pandemic, half of all consumers are still shopping in stores. 

But with consumers so clearly on edge, it is imperative that merchants lean in to enhanced safety and sanitation measures—practices like limiting store capacity to encourage social distancing, frequently disinfecting pens and surfaces, and implementing mask mandates. After all, the more businesses that adopt these changes, the more consumers will come to expect them and begin identifying these measures as standards.

A very important (yet often overlooked) callout involves contactless solutions, which have become quite popular this year. According to one study, 53% of consumers have used a mobile contactless payment option for the first time since the pandemic began, and an astounding 85% of consumers say that it is important that a retailer offer the choice for contactless payment.

There’s also evidence showing that stores which haven’t implemented some sort of contactless payment solution are at a competitive disadvantage. The same study cited above indicated that 28% of shoppers will actively avoid a retailer that doesn’t offer a contactless payment option and instead choose one that does. 

We at Zenreach have seen similar data with regard to another contactless solution: menus. Our contactless menu capabilities rolled out several weeks ago, and since then, we have observed that those merchants that have deployed contactless menus are seeing consumers sign up at twice(!) the rate of those merchants who do not have contactless menus. This is just another strong indication of consumers’ desire for contactless solutions. 

It’s truly amazing that technology has evolved to the point where customers are able to have a contactless retail experience at a brick-and-mortar establishment. Contactless solutions—for payments, price checks, and even in-store assistance—should go a long way toward alleviating consumer concerns.  To survive the pandemic, retailers need to take a hard look at contactless solutions. Your consumers want them.

About The Author
John-Kelly-author-2

John is Zenreach’s CEO. He has extensive experience in both ecommerce and ad tech. Prior to joining Zenreach, he was Head of Seller Growth at eBay and VP of sales at Criteo, a company that pioneered retargeting technology. John has a B.A. from Brown University, a J.D. from Georgetown University, and is a Fulbright Scholar.