Reducing friction in retail is not a novel concept by any means. Consumers value convenience and consider it an essential factor when deciding where to spend their money.
According to a recent survey analyzed by the team at Banklesstimes.com, 44% of consumers believe retailers should invest in frictionless payment technology. In terms of deciding where to shop, 43% of consumers said they would pay more for greater convenience in their shopping experience.
Frictionless and traditional payments can coexist
New market players can coexist with established retailers. Buyers have different needs, for which there is no single solution. There are different technological platforms for different niches and the benefits of each channel should be integrated to create a consistent and seamless customer experience.
Frictionless retail uses artificial intelligence (AI) to do away with the need for checking out. This technology has been gathering momentum over the years. AI makes it easier for customers to choose products and make payment. At the same time, retailers have access to accurate data in real time, which enables them to manage product supply and performance.
However, they need a clear engagement and communication strategy to assuage concerns regarding data safety and technological functionality.
The future of retail?
43% of customers would pay more for a product if they could buy it more quickly and conveniently. This preference is reflected in market predictions: the number of frictionless shops worldwide is anticipated to grow at 91% CAGR, with transactions reaching the astonishing value of $400 billion by 2025.
In 2025, Western Europe is expected to account for two-fifths of the total market size. In the UK, experts predict supermarkets will generate £190.8 billion this year and £224.7 billion by 2029.
The majority of survey respondents said they would use self-checkout in a frictionless store. Just over half (52%) of them already use self-checkout.
Personalisation vs. privacy
Customers can shop across numerous platforms without having to check out physically. While shopping, they will be able to receive personalized promotions and discounts in real time based on their movement and spending habits.
Consumers consider personalisation a priority according to the survey. 80% said they were willing to share personal data if that would improve their experience. They are most willing to share information such as their email address, birthday, age, and sex / gender.
Against the backdrop of this finding, it’s no wonder why marketing teams invest so many resources into personalisation. At the same time, we are witnessing a growing focus on data privacy.
The paradox
Personalisation mandates collection and analysis of data, while data privacy regulations often limit these practices. Advanced forms of data collection involve disclosure of buying habits, browsing history, and demographics. Collectors collate and analyze data using automated tools. As consumer awareness of data sharing and the risk of misuse increases, retailers are facing pressure to improve their methods of collecting, storing, managing, and using data.
The paradox has given rise to the concept of zero-party data: information intentionally shared by a customer with a retailer. A consumer will provide their data willingly if they want to hear from brands that they enjoy interacting with.
Pluses of zero-party data
Having come directly from the customer, this data is reliable, accurate, and relevant. It lets retailers know how the customer wants to interact with them. The data is also provided for free. Data sources and collection methods are secure and clear, which mitigates compliance concerns.
Pros and cons of frictionless retail according to US shoppers
A recent survey on 1,500 US consumers’ opinions of frictionless shopping confirmed its many benefits. Among those cited were faster shopping (51%), no need to wait in line (50%), not having to interact with a cashier (17%), and a lower product cost (9%). Spending less money and having a personalized shopping experience were pointed to as advantages by 3% and 4% of participants, respectively.
When asked to point out the possible downsides, 51% lamented the loss of jobs in retail. 38% feared they would pay too much for products. 33% of respondents were concerned about data protection and 27% were afraid frictionless shopping would lead to privacy issues.
Finally, 15% indicated they preferred paying in cash, and 13% said the shops they visited didn’t have self-checkout.
Jonathan Merry, CEO of BanklessTimes.comThe shopping experience is continuously transforming and change is a matter of time. By keeping up with the trends, retailers can drive their profit and create a more satisfactory customer experience. All parties involved will benefit.
