Multiple payment trends are coalescing around two different themes: optimizing costs for the grocer and offering more choices for the shopper.
A landscape of mixed economic signals surrounds grocers entering the New Year. Inflation has slowed yet remained persistent, affecting everyday purchases like gas and groceries, while supply chains have yet to stabilize. Conversely, consumer spending, the biggest driver of the economy, continues to show a degree of resilience that’s compelling businesses to invest in new consumer experiences, investments that may be particularly wise if spending slows and competition for dollars grows.
So, how are grocers responding? We see multiple payment trends coalescing around two different themes: optimizing costs for the grocer and offering more choices for the shopper. Accelerating innovation in these areas will help position grocers for the long haul, no matter which direction the economy goes.
[Read more: "Where Are Consumers’ Heads – and Wallets – This Year?"]
Here are key trends that grocers will need to address in 2023 and beyond.
1. Payment Choice Helps Grocers Meet Consumer Needs
Consumers prefer, and, in some cases, need, to pay in a myriad of ways ranging from tapping their digital wallets to paying with government benefits. From enabling digital payment options like electronic benefit transfer (EBT) and PayPal in-store and online, to allowing consumers to leverage experiences that connect physical and digital commerce, grocers increasingly view payments as an opportunity to maximize customer choice and create loyalty-building experiences.
Think of the online customer who needs to pay with EBT, the college student who wants to purchase a late-night pizza with Venmo, or the savvy shopper who plans to bank loyalty points by routing in-store purchases through a grocer’s mobile application. Each consumer has a unique payment preference driven by a real-life need. Grocers maximizing payment choice can create experiences that drive loyalty and enable their customers to navigate their financial lives.
2. Optimizing Payment Flows to Protect Against Economic Uncertainty
- For lower-cost payments, flows like pay-by-bank are gaining momentum, following a broader trend toward real-time payments. By allowing customer bank accounts to be securely accessed as a direct in-app payment option, grocers can reduce their cost of acceptance on a given transaction. That cost savings can benefit the bottom line and be reinvested to boost the customer experience.
- Streamlining accounts receivable payments by closely integrating them with enterprise resource planning (ERP) systems will create efficiencies, enhance data protection, and optimize collaboration with customers and partners, thereby improving cash flow.
- Finally, during challenging economic times, history shows an increase in both first- and third-party fraud occurring across channels. Pairing artificial intelligence and machine learning with robust sets of payments data allows grocers to leverage omnichannel fraud controls to mitigate costly risks and preserve customer trust.
3. Moving Payments Data to the Cloud
To unlock new value from their payments data, grocers can tap cloud solutions to achieve new levels of access, analysis and efficiency. Enabling seamless and secure data transfer via the cloud will modernize how payment data flows to decision-makers and guide business decisions.
With ready-to-query payments data, grocers will be able to enhance consumer experiences by integrating real-time payment data into the checkout process, strengthening loyalty and rewards programs, and improving decisions for embedded financial services.
4. Enhancing Digital Wallet Experiences
As competition heats up, large grocers are investing in branded digital experiences, leveraging their own digital wallets to create value and drive deeper customer relationships. For example, grocers can leverage their mobile applications to streamline payment experiences across multiple wallets within their digital environment. This functionality allows consumers to store and move funds between multiple financial purses, including loyalty, prepaid, financial and health/wellness, within the grocer’s digital wallet. Doing so allows brands to create engaging experiences and offer more services within their digital ecosystem.
To illustrate, a grocer could provide cash back into a stored value account, a health care wallet could hold funds to be spent at the grocer’s pharmacy, or a consumer packaged goods company could place rewards in a wallet for purchasing its product at that grocer. The ability for grocers to extend functionality across multiple purses within their digital wallets helps drive loyalty and engagement, and delivers more value to the consumer.
Accelerating Innovation in the Year Ahead
While there may be some ups and downs in 2023, there’s a bright future for brands interested in technology that focuses on creating new and differentiated customer experiences that encourage loyalty and drive growth. For grocers, investing in payment choice and optimizing payment processes will best position them to accelerate innovation in the year ahead.