In the PYMNTS study, Global Digital Shopping Index: United Kingdom Edition, the UK was revealed to be a leader in digital-first payments.
Though the pandemic accelerated growth in digital channels, in-store digital-first features and shopping online have been a mainstay in the UK.
So, what makes the UK payments scene tick, and why are they ahead of the pack when it comes to digital innovation?
The study notes that “Fifty-four percent of U.K. consumers now prefer in-store shopping, marking an 11 percent decline from the share that preferred it prior to the pandemic’s start. The greatest shift has occurred in online-native shopping journeys, in which consumers shop for products on computers and laptops and have them delivered to their homes. Use of this channel grew by 29 percent since the pandemic's onset, making it the most preferred shopping method for nearly one-quarter of U.K. consumers.”
While the steep decline in physical retailing worldwide hasn’t spelled the end of in-store shopping, U.K. shoppers shifted further away from it than their American cousins, per PYMNTS’ survey of over 2,000 consumers and close to 600 U.K. merchants.
“Digital-first features are uniquely compelling for U.K. consumers,” per the Index. “Thirty-five percent of U.K. consumers, on average, are ‘very’ or ’extremely’ interested in employing such features. One digital-first technology stands out for its wide adoption: contactless card payments.”
The study found that 55 percent report using this feature, and the number grows daily.
U.K. merchants need to deliver on digital
While in-store will certainly live to fight another day, PYMNTS’ U.K. Index found the greatest shift is seen in online-native shopping journeys where “consumers shop for products on computers and laptops and have them delivered to their homes. Use of this channel grew by 29 percent since the pandemic's onset, making it the most preferred shopping method for nearly one-quarter of U.K. consumers.”
What’s interesting here is an attendant disconnect between what merchants define as digital experience, and what consumers increasingly expect. Global Digital Shopping Index: United Kingdom Edition states that “Seventy-one percent of merchants say they offer click and collect, for example, yet just 54 percent of consumers say that merchants offer such services. Wider gaps exist for other popular features, such as inventory checking capabilities: 69 percent of merchants say they offer them, but only 35 percent of consumers say the feature is available.”
Merchants and their technology partners must work on that, as businesses hustle to recoup 2020 losses and ensure that all is in place for the digital experiences demanded after COVID.
Retailers are getting the message. “Top most among [merchant] investment priorities are better click-and-collect options that allow shoppers to pick up purchases inside or outside stores. Forty-eight percent of top-ranked merchants plan to invest in buy online, pickup in store options,” researchers found. “Mobile order-ahead is also an important investment priority, with 44 percent of top-ranked merchants planning improvements in this area. Improvements to mobile product availability capabilities also rank among important investment areas, with 40 percent planning to boost these services,” per the PYMNTS research.
Debit and touchless preferred
It’s impossible to separate digital experience from payments choice. That’s as true in the U.K. as it is in Australia and the U.S., as was borne out by studies of those markets.
U.K. consumers show a slightly higher preference for digital payments, with debit currently leading the pack here, as elsewhere. PYMNTS researchers found, “U.K. consumers demonstrate a greater preference for both debit cards and contactless payment methods. Debit is the most used payment method for both in-store and online purchases: 51 percent of them prefer it for the former, as do 38 percent of U.S. consumers..”
Digital wallets and cards on file are also more popular in the U.K. than almost anywhere, with 9 percent paying via contactless methods, “nearly twice the rate of that in both the U.S. and Australia,” the Index states, adding that “The use of in-store digital wallets is also more robust in the U.K.. Nearly 4 percent of U.K. consumers use Apple Pay in stores, for example, while the usage rate in the U.S. is less than 1 percent.”
With nearly half of all U.K. consumers (46 percent) preferring to begin shopping trips in the digital domain in 2021—and given that 63 percent of them are leaning into home delivery—players need to quickly field payments experiences calibrated for touchless connected commerce—per the Global Digital Shopping Index: United Kingdom Edition.
1 The 2020 Global Digital Shopping Index, U.K. Edition, Cybersource and PYMNTS, 2020, p. 9.
2 The 2020 Global Digital Shopping Index, U.K. Edition, Cybersource and PYMNTS, 2020, p. 9.