While many point to the pandemic as the catalyst responsible for changing today’s retail customers, in reality, the “retail customer” has been evolving for some time. Over the past several decades, consumers’ lives have grown busier and more complex while also being offered more choices spanning retail and digital, and shoppers have come to expect much more in terms of access, options, value and experience overall.
This exponential growth, competition and complexity in the buyers’ journey present both challenges and, more importantly, opportunities for retailers looking to stay relevant and keep customers engaged. As consumers look to maximize time and efficiency when running errands, many retailers have expanded their offerings to include everything from health services to auto care to, yes, even financial services. It’s easy to look at these as just new means of driving sales, but in reality, it’s a reaction to consumer demand for convenience, the most valuable driver of what will ultimately determine a customer’s loyalty.
It’s essential to make an impact with consumers during what might be their only trip out of the house on a given day. For retailers, the time is now to engage tech and financial partners to build new services that can engage consumers digitally, grow customer relationships, and drive new levels of loyalty.
The Evolving State of Retail and Brick-and-Mortar Banking
The average U.S. consumer is seeing their options for transacting and managing money in person evaporate before their eyes. Bank branch closures are rising and retail locations are growing into the financial service centers of the future, as consumers can now turn to Walmart, Dollar General, or 7-Eleven, among others, to do everything from loading cash to a debit card to paying bills to sending people money while at their retailer of choice. Innovation in financial services and the proliferation of digital platforms for banking and payments have quickly turned these services for retailers from unique value-adds to table stakes. This has made it essential for retailers to engage their customers “beyond the rack,” or beyond a single point of engagement in their stores.
Why Retailers Must Think Beyond the Rack
The millions of Americans who transact in-store daily or weekly (nearly 40 percent of consumers indicate they shop in-store at least once a week) present an incredible opportunity for retailers to turn a one-time customer into a long-term valuable customer relationship. This can start by offering a variety of financial services that provide more seamless access to money and tools and deliver the convenience they demand. If a working mom can buy food for her children, pay the electric bill, and load money onto a debit card to pay rent in less than an hour from one location, imagine the perceived value and long-term relationship potential a retailer can build. Opening that door through basic financial services can then provide opportunity to layer on loyalty programs and other perks they might find valuable like P2P; buy now, pay later (BNPL); path-to-credit loans; and more. This is just the tip of the iceberg.
Retailers providing financial services may be inclined to see digital financial platforms as their competition, but blending the two to create a better experience in-store will in fact be what really sets them apart for their customer.
What Beyond the Rack Looks Like in Practice
A beyond-the-rack strategy is about digital engagements that meet customers at an inflection point in their shopping experience and pull them into a cycle of new and differentiated services, experiences and value. We know most consumers, particularly younger generations, use their phones in some capacity for nearly all shopping and financial services. Many retailers count users of their digital apps in the millions and recent studies have shown that consumers who use mobile shopping apps visit physical stores 41 percent more frequently than those who do not. This not only provides retailers an opportunity to engage customers beyond the rack, but offer them other valuable options such as picking up products curbside, paying in installments, or easily checking off financial to-dos in seconds at their locations (think depositing cash or staging a transaction to be completed in-store while in the app before leaving their home).
According to the Time Use Institute, the average shopping trip takes consumers 41 minutes — meaning there’s little time to make an impact on a customer looking to manage their money in-store. Retailers need to take advantage of this opportunity. A beyond-the-rack strategy helps create stickiness with the customer while bridging the digital and brick-and-mortar divide. Foot traffic becomes less of an important metric when you can create valuable touchpoints and engagements elsewhere.
The smartest thing today’s retailers can do is resist the urge to be reactive in their offerings for customers or take a “me too” approach in tacking on services they see their competition offering. Proactively considering how to introduce services that engage customers digitally beyond the rack can unearth new opportunities to present services they would have never considered taking advantage of in a store where they had previously shopped for toys, diapers or groceries. Offering consumers valuable financial services in-store doesn’t need to involve a complete overhaul of a business’s strategy, space and inventory. It can be as simple as taking a proactive look at the touchpoints they have in-store and then meeting their customers where they are digitally. Blending simple, digital offerings can create more value for them in that moment, save them time and, ultimately, make their lives easier.
Jamison Jaworski is senior vice president/general manager, retail, Green Dot Network, a trusted, real-time money movement suite of solutions that span from cash to digital.
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