Digital-First Down Under: Visa Report Shows Changes Coming For In-Store Shopping

Australia, like many places in the world, has seen its commerce landscape reset by the COVID-19 pandemic and the changes it forced on consumers and merchants. It’s a story told clearly by the numbers, according to PYMNTS’ Global Digital Shopping Index, part of which is dedicated to commerce Down Under. The report shows the pandemic has reduced in-store shopping by 6 percent, while the number of online-native shoppers grew by 24 percent.

Australians still like shopping in the physical store, according to the report. A little over two-thirds (67.1 percent) still identify as primarily brick-and-mortar shoppers today, with only 19 percent identifying as online-native consumers. But as Visa Head of Merchant Sales and Acquiring, Australia, New Zealand and South Pacific Daniel Parsons told PYMNTS in a recent conversation on the changing face of Australian commerce, that figure only tells one part of the story. Consumers there still like and seek out the physical shopping experience, but in very different ways than they ever have.

“Though the consumer survey said they have a preference for shopping in stores, we see that when they’re in-store, they’re choosing to pay digitally either by tapping their card or using their digital wallet,” Parsons said. “We’ve also seen online outpacing in-store in terms of growth and the proportion of spend, meaning the customers are spending more online than ever before.”

Think of digitization in terms of a curve, he said, and it’s easy to see that this transformation was already underway before COVID-19 appeared on the scene. The pandemic simply accelerated that curve. Moreover, noted Parsons, the acceleration of digitization will carry on apace as consumers continue to climb the digital curve and merchants rush to meet them with better options.

Recreating The Customer Journey

To their credit, Parson said, merchants have been fast to pivot their offerings and service sets to meet the needs of consumers whose lives had been radically altered by the pandemic. This is where Visa and Cybersource have played an important role in offering a range of digital-first solutions, helping merchants make spending more seamless and target the customer segments they’re most keen to engage — an increasingly complex undertaking where merchants are being driven by two realities. The first, said Parsons, is that — however modified — Australian consumers still have a preference for shopping in-store. Second, they are increasingly realizing the convenience of shopping online.

“I think those two preferences will drive Australian retailers to start developing these omnichannel experiences, and it’s why we continue to see growth in these cross-channel journeys,” Parsons said. “We find that Australian consumers value convenience and simplified shopping experiences and digital tools that can really enhance that.”

The Work Going Forward

As the commerce ecosystem is rebuilding itself around digitization, work still needs to be done when it comes to living up to consumers’ expectations. “One interesting point that was raised in the report is around free shipping, and the perception gap between consumers and merchants on that particular online feature,” noted Parsons. “Consumers deemed free shipping much more important than merchants.”

And that meeting of consumer expectations increasingly means providing that extra, more tailored experience. It’s not enough to just have an app — it needs to be an app that is easy to use, intuitive and offers consumers new options, like using it to pay in a store instead of having to wait in a line at the point of sale (POS), said Parsons. Just as consumers who were going to bank branches are now managing their financial lives online, grocery shopping is also increasingly starting in an app, even if it ends with a pick up at the store. Consumers expect to have the ability to customize their commerce lives.

The players that provide that experience now — and continue iterating on it going forward — will be the ones best-positioned to take on the immediate, and post-pandemic, future, Parsons predicted.

“Whether it’s a café, retail establishment or restaurant, they’ve had to accelerate their digital payment offerings,” he explained. “It can take many forms, whether it’s setting up an online store for the first time, offering click and collect or curbside delivery, or simply adding a terminal to allow consumers to tap and pay to reduce cash handling. As the report indicates, consumers really value digital shopping experiences, and they want to see that convenience across merchants of all sizes. What’s heartening, though, is that the pandemic created a movement in Australia that saw consumers choosing to support small businesses, which is why Visa launched Where You Shop Matters to provide small and micros businesses with digital tools, helping many to sell online for the first time. Looking ahead, I expect the digital-first trend will continue to accelerate over the next year as consumers move up the digital curve.”