Payment Technology Plays Key Role in 2022 Holiday Shopping Success

With Thanksgiving upon us, so too is the holiday shopping season. Of course, we’re all aware that Black Friday has historically been a hectic and lucrative shopping day for retailers and an opportunity for shoppers to find some of the year’s best deals. While there’s no reason to think that this year will be much different, there are several factors that industry insiders will be watching which could impact the overall success of the 2022 holiday shopping season.

Inflation and the Supply Chain

Everything costs a little more today, thanks to steady inflation. The Bureau of Labor Statistics reports that the cost of goods increased by 8.2% between September 2021 and September 2022. As a result, shoppers might be more eager than usual to score deals this year, but retailers have higher costs they’ll be managing as well. For example, freight forwarding company Flexport has revealed that shipping a 40-foot container from Asia to the U.S. west coast now costs between $21,000 and $23,000 (up from $1,600 to $2,100 in 2019). As a result, finding bargains as good as years past might be challenging for shoppers.

At the same time, the effects of the pandemic introduced supply chain challenges retailers are dealing with today. Consequently, finding adequate inventory to meet holiday demand could be difficult for some retailers. The severity and spread of the impact will depend on many factors, including the category and merchant type. For example, Apple continues to struggle to meet the demand for its latest iPhone within the consumer electronics space. Within the fashion industry, cotton shortages are creating issues. Overall, empty shelves and racks are probably unlikely, but selection might be limited.

One opportunity for shoppers related to both issues is that retail chains like Target, Kohl’s and Walmart have expressed a desire to reduce some inventory piling up in warehouses and stockrooms. So while these items might not be the hottest or most desirable gifts, they will probably be the most significant opportunity for shoppers to save.

Payments Power Retail Success

We’ve talked a lot about how payment solution providers should be helping retailers meet their customers wherever they shop – online, in-store, or through a hybrid model. Data from last year’s shopping season proves that empowering customers to make their own choice can profoundly impact a retailer’s success. According to data from Salesforce.com, U.S. stores offering curbside or in-store pickup during Black Friday grew their revenue by 50% more year-over-year than retailers not offering those options. At a time when retailers are fighting for every sale, the right omnichannel payment solution can give your merchants the boost needed to remain competitive.

Contactless payments will also play a role in this year’s shopping season. For consumers heading in-store, having access to safe, fast and secure payments can greatly impact the experience. Merchants will be wise to offer customers a variety of payment methods, including contactless. Additionally, merchants who have previously operated on a cash-only basis can now harness affordable and secure tap to mobile payments, opening up a new customer channel.

Similarly, retailers with effective loyalty programs stand to see above-average shopping numbers. Loyalty programs can help merchants engage with existing customers and attract new ones while giving shoppers access to their desired deals. Perhaps the most potent aspect of loyalty programs is that they allow merchants to run their own holiday savings campaigns before and after Black Friday and Cyber Monday.

Next Steps

There are many variables at play that will affect how your merchant customers do this holiday season. However, payment technology is one area that can be controlled and can have a positive impact. Contact NMI today to learn more about how the proper payment solution can bring increase profitability and customer engagement to your customers.