Significant changes in consumer behavior create unique opportunities for Nordic traders

There is little doubt that the coronavirus pandemic has had a huge and devastating effect on the global economy.

Cash use is steadily declining in the Nordic countries

But the pandemic also represents a unique opportunity as it has triggered significant changes in the behavior of consumers, who have not yet settled into new sustainable models.

Now the burning question that is on everyone’s mind is: what happens when the pandemic finally releases its grip on the world?

Analysis of comprehensive payment data and recent consumer research in Nordic markets not only shows how the pandemic has affected consumer behavior both online and offline, but it also provides insight into trends that may affect consumers. continue.

New behaviors become new habits

In the Nordic countries, the pandemic has shifted the balance between online and physical shopping, as well as the balance between e-commerce categories. Total online consumption in the Nordic countries decreased by SEK 218 billion compared to last year (from SEK 856 billion to SEK 638 billion).

However, this decline is mainly due to a sharp drop in travel spending. Online shopping for products has actually exploded. In all Nordic countries, the purchase of products now accounts for more than half of all e-commerce transactions (Sweden 70%, Denmark 59%, Finland 58% and Norway 54%).

For physical purchases in the Nordic countries, the grocery category experienced strong growth due to more consumers staying at home. Retailing, restaurants, cafes and transportation saw overall negative growth rates, in some cases as low as 47%.

But some subcategories within these groups, such as flowers and home improvement, have grown significantly, again underscoring the significant changes in spending habits. The data also clearly shows a strong desire to return to physical shopping among all Nordic consumers.

It’s also clear that the pandemic has resulted in cashless payments and accelerated consumer adoption of digital payment methods. In all Nordic countries, the use of mobile, contactless and card payments has increased at the expense of cash, which is now preferred by less than 10% of all Nordic consumers.

The card is still the Nordic king of physical payments and e-commerce, thanks to the well-established card payment infrastructure. This payment method is preferred by up to 90% of Nordic consumers, mainly because it is considered easy, fast and secure.

There are three key opportunities that more merchants should explore to increase their revenue and improve the customer experience as the world moves past the pandemic.

  1. Invest in stronger integration between online and physical sales channels

For years, the global business community has tried to crack the Unified Commercial Code, where online and physical sales channels seamlessly integrate. Now, there are many indications that the pandemic may have been a driving force in this direction.

On the one hand, widespread lockdowns and fears of infection have motivated many consumers to turn to e-commerce when shopping for products, including older customer groups. In total, 22% of Nordic consumers say they are likely to shop online more often after the pandemic, with a fairly even distribution across all age groups. This indicates that more consumers have overcome significant hurdles to shop online, such as force of habit and safety concerns.

However, most Nordic customers still prefer physical shopping and are eager to return to their favorite stores, restaurants and events. Up to two-thirds of Nordic consumers prefer to buy physically rather than online. One of the benefits of shopping in physical stores is the ability to see and smell the products before purchasing, which 45% of Nordic respondents cited as the main reason for visiting a store.

Delivering a strong, unified business experience is more important than ever. The winners will be those who succeed in delivering a seamless experience designed around the preferences and needs of the customer.

For example, online shoppers have long become accustomed to receiving personal recommendations and offers based on data about their previous purchases and personal profile. In physical stores, this experience can be emulated by using mobile payment terminals, which free the sales people from the checkout.

This allows staff to accompany customers around the store to provide personal assistance. In hotels, this allows guests to pay for room service on delivery instead of adding it to their room bill for payment upon check-out. In other words, meeting your customers where they are is a better experience.

For customers more comfortable with full control over their own shopping experience, many companies have stepped up implementation of click-and-collect programs and self-checkout terminals to create a shopping experience. practical and frictionless.

Digital receipts and loyalty programs are also great ways to combine physical and online purchases. Digital receipts can facilitate returns, whether the purchase was made online or in person.

And loyalty solutions that deliver benefits across multiple channels are an effective way for merchants to entice customers to visit their digital and physical locations. Almost half of Nordic consumers prefer digital receipts, and about nine in ten are part of at least one loyalty program.

  1. Offer a variety of digital payment options

With the steady decline in cash, which has been going on for years in the Nordic countries and has been accelerated by the pandemic for hygienic reasons, it is increasingly vital for businesses to offer digital payment options to enable cashless payments. cashless purchases.

For example, 26% of Swedes never use cash, which is the highest percentage in the Nordic countries. However, there is a far cry from a universal consensus on the preference for digital payment across channels among Nordic consumers.

Providing a full suite of digital payment options makes good business sense. The lack of a preferred payment option is the second most important reason for abandoned online shopping. 37% of Nordic consumers discontinued an online purchase, and nearly one in ten online purchases were lost because the customer’s preferred payment option was not available. This also applies to physical sales, where the lack of a preferred payment option also results in lost sales.

In 28% of abandoned purchases, Nordic consumers had to stop a purchase because a business only accepted cash and all they had was a card. It is also interesting to note that in 7% of cases, the lack of a “buy now, pay later” option resulted in a lost purchase.

In the Nordic countries, card payment is still a major factor in physical and e-commerce, but other digital options such as mobile payments are slowly gaining ground. Contactless payment continues to gain popularity among Nordic consumers. In 2020 alone, contactless payment rose from 44% to 62%.

  1. Keep the preferences of international consumers in mind

With the lifting of travel restrictions, brick-and-mortar businesses can also expect an increase in the number of international customers. In this regard, traders should be aware that the Nordic countries are among the most digitized markets in the world and that consumers’ payment preferences vary considerably from country to country.

Most visitors prefer to use their local card such as UnionPay or Alipay for Chinese travelers and American Express for Americans. And in Germany and other parts of Europe the species are more common than in the Nordic countries. So, if you are dealing with a group of international customers, it becomes more important to accept multiple types of payment.

This preference gap is even more relevant for e-commerce, where it is obviously much easier to reach a group of international customers. Typically, accepting card payments from major international card providers like Visa or Mastercard is still the safest bet, but digital wallets, invoices and online bank transfers are also worth considering, depending on the country. origin of customers.

How can this information add value and growth for Nordic traders?

So what does all of this mean for Nordic businesses? First, consumer behavior changed in many ways during the pandemic. Customers will expect business to also change to accommodate these new preferences, for example, turning their “points of sale” into “points of interaction” with more customer service options.

Delivering a seamless experience across digital and physical channels through forward-looking technology – Unified Commerce – will ensure consumers are better served and thereby increase merchant growth opportunities.

Payment methods must also be tailored to consumer preferences. For physical purchases, accepting card payments is sufficient, but for online payments the picture is more varied. Cards are the most important, but local mobile payment solutions like Swish, Vipps and MobilePay have established a strong online position in the Nordic countries as well.


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