2022
The Retail Report USA
Trends and insights shaping the industry
We asked over
10,000 merchants, from 23 countries
to detail their fears, hopes, strategies, and investments for 2022 and beyond.
Then we asked 40,000 consumers from 26 countries if they’re getting it right.
Welcome to the Retail Report 2022:
The shape of ambition
When faced with sudden and significant change, we are compelled to examine our hopes, fears, and ambitions in a new light. What’s most important to us? What do we want for the future? The answer can take a very different shape for each of us.
For businesses, ambition might be in the form of improving customer experience, championing sustainable practices, or expanding into new markets. Perhaps it’s all, or none, of the above, plus more.
Since our last report in 2020, much about the world has changed. Businesses and their customers have seen and felt that change in irrevocable ways. And yet despite the strangeness and hardship, many have been able to adapt and thrive, showing incredible positivity and resilience. We’ve seen this in both our data and in our daily collaborations with our customers around the world.
Globally, 67% of businesses across the retail, food and beverage, and hospitality sectors grew in revenue by 20% or more in 2021. Digital transformation has played a pivotal role. In the face of enormous pressure and uncertainty, many of you have chosen innovation. You’re optimizing processes, breaking down silos, growing loyalty, helping communities, and working towards a better future.
Ambition comes in many shapes and sizes. As do customer expectations. There are challenges on the horizon, in evolving risk, regulatory complexity, and rising competition. But now you know what’s possible.
We hope the following insights and recommendations help you shape, grow, and realize your ambitions for 2022 and beyond, whatever they may be.
Roelant Prins CCO, Adyen
Foreword
At KPMG, we believe unifying business is the next frontier for long-term success. By connecting backend systems and data insights with compelling customer experiences, businesses can engender growth, achieve greater efficiencies, and lower costs. Similarly, Adyen has long championed unified commerce – the process of connecting payments across every channel where customers shop – for its ability to break down silos to deliver richer services and more agile operations.
With 94% of businesses surveyed planning to invest further in their digital transformation in 2022, we believe this year’s Retail Report will be a valuable tool for those deciding exactly where to focus their resources. This year’s report highlights the increasingly inextricable link between operational digitisation, customer experience, and growth – and the pivotal role payments technology plays for any business serious about all three. Findings show that 72% of businesses globally expect to grow by 20% or more in 2022. This jumps to 80% for businesses who have connected their payments systems across the business.
Increased investment in payments has been fuelled by the global acceleration of digital trends–from the increasing popularity of digital and contactless payments to the growing demand for alternative shopping options like buy- now-pay-later (BNPL), social commerce, and buy online, return in store. This is evident in both mature markets like the US and UK, and in highly digitised markets within Africa, Latin America, and Southeast Asia.
Those retailers who can leverage digital technologies to make their service ubiquitous and engage with customers across channels are more likely to build long-term loyalty. Adyen’s research shows that globally, 61% of consumers feel that if retailers can sell across multiple channels during the pandemic, they should adopt the same, flexible approach as a baseline going forward. And businesses agree: 49% feel they are in a better position due to investments to improve operations during the pandemic.
But this is all work in progress. 47% of businesses understand the direct connection between customer experience and payments–and those that make this connection are financially better off. Yet only 28% use payments data to improve customer experience or create new services as a result.
KPMG believes this highlights significant growth and retention opportunities for businesses, particularly across loyalty, credit, marketing, supply chain, and personalisation. Businesses must understand who their customers truly are and design for them. This is where real-time payments data shines. Loyalty, after all, means different things to different people.
Whether you’re adding digital capabilities to existing services and products, or stepping out to build completely new digital processes, your technology must be capable of taking you anywhere you want to go, now and in the future. Working with industry leaders who can provide a high level of knowledge, flexibility, and security will ensure a strong return on investment and continued resilience.
For businesses reshaping their digital transformation strategy in 2022 and beyond, it’ll be those who can let go of old assumptions and base their decisions on real moments of truth who will grasp long-term, sustainable growth. Together with Adyen, KPMG wishes all consumer and retail businesses the very best in 2022, and hope the following insights serve to inspire and motivate.
<em>Chapter 1</em> — Digital transformation is ambition’s best friend
Digital transformation is a trillion dollar opportunity.
In spite of – or perhaps because of – the multitude of pandemic-fuelled challenges hitting retail, food and beverage (F&B), and hospitality over the last year, businesses around the world managed to invest in digital technologies. The goal? Improving operations and breaking down silos in backend processes and systems such as payments. 1 in 5 businesses connected payment systems to other parts of the organisation, such as inventory management and supply chain.
This proved to be the right move. 49% of respondents say their business is now in a better position due to investments to improve operations. And customers agree. 61% of consumers believe retailers used technology well to make their products available during the pandemic. No wonder 94% of businesses plan to invest further in this area in 2022.
With so much investment planned, it’s time for businesses to take a holistic view of digital transformation. Connecting operations and customer experience is key to success – not just in terms of sales, but also operational efficiency.
Our studies show that there is a 9% increase in growth amongst businesses that connect payment systems to other parts of their business compared to those that don’t. This is reflected in their ambitions – the growth projections for 2022 are 11% higher for those who connect their systems compared to those who do not.
Digital transformation is expected to continue opening up a wealth of opportunities. Our research found that 72% of retailers expect to grow by 20% or more in 2022. Overall, hitting these growth ambitions equates to a $7.7 trillion opportunity – and with so many planning to invest further and grow bigger, that number could be even higher. In fact, if technological adoption is accelerated, the retail sector could add 4.7% percentage points to its growth rate over the next five years.
1 in 5
businesses globally have connected their payments systems to other parts of their business.
What does this mean for the USA?
These results are once again higher than the global average: US businesses know how to adapt and thrive in tough times.
Our research shows a significant digital transformation occurring in the United States. There are clear opportunities for US businesses leveraging advanced technology to create efficiencies, break silos, protect their business, and deliver more sophisticated customer experiences.
US businesses are seeing higher growth rates than the worldwide average – 76% of US businesses grew more than 20% or more in 2021, compared to 67% globally. This is in large part thanks to the acceleration of digital transformation in the industry, as businesses were forced to streamline operations and connect with customers in new ways amidst fluctuating pandemic restrictions.
How’d they do it?
Agile businesses focused on connecting backend systems to enable a smoother frontend experience:
- 22% of US businesses now have their payment systems connected to other parts of the organization.
- 52% of businesses now feel they’re in a better position due to investments to improve operations during the pandemic.
- Joining payments systems across the entire business, from CX to supply chains and inventory management, increases businesses’ growth projections by 8%.
- This effort was worth it: 64% of US consumers believe businesses used technology well to make their products available during the pandemic.
US businesses are optimistic
It makes sense that merchants are feeling stronger going into 2022. On average, 68% of merchants expect to grow by 20% this year. That would add $4.5 trillion to the US economy – but as we’ve seen globally, digital transformation stands to accelerate this, with the potential to add 5.1% to the US sector’s total economic performance over five years.
The additional resilience and flexibility provided by digital transformation has given US businesses a leg up when it comes to revenue growth. 76% of all respondents expect to grow by 20% or more in 2022 – but this goes up to 89% for businesses embracing unified commerce – connecting their online and offline payments systems into one platform.
“The rise of digital channels, business intelligence capabilities, and transaction data helps us to better understand our customer base, and to run better targeting, better proposals, and better promotions to these customers.”
Casper Mooyman — Head of Marketing, Domino’s
From insight to action
Connecting opportunities with unified commerce
47% of businesses say unified commerce improves customer experience
Businesses that consistently perform the best are those that can combine their physical and digital worlds to create a fluid, channel-agnostic experience which prioritizes the customer. This is unified commerce, the next level up from omnichannel sales.
Omnichannel businesses are great at delivering cohesive cross-channel experiences to their customers. But behind the scenes, backend systems are often unconnected, complicating cross-channel reconciliation, limiting the experiences you can offer customers and hindering your operational agility across multiple channels and regions.
With unified commerce, payments from all your channels — online, in app, and in store — feed into the same system. This gives you more targeted, data-driven decision making, and a more seamless, flexible experience for customers. It also keeps you agile since you can add new channels and support new customer journeys quickly because everything’s connected.
<em>Chapter 2</em> — You’ll win hearts, minds, and wallets with unified commerce
61% of consumers believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic.
The flexible, tech-driven experiences made available mid-pandemic have blurred the line between sales channels and encouraged the rise of nonlinear customer journeys. Businesses are providing new or simply different ways to shop, from the convenience of click and collect or curbside pick-up to the perks of brand-owned apps – and customers are embracing the change. 50% of shoppers globally reported using shopping apps more frequently during the pandemic than previously – a 43% increase compared to results from our 2020 Retail Report.
Both businesses and consumers have a taste for what’s possible with technology – and now there’s no going back. 61% of consumers believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic. Keeping up with these expectations greatly improves the likelihood of repeat purchases and higher spending. Falling short could result in the opposite: 70% of consumers will not shop with organisations that have a bad shopping experience, either online or in store.
It makes sense that linking online, in-app, and in- store payments with a single system – i.e. unified commerce – has proved to enhance both brand resilience and customer satisfaction. 51% of businesses say online stores were able to offset the losses at physical stores during the pandemic.
And the more channels your shoppers use, the higher their value: 47% of businesses say a benefit of unified commerce is improved customer experience, 46% say it helps increase sales, and 44% say unified commerce increases customer loyalty.
Our research shows that globally, unified commerce increases businesses’ performance by 9%.
This brings us to some interesting findings around loyalty programmes. Only a handful of brands are making the most of them – look to Domino’s Pizza and Gap for inspiration – and it’s an area of the customer experience ripe for innovation. 70% of consumers globally say retailers should use tech to make their loyalty or rewards schemes easier and more effective. Payments-linked loyalty programmes and brand apps are a good place to start: 61% of consumers would download a retailer’s app to receive better loyalty rewards.
of consumers say they would download a retailer’s app to receive better loyalty bonuses or rewards.
of consumers thinks retailers need to use technology to make their loyalty/rewards schemes easier and more effective.
Agree
Neither agree or disagree
Disagree
% merchants that say unified commerce has:
Improved customer experience.
Increased sales.
Increased customer loyalty.
Higher average spend.
of merchants who grow by 20% or more enable customers to shop and complete transactions easily across online and offline channels.
What does this mean for the USA?
Merchants in the US are seeing growth potential in fintech transformation, and the choices they’ll make now will determine brand loyalty and longevity.
Overcoming the expectation gap
66% of Americans will not shop with organizations that have a bad shopping experience – either online or in store. Despite progress being made, in the US, there’s still an expectation gap between what consumers want and what brands are able to deliver.
Customers want a seamless shopping experience across channels but a retailer’s setup doesn’t always allow this to happen. For example:
- 68% of consumers would be more loyal to a retailer that lets them buy online and return in store.
- Only 28% of brands let customers complete transactions easily across online and offline channels.
- Only 24% make it easy for customers to return items purchased online at their stores.
This highlights a huge opportunity for the brands that get it right; offering customers the flexibility and ease thevy’ll return to again and again.
Expanding to new payment methods
Another critical loyalty-driver in the US is offering preferred payment methods. For example Americans have embraced Buy Now Pay Later (BNPL) options thanks to the flexibility it provides – but merchants are lagging behind. In the past year, 41% of Americans have used BNPL services, which is above the global average of 24%. However only19% of retailers allow customers to use BNPL services. BNPL options have allowed 43% of US customers to purchase when they wouldn’t normally be able to, meaning merchants are leaving money and loyalty on the table.
Enabling conscious consumers
Lastly our research found businesses showing support to good causes, and enabling consumers to make positive contributions, will help drive loyalty. American customers feel strongly about issues around ethics and sustainability. 62% believe brands have a responsibility to ensure their stock is ethically sourced and produced. 48% prefer brands that stand up for causes they believe in. And 41% want to donate to good causes while they’re paying yet only 26% of businesses enable this at checkout.
Fast food chain, Leon, integrated a donate-at-checkout feature (with Adyen Giving) into its in-store kiosks. Customers can now donate directly to its charity partner Bags of Taste and the money is passed directly to the charity while Adyen absorbs the processing cost.
of customers are more likely to shop with retailers that use technology to improve the shopping experience.
of customers would download a retailer’s app to receive better loyalty bonuses or rewards.
of customers think retailers need to use technology to make their loyalty/rewards schemes easier and more effective.
of customers would be more likely to shop with a retailer if their loyalty program worked automatically through their payment card.
of businesses stated that a benefit of unified commerce was an increased customer loyalty.
“The more you know, the more you can actually cater to the customer. Adyen helps us to collect data from our visitors and with that data, we can actually divide them up into different customer groups. This helps us create loyalty programs so we can cater to them even better.”
Koen van Santen — Account Manager of Memberships and Foundations, Rijksmuseum
From insight to action
Cross-channel recognition and payment-linked loyalty
Address customer needs in real time
Payments data enables you to build a better picture of your customers, their purchases, and their preferences in real time, across every channel and region. With these insights you can investigate your customer segments, understand their behaviour, and address their needs more quickly – plus shape more effective product, marketing, and operational strategies for the future.
Recognise and reward loyal customers
Use customer recognition to make your loyalty programme more frictionless by removing the need for a traditional loyalty card or app. When customers make a payment in your online or physical store, you can automatically recognise them and award them with points, discounts, or a reward.
<em>Chapter 3</em> — Customers appreciate physical stores more than ever (but there’s a catch)
61% of consumers would be more loyal to a retailer that lets them buy things online and return in store – but only 23% of businesses offer this.
They say absence makes the heart grow fonder, and everyone is feeling very fond of the physical store experience indeed. 41% of consumers globally say they have a new appreciation for being able to touch, feel or physically try products before they buy, and 59% prefer to shop in store.
On the business side, things are looking equally affectionate: 51% expect the proportion of revenue to increase from physical stores in the next year, and 41% plan to increase their number of physical stores in the same period. This doesn’t mean we can stock some shelves, throw open the doors, and expect the crowds to coalesce. It’s about creating a destination that entices: 59% of consumers say physical stores should be exciting places to visit. Stores must offer something more than the products and services available online.
Technology proves pivotal in creating an in-store experience worth visiting. From endless aisle shopping – providing kiosks or terminals to check additional stock for home delivery – to offering new ways to pay through QR codes or mobile payment terminals, 55% of consumers say they are more likely to shop with retailers that use technology to improve the shopping experience.
But even more crucial is the ability to connect online and physical channels to ensure a truly seamless experience: 61% of consumers would be more loyal to a retailer that allows them to buy things online and return in store, an increase of 13% compared to our 2020 Retail Report research. Shockingly, only 23% of businesses globally say they currently provide this option.
Customer and staff experiences are inextricably intertwined; any technology you leverage for in- store experiences should help, not hinder, your sales teams. 46% of consumers say they would love it if in-store sales assistants used technology to assemble items from their online wishlist in the changing room ready to try on.
Customers are more loyal to businesses that:
Offer buy online, return in store options.
Allow customers to buy out of stock items in store, and have delivered home.
Have physical stores and online options.
What does this mean for the USA?
US customers still value in-store experiences – as long as they’re safe and delightful
Despite years of whispers that the physical stores will eventually succumb to online shopping, our research found that just isn’t true. Americans like the in-store experience. 65% of Americans prefer to shop in a physical store, well above the global average of 59%. Plus the majority of Americans (67%) view physical stores as an important touchpoint even if they shop with the same brand online.
Online shopping and in-store should not be viewed as at odds with each other, rather a complementing channel strategy. For example 65% of US customers think online shopping is more about convenience and they chose to shop at physical stores more for pleasure.
Physical stores are still valued by US customers: 52% of American merchants say that physical stores are still important following the pandemic. But the experience goes beyond simply browsing and paying in-person. Customers want their time to be well spent, to be delighted, and to feel safe. As trends evolve, brands need to adopt a unified commerce approach in order to meet growing expectations.
Friendly and helpful staff is important but you also need to consider the bigger picture and connect your digital offering if you want to stand out. With only 28% of businesses enabling customers to shop and buy across channels, there are gains to be had in this area.
1 in 2
businesses expect the proportion of revenue from physical stores to increase in the next year.
of shoppers are asking retailers to make the shopping experience more interesting, for example Virtual Reality/Augmented Reality experiences, in-store cafes, or special events/activities.
of merchants said their customers became less tolerant of poor online experiences during the pandemic.
of shopper think physical stores should be exciting places to visit, not just about products because I can get those online easily.
of consumers would be more loyal to a retailer if they were able purchase an item that was out-of-stock in store and have it shipped directly to their home, up from 60% in 2020.
“We can deliver a unified experience and provide a smoother checkout process with mobile checkout and endless aisle capabilities. It also means we can extend digital into physical retail by connecting our in store to our online ecosystem. This will allow us to get a full understanding of our customers’ shopping behaviours and actionable insights.”
Nathan Alexander — CTO, R.M.Williams
From insight to action
Driving in-store convenience through technology
How to improve in-store experiences with payments innovation
Enhance in-person payments
Offer flexibility with options like endless aisle shopping. Use the terminal to ask questions and better interact with customers.
Make donations easier
Make donating at the checkout easier for you and your customers.
Recognise your customers
Personalise experiences and grow loyalty through data insights, brand apps, or payments.
Localise the checkout
Present customers with relevant languages and payment methods.
<em>Chapter 4</em> — There’s untapped potential in real time payments data
28% of businesses globally use payments data to understand user behaviour and improve customer experience.
COVID-19 hasn’t just influenced consumer behaviour; it’s completely disoriented it. Think of all the one-off purchases like kettlebells and baking tins, or the temporary exodus from cities muddling location insights. The historic data businesses use to inform decision making has been compromised.
Our research shows that consumers want businesses to recognise, predict, and meet their needs in a relevant and timely way: 47% of consumers prefer retailers who remember their preferences and previous shopping behaviours to create a more tailored shopping experience. Businesses who can leverage real time data insights instead of relying on historic data will be best placed to deliver these more personalised, sophisticated experiences.
The insights unlocked via payments data, and particularly unified commerce data, allow businesses to act more immediately on what consumers are telling them. A growing number of businesses are leveraging this opportunity – but many are still missing out. 28% of businesses globally use payments data to understand user behaviour and improve customer experience, and 27% to build a better picture of their customers.
Those businesses who are using payments data can identify popular product lines, inform inventory management, create personalised marketing campaigns, and inform decision making – a testament to the wealth of insights made possible through payments data.
If you’re diving into the payments data pool, there are a few crucial things to keep in mind. Regulations such as General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standards (PCI DSS), the Revised Payment Services Directive (PSD2) and similar data protection laws are developing around the world. In the absence of federal legislation, some U.S. states are devising their own. On a global scale, it’s clear consumers are demanding responsible use of their personal data – and the industry demands it.
43% of consumers believe retailers shouldn’t be able to use their data or purchase behaviour information unless they give express permission. And 39% of consumers will only allow data to be stored and used by retailers if there are assurances around security and privacy. Businesses need to stay informed and compliant to protect shoppers and themselves from data breaches and fraud.
of customers prefer retailers who remember their preferences and previous shopping behaviours to create a more tailored shopping experience.
of customers like it when retailers serve personalised adverts or suggestions.
Agree
Neither agree or disagree
Disagree
How businesses are using payments data:
To understand user behaviour and improve customer experience.
To build a better picture of customers.
To identify popular product lines and guide product development.
To help with inventory and guide what stock needs to go where.
To drive personalised marketing campaigns.
To inform decision making in other areas of the business.
What does this mean for the USA?
US customers prefer personalization
Our data shows that American like personalization especially when it makes their shopping experience more convenient. Almost half of Americans (47%)prefer retailers who remember their preferences and previous shopping behaviors to create a more tailored shopping experience.
Plus 47% of US shoppers like it when businesses serve them with personalized ads or suggestions – which is high compared to some of our European shoppers. For example, only 25% of British shoppers would agree.
These trends are likely to increase over time as customers become more used to brands using data and personalization, it’s clear that data will play an ever-important role in business growth. By gaining a 360-degree view of your customers’ habits you can build a deeper understanding of their needs.
Remember, it’s important to be transparent about using data. 41% of US consumers believe they should give retailers permission beforehand, and 35% will only allow data to be stored and used if assured about security and privacy.
1 in 4
shoppers will only give my data to a business if there’s something in it for them – such as a discount or special offer.
of American business use payments data to build a better picture of their customers (when/how they like to shop/average transaction value and frequency).
of americans like it when retailers serve them with personalized ads or suggestions.
“We want to offer our franchisees the best tools to run their businesses. If you split out your online and in-store payments you have all these different systems and tools and reports from which the franchisee must collect the revenue per day, often all by themselves. Unified commerce means we have a one-stop environment for franchisees to better understand what money they’ve made from which channels.”
Casper Mooyman — Head of Marketing, Domino’s
From insight to action
Securing trust with smooth payment authentication
Blocking fraudsters, not customers
Address customer needs in real time
Payments data enables businesses to build a picture of their customers, their purchases, and their preferences in real-time, across every channel and region. With these insights, businesses can investigate their customer segments, understand their behavior, and shape their strategy with confidence.
Recognize and reward loyal customers
Use customer recognition to make loyalty programs more frictionless by removing the need for a traditional loyalty card or app. When customers make a payment online or in a physical store, businesses can automatically recognize them and award them with points, discounts, or a reward.
A resilient industry with new ambition
The evidence is there. Businesses in 2022 are optimistic about the future, and so they should be.
Whilst resilience and adaptability have been key themes of the last few years, there is also opportunity. Digital transformation remains a key priority, accelerated by recent challenges but at the same time more within reach than ever. Consumers continue to drive innovation and flexibility, and businesses are expected to not only keep up, but continue to shape whatever comes next.
At Adyen our focus is, and always has been, on supporting long-term, sustainable growth. We’re committed to ensuring our customers remain at the forefront of this ever-evolving industry and look forward to speaking with you about how payments can be the strategic growth driver you’re looking for.
About KPMG International
KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services. “KPMG” is used to refer to individual member firms within the KPMG organisation or to one or more member firms collectively.
KPMG firms operate in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Each KPMG member firm is responsible for its own obligations and liabilities.
KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
For more detail about our structure, please visit home.kpmg/governance
© The Retail Report 2022
Adyen is the payments platform of choice for many of the world’s leading companies, providing a modern end-to-end infrastructure connecting directly to Visa, Mastercard, and consumers' globally preferred payment methods. Adyen delivers frictionless payments across online, mobile, and in-store channels. With offices across the world, Adyen serves customers including Facebook, Uber, Spotify, Casper, Bonobos and L'Oreal.
Methodology
The Adyen Retail Report is a comprehensive guide to the global and local trends impacting businesses around the world, fuelled by evolving consumer behaviours and the possibilities of financial technology.
We spoke to businesses primarily in the retail sector, but also polled segments in the hospitality and food and beverage (F&B) sectors. These industries are facing both similar and contrasting challenges and opportunities; including their perspectives ensures we capture the growing exchange of inspiration, strategy, and innovation between industries, from the rise of self-serve kiosks to data-driven loyalty programmes.
This study includes merchant and consumer data from a wide scope of countries, examined and compared on both global and local levels to ensure a holistic view complemented by regional nuances.
Consumer insights
Opinium Research LLP polled 40,020 adults in Singapore, Hong Kong, Japan, Australia, UAE, the UK, France, Italy, Spain, Portugal, Germany, Poland, Belgium, the Netherlands, Brazil, Norway, Denmark, Sweden, USA, Canada, Malaysia, Mexico, Ireland, Austria, Switzerland and India. Respondents were incentivized to participate.
Merchant insights
Censuswide polled 11,530 merchants in Singapore, Hong Kong, Japan, Australia, UAE, the UK, France, Italy, Spain, Portugal, Germany, Poland, Belgium, the Netherlands, Brazil, Norway, Denmark, Sweden, USA, Canada, Malaysia, Mexico and Ireland. Respondents were incentivised to participate.
Fieldwork was conducted between 23 December 2021 - 8 February 2022.
The sample includes minimum quotas of 100 in retail, 50 in travel and hospitality, 50 in food & beverage per market.
Opinium and Censuswide campaigns are conducted in accordance with all ESOMAR principles and best practice.
Economic insights
We commissioned the Centre for Economics and Business Research (Cebr) to provide analysis on the current state of retail, hospitality, and F&B businesses around the world.