• The majority of European retailers intend to expand their operations into other countries within the next 12 months
  • Entities that have invested in the right payment technology will be able to implement their growth strategies faster

The latest study published by the payment platform Stripe, conducted by Forrester, shows that the majority of European retail representatives, in the wake of COVID-19, are planning to expand their operations rather than scale them back. However, although the pandemic has accelerated the digitalisation of the economy, business growth still comes with certain challenges.

European companies still have a strong appetite for growth – not just for survival

European companies still have a strong appetite for growth

The study, conducted in September 2020 among 495 respondents worldwide, including 221 respondents from Europe, shows that European sellers adapted exceptionally easily to the current crisis. One third of the surveyed companies experienced a positive impact on sales, and more than half (57 percent) are planning expansion into other countries. Improving the customer experience also ranks high among corporate priorities – 56 percent consider it an important or key goal to achieve within the next twelve months.

Merchants not only want to grow their business, but also realise that they need to become more flexible in order to better anticipate market changes and adapt to them more easily. After an eventful year, the majority of businesses (56 percent) considered accelerating their ability to respond to such changes a key or important goal. 51 percent of respondents said they are considering introducing a new business model, such as a subscription service, within the next eighteen months.

Moreover, retailers operating in the context of a global crisis in which every euro counts are now facing an increasing number of fraud attempts. 38 percent of European sellers reported an increase in fraud attempts over the past twelve months, which can be counteracted by the introduction of Strong Customer Authentication (SCA) in 2021. It is therefore no surprise that the majority of respondents (57 percent) consider improving fraud detection to be key or extremely important for their business.

As companies grow, a lack of knowledge and adequate technology can prove costly

A lack of knowledge and technology can be costly

Most retailers believe that foreign expansion comes with many challenges. When entering new global markets, they encounter new preferences regarding payment methods, localisation nuances and regulatory obstacles. Adapting payment options to local conditions is a challenge, but what is fundamentally most needed is language support. As many as 42 percent of respondents declared that their company does not have such capabilities. To operate smoothly across different markets and regions, businesses must adapt to different rules and regulations. However, 44 percent of respondents admitted that their companies lack the expertise related to local conditions to understand the payment rules and regulations applicable in a given country.

The above obstacles can harm companies' international ambitions, which may result in lower revenues or higher market entry costs (31 percent). As a result, management is less willing to support international expansion (29 percent), and sometimes these obstacles can lead to penalties imposed by regulators (29 percent). These obstacles are even capable of preventing companies from entering new markets (33 percent). All of this risks slowing down growth and recovery in Europe.

Retailers are betting on payment technology to gain speed and flexibility in their growth strategy

Sellers are betting on payment technology

European e-commerce stores are planning further growth

The appetite of European retailers for growth also affects their payment priorities. Their main area of interest is growing revenue and profits from mobile channels (26 percent). Developing cross-border payment capabilities (21 percent) and the choice of payment methods (20 percent) are also extremely important.

Companies expect payments to give them a competitive advantage and help them acquire more customers and improve their strategy in response to COVID-19. Retailers in Europe are planning to introduce new payment methods (36 percent) and collect more insights and data about consumers thanks to payments (27 percent) – treating this as a high priority for the next 18 months. Entrepreneurs are looking for state-of-the-art payment capabilities from their providers, such as loyalty services (55 percent), card-linked offer programmes (47 percent) and white-label consumer lending services (45 percent).

“Although the economic effects of the pandemic are felt throughout Europe, European retailers have shown impressive resilience and are looking to the future despite significant obstacles and challenges. Stripe has extensive experience in helping online businesses deal with regulations and will continue to support these companies' efforts to operate internationally from day one.” – emphasises Marcin Misztal, Head of Central and Eastern Europe at Stripe

 

The full content of the study can be found at this link.

Summary

According to the Stripe and Forrester study, 57 percent of European retailers are planning expansion into new markets within a year, and 56 percent are focusing on improving customer experiences. The pandemic has accelerated digitalisation, but growth is being held back by gaps in local knowledge (44 percent) and language support (42 percent). As many as 38 percent of companies also recorded an increase in fraud attempts, which the implementation of SCA in 2021 is intended to curb.

Retailers are investing in new payment methods (36 percent) and data analytics (27 percent), and they expect loyalty services (55 percent) or white-label loans (45 percent) from providers. According to Marcin Misztal of Stripe, the key to international growth is technological flexibility and regulatory support from the first day of operating abroad.