Independent retailers plan to invest in flexible payment options

Over the next year, almost half (49%) of small retailers plan to invest in flexible payment options and e-commerce capabilities (48%) to help drive growth, new research by global payments provider Klarna has revealed.

While SMEs are open to embracing innovation for the “want it now” generation, uncertainty over costs and the UK’s current turbulent market is reducing spend on innovation and holding back budgets set aside for that very reason.

“The price of progress” is an issue Klarna is addressing, so small and independent online retailers can look to overcome barriers and realise innovation ambitions.

Luke Griffiths, UK general manager at Klarna, comments: "Shoppers today demand a frictionless buying experience from browsing to checkout, so it’s encouraging to see that so many online SME retailers are looking to bring new technologies into their businesses to enhance customer experience."

“Introducing new tech, like Klarna’s Pay later and instalment options, is an investment that will pay off in the long run — ultimately leading to greater sales, higher basket value and increased customer loyalty.”

Many online SME retailers feel like they are too small to benefit from investing in new technologies, yet investment is key for growth to stay ahead of the game and, as Griffiths points out, being small in size doesn’t have to mean “small-picture thinking.”

SMEs ultimately have the advantage of agility, and are often better equipped to do a fast integration than their larger counterparts. As well as recognising the potential of innovative technologies, they also understand the importance of an omnichannel presence, with three quarters (74%) having created some form of physical experience for their customers in the past.

Yet, while customer loyalty remains stable, the research also shows SMEs are losing more customers than they should during the checkout process, as one in five (21%) visits result in a dropped basket — leading to a loss of vital revenue and a hit to their bottom line.

Unsurprisingly the UK’s current turbulent landscape is inhibiting tech spend, even though SME online retailers have budgets set aside for investment in new technologies.

Almost half (48%) cited uncertainty around Brexit as the main reason they’re currently halting investment. This was followed by not knowing what tech will provide the best return on investment (31%). But SMEs who let this stand in the way could be damaging their bottom line in the long run, especially given 54% said competition from bigger players and online giants is the biggest external challenge currently impacting them.

Klarna’s new research, conducted across 100 UK SME decision makers at online retailers in 2019, does at least show the UK’s SMEs understand the need to embrace flexibility and innovation. The following year will no doubt show who’s actually embraced it.