Mollie, looks at the biggest retail and payments trends of 2021

Personalised alternatives to Amazon, the new normal, more efficiency through software platforms, consumers choosing payment systems and “pay later” methods creating new revenue for merchants. Read more about Ken’s five predictions.
#1: David vs. Goliath: SMEs will offer a personalised alternative to the likes of Amazon
The pandemic has shifted many brick-and-mortar stores online for the first time and has also put a spotlight on what SMEs can offer. Small-medium sized merchants are now aware of their strengths and how to play to them. They are providing a relevant and credible alternative to larger retailers thanks to their in-depth product knowledge, access to specific customer groups, deep customer knowledge and local stock – all of which make them very appealing to consumers. Many also have an ingenuity that is keeping them relevant – pubs and bars for example have quickly pivoted to delivery and takeaway services during lockdown measures.
However, small-medium sized merchants are not only capable of competing with the Amazons of the world, they are uniquely positioned to offer a more personalised and local approach that the giants simply cannot. Next year, SMEs will prioritise creating the sophisticated online experience customers want. They will double down on digital and use the insight they have into their customers to create tailored offerings not found with larger retailers.
#2: We won’t see a return to ‘Before Covid’
The pandemic has turned retail on its head and it is not going to return to normal any time soon. Thousands of customers who have never ordered anything online are now accustomed to digital retail. The retailers who are going to do well in 2021 are those who are bold and adaptable. Successful merchants will level-up their online presence, finding new and creative ways to reach customers who cannot, or don’t want to set foot in physical stores. More retailers will venture into online and deliveries. Online shopping experiences – even from smaller retailers – will become bespoke. And there will be a range of innovative customer incentives that build loyalty digitally.
The largest players – Asos, Amazon etc. – have developed frictionless checkout experiences that consumers now expect. To compete, SME merchants will ensure their checkout experience is simplified to reduce cart abandonment and increase conversion, removing barriers and making e-commerce offerings more innovative.
#3: SMEs will boost efficiency thanks to support from software platforms
SMEs will be more supported by platforms offered via a business as a service (BaaS) model. BaaS platform providers will handle a lot of the complicated elements of the SME’s business. Shipping, marketing and customer service are just a few elements that BaaS providers are likely to take on. By eliminating these cumbersome tasks, smaller merchants can focus more on their core responsibilities and growth. All the more important during times of uncertainty.
#4: ‘Pay later’ payment methods will create new revenue for merchants
With the market uncertainty of the pandemic, consumers are looking for payment methods that give them the freedom to pay how and when they want. Klarna, which became one of 2020’s biggest fintech success stories, is a great example. With the next year likely seeing more pressure on people’s personal finances, this trend is going to get much bigger. Payment methods offering choice, catering to customer needs in this ‘new normal’ will come to the fore. This change in behaviour will encourage merchants to adopt ‘pay later’ solutions as standard.
#5: Consumers will increasingly demand specific payment methods
Changing online demographics and evolving expectations means customers are going to be increasingly selective about payment methods, opting for payment solutions that fit the channel and the transaction. For a larger transaction, customers may want to use a more secure payment method or a credit card. For a smaller transaction, perhaps a mobile payment method or fintech product, whereas a frequent subscription could be handled by direct debit, depending on the requirement.
In response, small-medium-sized merchants will now meet consumers where they are, catering to mainstream payment methods as well as expanding into specific payment methods to offer the best choice. This may require new payment infrastructure, but implementing this will widen a retailer’s addressable market. And thanks to modern payment providers, this can be attained much easier.
SMEs will increasingly use a very wide array of payment methods and offer the appropriate method for every customer. Conversely, payment providers will continue to offer support to SME merchants to ensure they have the tools to meet customer demands online.