Digitally-driven mid-tier merchants that are able to bring new and innovative products and services quickly to market as well as deliver a consistent focus on customer experience are winning the global innovation race, new research by ACI Worldwide and Ovum reveals. According to the Culture of Innovation Index, 37 per cent of mid-tier merchants with annual revenues between $5bn and $10bn are either ‘Advanced’ or ‘Trailblazers’ when it comes to innovation, whereas 23 per cent in this group is classified as ‘Laggards.’
The index identifies five types of organizations, as defined by their approach to innovation and business transformation: Laggards, Emerging, Tech-led, Advanced and Trailblazers.
When it comes to the world’s largest merchants, the situation reverses: 37 per cent of merchants with annual revenues of at least $10bn are ‘Innovation Laggards;’ 22 per cent are classified as ‘Advanced’ and only 8 per cent are ‘Trailblazers.’
“Digital-led mid-tier merchants may well be on the way to becoming the super-merchants of tomorrow,” commented Andrew Quartermaine, vice president, Merchant Retail, ACI Worldwide. “Today, growing numbers of consumers globally expect a digital-led shopping experience. Businesses that have a strong digital presence and strategy, whether they are big or small, will, therefore, have the edge in today’s competitive environment.”
While there is no single formula for driving innovation within an organization, the Merchant ebook – How to become a Payments Trailblazer outlines seven key characteristics of ‘Trailblazing’ Merchants – the most innovative enterprises – that stand out from the rest of the market. Among those key features are a strong central function tasked with driving innovation, an agile culture that is responsive to customer needs, taking advantage of emerging technologies and focusing on customer experience by bringing innovative products and services quickly to market.
“There is no single recipe for success in today’s new retail environment, but our research provides a blueprint for what the most innovative and successful merchants do right,” continued Quartermaine. “Catering to growing customer preference for digital-led or digital-influenced purchasing is key. This includes new payment options; a focus on mobile, especially in-store, and a stronger, more seamless cross-channel payment experience.”
Key Asia-Pacific (APAC) insights:
- When queried on their investment focus for new payment-related services in the coming year, more than half of APAC respondents indicated that supporting the convergence of in-store/in-person and digital commerce was a top priority (52%), compared to 42 per cent in Europe and 43 per cent in the Americas.
- 59 per cent of APAC merchants said that enhancing the range of payment options for customers (for example, supporting payments being made directly from bank accounts) was another top priority for investing in new payment services for digital sales, significantly more than 52 per cent in Europe and 46 per cent in the Americas.
- 38 per cent of APAC merchants strongly agreed that abandoned transactions are a bigger concern than fraud, compared with 27 per cent in both Europe and the Americas. On the other hand, 40 per cent in APAC strongly agreed with the statement “our risks of a data breach are higher now than they were a year ago,” compared to 30 per cent in Europe and 27 per cent in the Americas.
- Merchants in Asia-Pacific are highly focused on investing in technology; 32 per cent fall into the Tech-led group, with 26 per cent in the Advanced category; only 19 per cent are Laggards.
- In contrast, 35 per cent of all merchants in Europe are classified as Laggards, compared to 30 per cent globally. European retailers particularly fall behind their global peers, with 43 per cent in the Laggard category, reflecting the challenges that many have faced as a result of the rapid shift in customer habits toward eCommerce.
- Merchants in the US are polarized, with 34 per cent falling into the Laggards and 16 per cent into Trailblazers category, reflecting the growing gap between more traditional merchants and many of the more digital-native businesses.
Overall merchant performance
- Overall, the merchant segments (telecoms, retail, digital goods and hospitality) featured in the Culture of Innovation Index are spread across the Laggard, Emerging and Tech-led categories, placing them behind fintech, retail and corporate banking in the overall ranking