The very nature of money is being disrupted—have you noticed? It’s shifting forms, becoming ever more virtual and 2017 is proving to be the landmark year where the disruption is playing out on a global scale. So what does this mean for your retail store as you plan for the future?
Here are three key things to consider—and how it impacts your store’s bottom line:
This is the future
People are bringing less cash around with them: it’s a fact. A 2016 Gallup poll showed that 63% of Americans believe that the U.S. will likely be entirely cashless in their lifetime. Gallup has also shown that the number of people using cash in retail contexts is declining. In a 2016 survey, 24% of respondents reported making all or most of their purchases with cash; that number was 36% five years before.
Compare that with Business Insider’s prediction of mobile payment volumes being on the sharp rise. This is the likes of Apple Pay, Android Pay, PayPal—payments made by mobile phones with NFC capabilities. Business Insider predicted $75 billion of mobile payments in 2016. By 2020 they are predicting this to rise by the compound annual growth rate (CAGR) of 80%, bringing mobile payments volume to $503 billion by 2020. And if that doesn’t convince you, entire Nordic countries are becoming cashless.
This is to say: If you’re running a retail store that is only offering cash sales or only offering clunky old POS terminals, you need to convert quickly. Or your business will become obsolete. This is your future reality so my advice is: embrace, adapt, and grow with the changing tides. (I’m so passionate about this topic, I wrote an entire ebook)
mPOS is now a necessity
Another key takeaway is that you need to be flexible in accepting payments right now. Nasdaq writes that “since consumers now expect merchants to accept credit cards or debit cards, having mPOS terminals is a necessity.” Gallup agrees: “For an improved customer experience, it is going to become increasingly necessary for businesses to accept other forms of payment beyond cash.”
The good news is that this cashless world can actually boost your profits. There is a lot of labor involved in cash: You need to deal with the hassle of stocking change for your cash drawer, counting your cash, making regular deposits at the bank, and of course the risk of theft in the store (including employee theft). And while there are fees involved with credit cards, there are also studies that show thay people tend to purchase more when using cards versus cash.
Don’t go completely cashless…just yet
Cashless is clearly the future, but be wise. You don’t want to close your cash drawer… just yet. The National Retail Federation advises: “A host of considerations are in the mix, including consumer attitudes, laws and regulations—not to mention the $1.4 trillion in U.S. currency in circulation worldwide that the Federal Reserve says is seen “as a trusted store of value.”
It can be a customer service slap in the face to not accept cash at all (not to mention, if you’re based in Massachusetts, it’s actually against the law). Federal Reserve studies show that consumers prefer cash for small transactions—so you run the risk of alienating people if you ditch it completely, particularly lower-income customers who may not have access to bank accounts.
What you need is a balanced system, that is future-proofed, varied, adaptable. As the CEO of General Electric, Jack Welch has famously said: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Make sure you get on the right side of that change—no pun intended.
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