COVID 'Black Swan' reshaped global commerce

A new study by FreedomPay and J.P. Morgan, published June 9, 2021, describes COVID-19 as a "Black Swan" moment that transformed retail and hospitality. Preparing for the Return of Demand: How America's Retail & Hospitality Tech Elite Tackle Disruption with New Commerce Investment, reports on U.S. IT decision-makers surveyed to identify top concerns and technology investment strategies, FreedomPay and J.P. Morgan representatives stated.

Molly Walsh, head of product for merchant services at J.P. Morgan, credited changing consumer preferences for driving touchless and digital commerce adoption. These behaviors are "driving our merchant clients to build more effective payment and data commerce strategies, create new roadmaps and shape vendor relations in 2021 and beyond," she said in a statement.

Chris Kronenthal, president and chief technology officer at FreedomPay, agreed, adding that researchers found IT leaders focusing on better use of data and real-time insights. "A key takeaway from the study overall, emphasizes that the challenges experienced over the last 12 months are creating new opportunities for tech-investment as retail and hospitality organizations re-evaluate what's really important," he said.

Shifting priorities

The steady march from legacy POS systems to multichannel commerce switched into high gear in 2020, when COVID-19 abruptly changed retail and hospitality landscapes, researchers found. Today's merchants and IT teams are in a better state of preparedness, thanks to emergency responses taken during initial phases of the pandemic, they noted.

"While the risk of a global pandemic had been on the radar for several years, COVID-19 took America by surprise – both for its ferocity and speed of spread," researchers wrote. "Recognized as a Black Swan event - something that is rare, unpredictable, beyond control, and with potentially severe consequences - its impact was underestimated yet obvious in hindsight."

Researchers further noted that 78 percent of C-suite executives surveyed saw COVID as a "Black Swan" moment that reshaped their future, underscoring the need for secure, integrated digital platforms. Success in the post-pandemic environment will depend on proficient use of digitization, mobilization, unification and sharing across platforms, they stated, with better use of predictive analytics to target customers and identify emerging trends.

Retail readiness

With lack of readiness topping the list of pandemic-related challenges in the study, researchers found 69 percent of respondents ill equipped to integrate digital commerce and data to engage with customers. Following are additional challenges facing C-suite IT executives surveyed:

• Data management: Respondents reported numerous challenges with integrating data sources (38 percent), improving effectiveness of customer data (25 percent), analyzing changing shopping behavior (19 percent), being limited to physical business data (13 percent) and prioritizing its value (44 percent).
• Channel integration: Remotely managing organizations required integrating POS channels and payments infrastructures; 69 percent of senior decision makers struggled to integrate digital channels and data.

"While the majority of businesses already had multiple digital platforms, in many cases these were run on separate platforms to their physical channels, which held them back from offering the 'joined-up' services essential to minimizing contact during the pandemic - e.g., retail 'click- and-collect' or food and beverage 'mobile- ordering and pick-up,'" researchers wrote.

Vendors become partners

Kronenthal observed another positive impact of COVID was deepened vendor relationships. Service providers that helped enterprises adapt quickly were promoted from vendors to true partners, he stated, adding that three-year and five-year plans are out of place in today's dynamic retail environment, where change happens much faster.

"If you're a large enterprise, you inherently require lot of specificity but there are platforms that can walk in the door with 80 to 85 percent of what you need," he said. "Whether it's opening a new commerce channel, analyzing customer data, building a bigger, better marketing campaign or managing your finances, solutions that previously required five to ten years to implement are ready to deploy."

Walsh agreed, stating that open architecture is transforming the payments ecosystem, making it easier for merchants and retailers to meet customers in any channel. Digital and touchless commerce providers are helping merchants evolve their business models and broaden payments acceptance through different payment methods and channels.

"What was really interesting was not only from hearing from those who participated in the study, but also seeing our merchants make digital commerce technologies a critical part of their long-term roadmaps," Walsh said. "Merchants are thinking not only about consumer engagement and buying behaviors but how they can support that and have enough runway to shift quickly."

Walsh went on to say that partnerships will become even more important going forward. "As payments evolve, merchants will have to constantly shift their technology, operations and business models," she said. "And we're here to support them in that process."

A copy of the report is available at: corporate.freedompay.com/whitepapers/preparing-for-the-return-of-demand/

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