Your newest customer: Understanding Gen Z’s shopping habits

Discover how to meet the ever-evolving needs of shoppers. Retailers are no strangers to disruption. Every 50 years or so, the industry goes through a significant period of change. 200 years ago, Mum-and-Pop shops lined the streets. They were community-anchoring, catch-all drug and general stores, selling anything and everything a person might need for daily life. 150 years ago, the growth of big cities and the rise of railroad networks led to the rise of the first modern-day department stores. Think David Jones, and Myer. 100 years ago, mass-produced automobiles made suburbia more accessible, and appealing. Soon after, shopping malls and high streets formed — posing a challenge to city-based department stores. 50 years ago, in the 1960s and 1970s, discount chains began spreading like wildfire across major cities, transforming the retail landscape once more. Each wave of disruption poses a challenge to retail store owners. While these shifts do not eliminate what came before, each reshapes the landscape through redefined consumer expectations and new entrants to the markets. History proves the retail merchants that thrive are those that are able to adapt to the times, and adopt the latest technology to gain a competitive edge. Adapting to the next normal in retail Every retailer has, to some degree, a sense of what the future of the retail industry could look like — stores morphing into showrooms, with products being shipped out by drones; shoppers making purchases from anywhere, at any time, via whichever device is most convenient for them; perhaps even robotic, roaming mannequins treating walkways as a cat walk. Some are more likely than others to eventuate. Yet what seems futuristic and fanciful in 2022 may one day become the norm. There’s no doubt financial services technology will continue to develop at a fast pace, and your customers will be paying with different devices in the future. Shoppers are already using mobile phones, smartwatches and smart rings to pay for their purchases with a single tap. As shoppers grow to expect more and more from the brands they choose to support, retailers are increasingly needing to consider the customer experience and how to turn shoppers into loyal customers. The 5 trends shaping the future of retail 1. Speed and convenience Speed and convenience will be defining qualities of a top shopping experience. Your customers are becoming less patient, and place increasing importance on the ability to make purchases quickly and easily. Patience for lagging systems and long queues is waning. Every customer must be able to pay for their purchase quickly, in the most convenient way for them. The ability to place orders over the phone, and collect items curbside, is key — as is having the items they expect in stock. Having the ability to take payment via a mobile EFTPOS terminal , from wherever your customer is in-store, will help to alleviate the inconvenience of queues and enable shoppers to ponder additional purchases for longer. Retailers that simplify the purchasing process, and deliver products into their customers’ hands faster, will generate customer loyalty and benefit from repeat purchases and positive word-of-mouth. Many of these efficiencies will be made possible through a powerful, integrated retail POS system . 2. A personalised shopping experience A personalised shopping experience will be a key competitive differentiator. Time-poor shoppers want to know when you start stocking a new product that meets their needs, and have the option to streamline repeat orders. Similarly, their loyalty should be tracked and rewarded. Forward-thinking retailers will use these customer insights to inform their stock purchases, and highly targeted marketing activities. An integrated payments system will enable you to do all of the above, and more. Those retailers that take the time to understand the customer journey, and leverage intelligent tech tools to personalise that journey wherever possible, will come out on top. 3. A shift in spending power Millennials may be the largest consumer group currently, but there’s another generation garnering increased spending power: Gen Z. Discovering what drives a young consumer to shop with one brand over another is key to the long-term success of your retail store. The youngest generations of shoppers tend to be loyal to brands that value honest communication, recognise the environmental impact of their business, and make moves to alleviate that impact in some way. It could be through sustainable packaging, donation drives, or something different entirely. Transparency in production lines will also help to generate brand loyalty; your shoppers want to know where their purchases come from. Every retailer should take the time to understand the mindset of the consumers who control the largest chunk of the purchasing dollar. Retailers need to evolve with that high-value consumer to hold onto their brand relevance in 2022 and beyond. 4. Support for smaller brands In recent years, there has been a clear shift away from department stores. Fewer consumers are shopping with big brands, and instead are choosing to spend with local stores, boutiques and smaller brand name shops. When it comes to agility, smaller brands have the upper hand. With no boards or shareholders to answer to, or long-engrained brand values and traditions to consider, small retailers can adapt to consumer trends more quickly — whether that is by introducing new, simpler ways to pay, new product lines, innovative advertising strategies, or something else entirely. While larger brands will struggle to stay relevant, independent retailers can (and should) take advantage of the fast pace of change to deliver exceptional, modern consumer experiences. 5. Frictionless payment experiences A frictionless payment experience will be a key component of a positive shopping experience. In simplest terms, that means every shopper should be able to pay: wherever they want — in-store, online, over the phone, or curbside using whichever method of payment, and device, they prefer with one tap. If shoppers are required to pay a surcharge, they shouldn’t be financially penalised for choosing one payment method over another. For retailers, that means it’s even more important to seek out one low transaction rate — like that offered by Zeller. In future, payments may be able to be made through iris scanning, fingerprint recognition or even facial identification technology. The opportunities are endless. For now, it’s imperative that your store’s EFTPOS machine is able to accept payments made through digital devices, such as mobile wallets. Increasingly, the ability to accept payment via QR codes will become critical as more consumers adopt the likes of AliPay and WeChat Pay — both of which are already popular among tourists. Change is inevitable, yet the aim of retailers remains the same: to make the shopping experience more convenient for the customer. New technology will continue to emerge to enhance the customer experience, streamline payment processes, and offer retailers new ways to win and retain customers. Retailers will have to work hard to meet the ever-evolving expectations of shoppers. However, those that do will solidify their brand position amongst the next generation of shoppers, and be rewarded with customer loyalty for years to come.

Use of alternative payment methods is skyrocketing. In the digital world, change is rapid. Payment options and alternatives are frequently evolving — as are your customers’ expectations. People expect to be able to transact with the businesses they buy from, quickly and conveniently, no matter which payment method they choose. Some may even go as far as to only transact with those businesses that accept a particular method of payment. As consumer preferences continue to evolve, it’s going to become increasingly difficult and time-consuming for businesses to play catch-up. Those that keep themselves informed of these shifts in expectations stand the best chance of winning and retaining customers in the competitive small business world. Welcome to Payments 4. X A new age is dawning within the payments industry. This era, dubbed “Payments 4. X”, will see a focus on personalised customer experience, industry consolidation and new tech industry players — offering business owners and their paying customers alike “ smarter experiences and smarter interactions ”. But what sparked the change? Payments 4. X has been ushered in by an unprecedented push for contactless payment options, faster transaction settlements, and foolproof security. The most straightforward explanation of the shift comes from Capgemini's 2021 Global Payments Report , which provides an in-depth look at how payments have changed over the last year, as well as the various ways in which the COVID-19 pandemic has shaken the industry up and created new opportunities for merchants to improve the way they run their business. Access the entire global report online , or keep reading for the short version: a distillation of 5 payment trends that will likely impact small business owners in Australia as we enter the age of Payments 4. X. 1. Connected systems The success of any business hinges on its people, processes, and systems. As new tools and apps continue to be developed, the success of a business will increasingly depend on its tech stack. The ecosystem of tools you piece together will impact everything from how you communicate with your customers, to the ease of running promotions, to the time it takes to report on business performance. Integrating your EFTPOS terminal with your point-of-sale system, for example, will enable you to select a customer’s item on-screen and have the transaction amount immediately appear on your terminal — ready for the customer to tap, dip, or swipe to pay. An interconnected system will also make real-time data accessible, enabling you to make quick decisions for the betterment of your business. For your customers, connected systems mean a better experience; more personalised, more efficient, more fulfilling. As tech companies continue to develop products built on the software-as-a-service model, businesses of all shapes and sizes will be able to create their own modular value chain of tools. This plug-and-play tech will enable those merchants who spend time comparing and selecting tools that work well together to save time, build better customer relationships, and grow profits. Perhaps most importantly, spending the time to find the right systems will enable you to run your business in your own unique way. 2. A new type of consumer credit Buy Now, Pay Later schemes (BNPL, for short) are exactly what they sound like. A customer can buy a product now, for a small amount of money, and pay the balance later — no need to wait for payday. In removing these hurdles for customers, they’re more likely to spend. An American study found that businesses that offered their customers to option to buy now, pay later experienced a 20 to 30% uplift in conversion rates. 80% of those that began offering BNPL saw an increase in the amount customers spend in-store. Unsurprisingly, BNPL has exploded in popularity — especially amongst younger generations, where trends come and go quickly. The way they’re using the platforms demonstrates a clear preference to debit over credit; according to Afterpay, 94% of its Gen Z users are opting to buy now, pay later using their own money rather than link their account to a credit card. This is the same generation that commonly reaches for their phone or extends their wrist when it comes time to pay. Anyone with a bank account that meets a set of standard eligibility criteria can sign up for a BNPL scheme to buy whatever they want at stores that accept the payment method. Essentially, that means anyone over the age of 18, with a bank account, who passes a credit risk check can use BNPL. If your business doesn’t already accept BNPL as a method of payment, consider whether 2022 is the year to start. It could be a way to reach a new subset of customers whose spending power is increasing with time, and grow your profits. 3. No more cash The pandemic has hastened the pace of cash’s decline even faster than predicted. In 2020, cash was used for just 20.5% of transactions at a point of sale across the globe. That’s a 32.1% reduction in cash use since 2019. Companies like FIS, for example, previously speculated we would reach these levels in 2023; the pace of decline is three years ahead of schedule. In Australia, we are even further ahead of the pack; cash has been approaching legacy status as a payment method for years. Cash is used for less than 20% of point-of-sale transactions in the Asia-Pacific region, and it’s expected that by 2024 it will account for less than 10% of those transactions. So, how are consumers paying? With their new limb: the mobile phone. Nearly 45% of consumers say they frequently used their mobile wallet to pay for things in 2021 — meaning almost half of consumers reached for the mobile wallet upwards of 20 times. A year prior, just 23% of consumers did the same. This is good news for businesses; the less frequently your customers pay with cash, the less time you’ll spend counting your cash drawer, visiting the bank, and waiting to be able to put those funds to work. Instead, simply accept payment through Zeller Terminal and the funds will be available in your Zeller Transaction Account the very next day. Spend them using your Zeller Mastercard . 4. Innovative forms of payment There’s no question that COVID has accelerated the adoption of digital wallets while speeding up the decline of cash. However, consumer payment preferences are growing increasingly diverse. With Payments 4. X ushering in an accelerated transformation timeline, every business owner needs to take stock. How will your customers expect to be able to pay in 12 months’ time? Credit card use is expected to flatline. There’s an abundance of payment methods available, and more to come. What was once considered an ‘alternative payment method’ — such as a digital wallet attached to a mobile phone or smart ring — is now mainstream. Cash won’t simply be replaced by credit cards and mobile wallets. Remember, the technology powering NFC-reliant digital wallets is still in its infancy. As younger generations embrace these newer payment methods with gusto, the trend accelerates — indicating there’s more change to come. Is your business prepared? Convenience is key; when a new payment trend emerges, you’ll want to ensure your EFTPOS terminal can meet your customers’ needs by accepting whatever form of payment is most convenient. 5. An even faster pace The pace of innovation and competition within the industry has sparked a change in consumer expectations: everything must happen quickly. Near instantaneously. Consumers have gotten used to fast transactions, and are increasingly expecting the process to become faster and faster. In this instance, a ‘consumer’ in a digital transaction refers to both: the customer of the bank (i.e. the business carrying out the transaction and accepting funds) the customer of the business (i.e. the person who is making a purchase). Both expect the transaction to happen swiftly, meaning instant payments and quick transaction settlements are already table stakes. Businesses need the ability to quickly and seamlessly process transactions, so customers can pay and continue with their day without disruption. This includes the ability to quickly identify the reason for a declined transaction , and being enabled with the information to quickly correct the issue and progress the sale. However, increased transactions volumes and instant processing requirements are stretching the banks’ decades-old legacy payments infrastructure. Nimble payments providers will be able to adapt to change and offer their users the most forward-thinking solutions, so that you can offer your own customers a great payment experience. Preparing your business for Payments 4. x The picture the Global Payments Report paints is overwhelmingly positive, despite the obvious challenges. Innovation is opening significant opportunities for payment providers to step up and differentiate themselves as forward-thinking companies that can keep up with the pace of change, and build the functionality that enables businesses to take advantage of those changes. As a merchant, it’s up to you to ensure that every one of your customers has a positive payment experience. Whether you are able to accept a customer’s method of payment, troubleshoot a declined transaction, or even continue operating in a thunderstorm depends on your EFTPOS provider. It's an important choice that will have an impact on the way you run your business for years to come. By sharing your details with us, we may contact you from time to time. We promise we won’t bug you — and you can unsubscribe from communications at any time.

Australians are showing their values with their wallets, and ramping up local spending. From buying produce at the farmer’s market to splurging on the local high street, consumers are becoming increasingly community-conscious when it comes to their spending. In fact, 73% of Australians say they are making a conscious effort to spend with local brands and businesses to help them recover from the financial blow dealt by the pandemic, according to a Mastercard survey. This is great news for business owners: a local customer is more likely to become a regular, and refer other locals your way. But how can you attract more conscious consumers? Keep reading to discover more about this trend, as well as five tips to attract more local customers. Shop Local is here to stay While the impact of the various lockdowns cannot be understated, one unexpected silver lining has emerged: a resurgence of local shopping areas.  With fewer consumers traveling to large shopping centres, whether due to restrictions or an unwillingness to visit potential exposure sites, many smaller shopping hubs have seen an uptick in sales. Even as restrictions on movement are lifted, it’s unlikely we’ll see a shift back to the way things were. The Shop Local trend is part of a drastic evolution of consumer spending habits, and clear proof of a shift towards more conscious consumerism. Ben Lazzaro, Chief Executive of the not-for-profit Australian Made Campaign Ltd (AMCL), believes the COVID-19 pandemic has changed consumer perspectives. “The pandemic very quickly highlighted our over-reliance on imported product and provided an impetus to address that imbalance,” he says. “I think it brought it home to a lot of us that the way we choose to spend our money can have an impact on Australia’s self-sufficiency as well as our economic future.” How to cash in on the trend People want to spend locally, whether that means purchasing craft beer at the local brewery or a birthday present at a neighbourhood retailer. However, in order to spend money at your business, consumers need to discover it. Here are five tips to attract more local customers to your business. 1. Make your business more discoverable on Google A recent study by Facebook found that the majority of today’s shoppers are searching the internet to plan their store visits in advance, which means it’s crucial that potential customers are able to find your business online. Understand the tools, websites and channels your target customers are using, and ensure your business has a strong presence in those areas. You’re probably already using Facebook or Instagram to promote your business, but what about Google? Add or claim your Google My Business listing, then populate your profile with your business’s contact details, store hours and other important information. Add photos of your store and products, and encourage customers to rate and review your business. 2. Accept more payment methods Offering more ways to pay isn’t just a convenience win for customers — it can also help you increase profits. According to the latest Mastercard New Payments Index , offering more payment customers can also help increase consumer spending. 74% of consumers would spend at small businesses more often if additional payment options were offered. Since the outbreak of the pandemic, contactless payment methods have been put front and centre as the ideal, hygienic way to pay. For those operating on a cash-only basis, it’s critical to understand the impact this operational decision is having on your bottom line. Not only is the cost of running a cash-only business higher than most people think, it also costs businesses customers. Getting more local customers in-store is only half the battle. Enable your staff to accept every payment from every customer by looking for a provider that supports payment via digital wallets, such as ApplePay and GooglePay, and QR codes such as Alipay. 3. Run a localised advertising campaign Geo-targeting allows you to run online campaigns targeted to potential customers in a specific area. Targeting your local area can help find the right customers for your business. Both the Google Display Network and Facebook allow you to target your ads to a particular country, state, city as well as postcode, however we recommend using the specific radius address. You tell the platform where your business is located, and it will target ads to people within a specific radius of that location. To help your ads stand out, localise your messaging. Do your research — if you’re the only local retailer that stocks a particular brand, or you have the lowest prices in your area, make it a focus of your ad text. 4. Offer curbside pickup To meet social distancing protocols and provide consumers peace of mind, consider setting up curbside pickup. It’s a convenience measure your customers will appreciate, allowing them to get items on the same day without stepping into the store or paying for rush shipping costs. For an even smoother customer experience, take your EFTPOS terminal to the curb so you can exchange goods for payment as seamlessly as possible. 5. Set up an online destination If there are other businesses within walking distance, consider setting up an online community. Show consumers that they can come to your business for a birthday card, then get a bottle of wine next door, and flowers from across the road. The impact is twofold: you’re helping to keep dollars in your hometown, and showing your community that you care for it and are willing to invest in it. “If communities do well, your business does well. That’s just how it works,” says Sandy Chong , CEO of the Australian Hairdressing Council. Many local shopping areas have recently undertaken such a community initiative, tapping into the power of the internet to connect with more locals. For example, the Chapel Street precinct has its own website (and independent destination marketing association), informing readers where to eat, drink and shop in an effort to drive more foot traffic into the area. Many shopping centres have an Instagram account that highlights sales and special events — send the account holiday a direct message to discover who’s running it, and provide them with content. Or, reach out to other business owners in your area and create your own online community. Attitudes towards supporting local economies have strengthened since the outbreak of the pandemic, creating a huge opportunity for small businesses to grow their customer base and increase profits. For more tips on growing your business, sign up to our Business Blog .