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Digital Quality Retail Trends in 2024

As the world leader in testing and digital quality, Applause has a distinct perspective on what challenges global retailers face and how they address them. Members of our team are intimately involved in testing and test strategy for global technology leaders and innovators. The State of Digital Quality 2024 draws on some of our learnings to help guide organizations in their efforts to improve overall digital quality while speeding releases and boosting efficiency. For the third consecutive year, Applause analyzed trends in software development, testing and quality – we also conducted a number of surveys to better understand current practices and consumer expectations. 

For more on The State of Digital Quality 2024 report and related webinars, read the blog, Digital Quality in 2024: Trends, Traps and Transformation

Retail trends

In the spirit of the main report, this blog examines a few key retail trends that Applause teams have observed this year. To do this, I interviewed several of our staff who work directly with our retail customers. 

I focus on four key areas: 

  • Embracing accessibility and inclusive design
  • Gaps in organizational process related to testing and remediating digital issues
  • Making it easy for customers to find what they want 
  • Understanding payment trends and customer preferences

Does your organization have empathy? 

Exposure leads to understanding which leads to empathy. To get there, you have to face the unfamiliar. 

When we surveyed 276 development and test professionals in retail, only 40% of them said they consult with people with disabilities (PWD) outside of their organization when working on inclusive design. Another 38% said they get input from PWD on staff. Both statistics tell us that there is still much room for improvement in the pursuit of accessibility and inclusive design, as involving PWD at the concept and design stage of the SDLC is table stakes for improving ecommerce retail experiences. Design with people instead of for people.   

Applause client teams in the field note these additional trends in retail accessibility in 2024:

  • Keeping up with peers – Many retailers are driven by what others are doing regarding accessibility, indicating a slight underachieving attitude. These organizations simply hope to stay on par with peers, but lack education on the benefits of building an accessibility culture based on inclusive design and forging their own path.
  • Organizational gaps – At the same time, other retailers are a step ahead, earmarking budget for accessibility and inclusive design that is partially fueled by avoiding lawsuits when not in compliance with WCAG standards or the European Accessibility Act, for example. Still, many of these organizations lack a culture wherein all groups understand how accessibility affects the entire business.
  • Seeing the global market – Many retailers are beginning to understand the massive market PWDs represent. According to the World Health Organization, approximately 16% of the world’s population has a disability. That’s 4/25 as a fraction, or just shy of one in five people. Count friends and family of PWD who care about companies that care about PWD, and that market grows substantially. Take Chase, for example. PWD choose them because their mobile apps and branches are more accessible than others, and PWD have an active internal referral community. 
  • Apex accessibility retailers – A smaller group of retail accessibility leaders have adopted inclusive design, shifted left and are incorporating PWD into their SDLC, while further building a culture where empathy for PWD fuels innovation in digital products and services. These accessibility top performers have a depth of commitment that includes higher-level actions like auditing their design system with accessibility in mind.        

These apex retailers routinely ask and answer the following with regards to accessibility and inclusive design, where their lagging peers may fall behind:

Product management/Accessibility managers:

  • Can everyone use the application?
  • Is it easy to use?
  • What blocks our users from completing a transaction?
  • How do I prevent defects/issues from occurring and reoccurring?

Development or Accessibility:

  • What should I fix first?
  • How do I fix it?
  • Why should I fix it?
  • How do I fix it faster?

Executives:

  • Is this aligning with a corporate objective? If not, why?
  • What if the schedule of this project changes? What is Plan B?
  • Is this the best plan for my company?

For years, Sam’s Club has been creating a world-class inclusivity program with experiences for everyone through organizational change and involving people with disabilities. Watch the webinar to see the details of their ongoing accessibility and inclusive design journey. 

Gaps in knowledge and process in retail

Functional gaps in process are another common find in our work with retailers. Take, for example, the de facto standard of doing an accessibility audit (this would apply to most any type of audit, not just accessibility). Firms hire an outside vendor and receive the findings and insights from them, yet our teams report that many organizations do nothing with these insights. It may be that they just wanted a sense of where they stand, or more commonly, they realize they simply don’t have the personnel and bandwidth to remediate issues. They’re overwhelmed. 

Other organizations may decide to attack the issues. Maybe they can fix a few of them, and then audit again later, only to address a few more issues. For example, in this way of operating, they may find themselves in a situation where they have a bug that is responsible for crashes, and at the same time, another accessibility defect that may seem minor. They may fix the one that has caused the crashes – and certainly that needs to be fixed – but the other bug exposes them to legal issues, and so should be prioritized. A deeper understanding of severity is missing, and therefore prioritization becomes difficult. Applause sees retailers and other businesses beginning to realize that they are not getting the full value of what they’ve paid for with third-party consulting when they lack internal processes to act on the insights gained from these engagements, or have omitted strategic planning in support of these audits. 

Another gap that we see with retailers (and other global enterprises outside of retail) is a lack of well defined test cases. They resort to using domain experts who know how a product works, but this knowledge can lead to missed documentation such as error messages or popup dialogs because they anticipate errors and also know what the workarounds are for these errors. If they have not documented these issues, problems will arise as new testers join the process, or when a test case is promoted to the automation team.  

Finally, the payment step of checkout is often another gap that retailers find when testing the end-to-end process of making a purchase or subscribing to a service. Some retailers have testers use test cards that have specific outcomes like “declined” or “over limit,” while others use fake cards that can pass the algorithmic test for a specific type of card. In order to have more confidence in the app, retailers should test multiple credit cards, valid and invalid cards, debit cards, rewards, installment plans and digital wallets. Cart abandonment increases dramatically when the desired payment does not exist or does not work properly.

Helping customers find what they want… quickly and easily

To facilitate sales, customers must not only find what they want, but the process should be pleasant, personalized, friction free. As we like to say, when the friction is low, the dollars flow. Retailers must constantly meet – and optimally – exceed customer expectations. Again and again, our client teams report the need for digital and brick-and-mortar stores to do their homework – executing appropriate user experience research (that often yields surprising results), and customer journey testing. Avoid the temptation to assume you know your customer, even if they’ve been loyal for some time. Customers are fickle. They evolve. They are tempted by other brands. 

In the current economic environment, brands need to cater to their customers more than ever. Inflation is a major contributor to this, even with the recent interest rate drop by the Fed, as that will do little for consumers’ wallets when inflation remains above 2%. As shoppers pull back on spending, retail competition will increase across price, product offerings/availability, supply chain efficiencies, personnel efficiencies, online and in-store experiences, personalization and more. As shoppers shop, even if the driving force is finding the best price, retailers must go above and beyond and understand the buyer, and meet them in those critical moments that precede a purchase. 

If an item is out of stock in a customer’s preferred store, can they check inventory in nearby locations? Can luxury shoppers who want to experience an item in person before buying set up an appointment with a sales associate in advance? If an item is out of stock, can a customer request notification when it’s available again?

At a time when most retailers are reporting loss of margins, the best way to win in this environment is to compete on superior service/customer experience, so they are not purely competing on price. It’s not uncommon that customers say to themselves I can find a lower price at ACME Shopping, but I really don’t enjoy my time on their site. The experience matters.  

Kroger, the country’s third largest grocery chain, exemplifies going beyond business as usual, as they offer many tools and services that enhance the customer experience:

  • Customers can use the Kroger app to shop for groceries, household items and more
  • Kroger offers pickup, delivery and shipping options, including curbside pickup, and is experimenting with drone delivery
  • The brand uses data to personalize the customer experience, allowing shoppers to suggest substitutions if an item is not in stock
  • With wayfinding in its app, the grocer helps customer navigate the store
  • Kroger helps customers understand how food choices affect their health, positioning itself as more than just a grocery store
  • It uses data from self-checkout machines to improve the customer experience

Whether it’s floor changes like regular end cap rotation or product changes based on shopper research and flow patterns, helping the customer efficiently find what they want – and very importantly – enabling smooth checkout and payment are table stakes to remain competitive in today’s challenging retail market. And then there’s that small thing: how customers pay for your product.  

Payment and localization in retail

If you’re in retail, you must focus on the customer journey. The most critical part of the journey is conversion. If you fail here, your best-intentioned efforts leading up to this point – UX research, involving diverse input from customers early on in the SDLC, innovations as a result of this shift left in product, reduction in friction along the way – were all for nothing. Failure to convert has a direct impact on revenue, even though you may have done everything else right up to this point. Retailers may have sorted out all the friction in their journeys and started building a reputation as a leader in customer journey, but if their customers have difficulties completing a transaction, they’ve lost sight of the whole point of why they’re in business. 

Our Applause client teams are seeing that global organizations are paying attention to this key aspect in retail. Global payments, reducing friction caused by fraud detection and new security standards along with localization all play a major role in the need to carefully test payments. Adding to this insight from our team, Applause ran a survey this year with more than 6,700 QA professionals, software developers and consumers worldwide around payments and localization. We found that limited payment options, poor translations and a wide range of bugs across the customer journey are the major reason consumers abandon digital transactions. 

Among key findings:

  • 41% of consumers encountered an issue that impacted their ability to make a payment. With high cart abandonment rates contributing to an estimated $111 billion to $136 billion in lost revenue for U.S. retailers alone (Retail TouchPoints), development teams must double down on software testing and other QA techniques to ensure seamless functionality.
  • 76% of consumers are likely to abandon transactions if their preferred payment methods are not available (this aligns with a 77% figure from a recent survey on pymnts.com). Credit/debit cards continue to be the most popular method, preferred by 78% of U.S. consumers, with mobile/digital wallets a close second at 68%.
  • When retailers were asked how their organization determines what payment methods to accept, 65% indicate they decided based on customer preferences. 
  • Despite growing consumer demand for mobile/digital wallets, retailers are not keeping pace: only 56% of them accept mobile/digital wallets. This seems at odds with the number indicating that consumer preferences drive the choice of accepted payment methods.
  • 52% of consumers have abandoned an app due to poor localization, contributing to cart abandonment. Effective localization – particularly translation accuracy – is critical to retaining users. Respondents shared the top localization issues they have encountered: 48% of apps used incorrect words or syntax, 40% assumed local knowledge with which they were unfamiliar, and 38% had misspellings.

Based on our experiences this year, Applause feels that retailers will be adding more Buy Now Pay Later (BNPL) options leading up to this year’s holiday season as a way for the financially savvy to reap the benefits of an interest-free loan.  

Protecting sales with payment testing 

One global athletics brand recently worked with Applause to test payments across 58 countries. Testers identified 12 payment bugs with an estimated value of $1.1M per critical blocker. The company avoided $13.3M in lost revenue by addressing just those 12 defects. 

Finally, In addition to testing for basic payment functionality, failure to test processes like rewards/loyalty accumulation or redemption can be costly – in both financial terms and customer satisfaction. The same holds true for validating shipping and tax calculations: too much and you’ll anger customers, too little and you cut into profits and potentially accrue penalties. Even something as simple as validating the way a transaction shows up on a statement can have an impact – a customer who doesn’t recognize a charge due to the name is more likely to dispute it with their bank or credit card provider, or cancel a subscription moving forward. 

Balancing security and convenience

As we know, one of the top things that retailers want to avoid is a failed conversion. Next in line is offering a payment process that is unclear or too complex. Retailers (and the banks/institutions that issue credit cards or alternative payment options) must get this delicate balance right. There must be security to protect themselves and the customer, but it can’t add too much friction to this final part of the journey. Not only is this key in terms of conversion, but it is also the last contact the customer has with the brand for the time being. It must be positive. 

Retailers want the customer to leave feeling happy, fulfilled, knowing that their financial information is secure. Only then can they enjoy the fact that their order is on the way. So, how are retailers achieving this end state these days? There are a few trends that our Applause teams are seeing in accounts, largely in the E.U. 

Retail is impacted by new requirements for secure payments

Retailers must follow strict guidelines to ensure the card information is securely stored, adhering to standards like PCI DSS (Payment Card Industry Data Security Standard). European requirements like Secure Customer Authentication (SCA), a regulation introduced under the E.U.’s Revised Payment Services Directive (PSD2) to enhance security in electronic payments, and 3D Secure (3DS), a protocol designed to be an additional security layer for online credit and debit card transactions, are impacting retailers in the E.U., particularly online, and will be progressively affecting the rest of the world. 

SCA requires multi-factor authentication for most online transactions. Users must provide at least two of the following: something they know (like a password), something they have (a phone, tablet, computer), or something they are (biometric data like an eye scan or fingerprint). The regulation applies to online transactions in the European Economic Area (EEA), aiming to reduce fraud and improve payment security.

Here are some of the ways SCA is impacting retail in the E.U., and soon in other geographies (Merchant Risk Council):

Increased checkout friction Impact on conversion rates: Requiring multi-factor authentication during checkout can create friction. This can lead to increased cart abandonment rates, especially for customers who are unfamiliar with the process or find it unwieldy.

Technological upgradesRetailers must invest in payment gateway updates that align with the latest security protocols. This includes adopting systems compatible with SCA and 3DS, and integrating with banks that support these technologies. This process often requires coordination with third-party providers.

Customer experience challenges Retailers must educate customers about the changes in payment security. Many businesses are investing in customer service improvements to help guide consumers through the new payment process and reduce frustration.

Operational costs Retailers have had to take on increased costs related to implementing secure checkout processes: potential loss of sales due to customer confusion, upgrading IT infrastructure, training, support and more. 

Reduced fraud A massive plus for retailers. With stronger authentication, it’s much harder to impersonate customers, particularly for card-not-present transactions in ecommerce.

Applause is testing 3DS authentication/checkout journey

The introduction of frictionless authentication via 3DS 2.0 helps mitigate some of these issues by offering an easier, customer-friendly experience that uses pre-existing device information and biometrics.

Applause recently tested the 3DS authentication/checkout journey across multiple card issuers. In doing this, we provided insights around user preferences, friction, potential reasons for abandonment, and user sentiment. We capture screenshots and/or videos and user feedback. The test flow:

  • Five participants use Android devices with different OS/device combinations make purchases up to a cap amount using the app or mobile web 
  • Testers gather feedback in the form of screenshots/videos, receipts and communications from the journey, along with a summary report 
  • The same testing is repeated using iOS devices, and then again with desktop devices

Applause solution experts are seeing most use of SCA and 3DS in Europe. Adoption is still low in the U.S., despite the fact that, according to Digital Transactions, merchants and financial institutions that use 3DS to help vet online transactions in markets that require it see fraud rates that are three to six times lower than for all card-not-present transactions. Given these statistics, we can assume there will be an uptick in adoption in the foreseeable future. 

Retail customers demand all you can give them

The flow of this blog is intentional. 

To meet the ever-increasing demands of retail customers, first, you must entice and keep them by ensuring all can access your digital properties and brick-and-mortar stores. Next, you must enable the straightest line to what they want, and make it pleasing while you’re at it. Finally, and perhaps most important, enable them to use the payment instrument of their choice and ensure that this critical and sensitive part of the customer journey is absolutely flawless. It’s that simple and that complex. 

Applause is here to help.

Find out more about what Applause does for retail.

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Published: September 25, 2024
Reading Time: 17 min

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