Why It’s Too Soon To Count Out Brick and Mortar Retail

Retail’s Digital Reinvention Post-COVID-19

Retail is not the same as it was at the beginning of 2020 — in fact, it isn’t the same as it was a mere month-and-a-half ago, given the quick and sweeping changes that COVID-19 has brought in its wake. And what it will look like moving forward is mostly a mystery to even the most experienced and seasoned in the game.

It’s undeniable that the world has undertaken a massive shift to digital, Afterpay Co-founder and U.S. CEO Nick Molnar told Karen Webster in their latest digital discussion. Moreover, he noted that some of those changes are likely to stick around long after the current crisis has passed — though which ones exactly, and how they will play out over the long term, is something he doesn’t believe anyone can predict. The post-pandemic rebuilding likely won’t proceed in a straight line, and isn’t something that can be easily forecast in anything but very general terms.


That makes what retailers have accomplished in the last several weeks — in an environment that is evolving unpredictably by the day — incredibly impressive, heartening and deserving of a collective “hat tip” from us all.

“Amid economic uncertainty, certain retailers are adapting and innovating in ways we haven’t seen before,” Molnar told Webster. “In some segments, I think they’ve adapted very quickly. Retailers have their finger on the pulse when it comes to understanding how customers live their lives in all aspects, and they have adapted to that.”

Afterpay, he noted, has had the privilege of being positioned to work with retailers on their responses to the crisis — both in terms of an immediate reaction to what is happening right now and in taking provisional steps toward the still-developing “new normal” that will come next.

Redefining The Digital Commerce Experience

Presently, Molnar noted, there are two major developing factors that are driving the general direction of retail. The first is the accelerated digital transformation of the economy currently happening across the retail segment, which has become a necessity given the store closures that have occurred in the U.S. and around the world.

At the same time, as customers are shifting their commerce habits into the digital space, they are also realigning their payment preferences. As was seen in the aftermath of the last financial crisis, said Molnar, there has been a “surge of preference among consumers toward spending their own money on their debit cards.” He believes that is tied to the increase in demand they’ve seen at Afterpay, even as certain segments of the retail economy have been slowing down.

“Consumers still have to spend. They want flexibility and don’t want to have to rely on traditional forms of credit or providers who offer interest-bearing loans during these uncertain times,” noted Molnar.

And that shifting tenor in consumer preferences — both toward digital spending and payment flexibility — has created an opportunity for retailers, particularly smaller ones, to not only expand into digital sales, but also to attract a new tier of consumers.

As of Afterpay’s last quarterly statement, said Molnar, they now claim roughly 4.4+ million active customers in the U.S. — consumers who have a strong tendency to seek out the Afterpay brand. That, combined with their demonstrated track record of boosting top-line sales growth within 24 hours of going live, has created an attractive prospect for even small retail players trying to create their strongest entrance into the world of digital commerce, he pointed out.

“I think retailers are now very open-minded to innovation and learning in a meaningful way, in terms of how to expand their customer experience. They’re very focused on things that can really shift the needle,” Molnar said, with that concern extending beyond the immediate moment and into what comes next.

The Next Normal

As Molnar noted throughout the interview, no one really knows what the winding road to recovery will look like, because so many factors are emerging. He thinks the current shift to digital will expand and deepen. Afterpay is still actively strategizing for their continued expansion into in-real-life (IRL) commerce, he said, because even in a post-COVID-19 world, it will still be an important strategic priority.

“I think the vast majority of retail will still take place in physical stores, when stores are able to reopen,” Molnar predicted. “There will be social distancing and other measures in the new normal, but I do think retailers will lean in and work to reinvigorate the in-store experience at the appropriate time.” He added that Afterpay looks forward to being part of that process of reinventing the physical stores it partners with going forward.

The rest is still playing out and is hard to forecast — retail marketplaces all over the world are rediscovering equilibrium, trying out new methods of engaging their customers and rewriting their business models for the next incarnation of commerce. And after all that work, said Molnar, there will be a component that remains largely out of their hands.

“I think a lot of it will come back to the psychological elements of consumers, as they exit shelter in place and living at home and start to re-engage, and their new preferences will lead all of us,” he said.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.