J. P. Morgan’s Max Neukirchen: Data Is Key To Helping Retail CFOs Manage Cash In An Omnichannel World

The holiday shopping season is headed for an early start, but that’s not the only factor behind why this year’s peak commerce season will look different than years past.

Unprecedented surges in online shopping volume has meant consumers are shifting their buying and payment habits in a big — and likely permanent — way. For the chief financial officers (CFOs) and treasurers of retailers working to meet the new face of customer demand, understanding how to ensure online shoppers have a positive payments experience while ensuring their own organizations preserve margins can be a tricky balance to strike.

In a conversation with Karen Webster, J.P. Morgan Merchant Services CEO Max Neukirchen described some of the emerging patterns in consumer behavior that CFOs need to look out for in order to best service buyers and customers — which may look differently for each merchant.

For many merchants, particularly smaller ones, the most immediate priority is to ensure that these businesses can accept payments online. Larger firms, meanwhile, are looking at how to augment an existing online shopping experience for their customers as well as migrate other areas of the enterprise online, including logistics, delivery and marketing. And as a result, CFOs and treasurers are now tasked with adjusting their liquidity management strategies for the new normal of omnichannel commerce.

Amid these variables, one thing is certain: “This year’s holiday season will definitely be different from any of the previous ones that we experienced,” said Neukirchen.

A Permanent Change

With consumers still reluctant to enter stores, merchants are now tasked with ensuring that the online commerce experience is optimal. Online payments acceptance is a significant part of that strategy, but not the only one, as Neukirchen explained.

Indeed, merchants must develop a more holistic, omnichannel experience as consumers may purchase online but pick up in store.

“This is top-of-mind for many CFOs and treasurers, how they can create an integrated omnichannel experience,” he said, adding that these professionals are also tasked with preparing to meet demand, with some retailers already seeing online commerce sales volumes usually reserved for the holiday season.

And while each merchant’s experience will be different, at the broad level, organizations are now looking at how to better integrate the payments experience with other workflows, like logistics and marketing, in order to obtain the most accurate, real-time view of financial positions.

All of this may be in preparation for what many experts expect to be a major holiday shopping season, but Neukirchen emphasized that the shift in consumer payment and shopping habits is likely permanent.

“Many of our clients think that what we have been seeing in terms of card-not-present volumes versus card-present volumes in store, and in terms of customer buying behavior, will be permanent,” he noted. “And now, they have to think about how to adjust their business models accordingly. Even in a world where we have vaccines widely available, and some of the immediate impacts of the pandemic might be abating, the general belief is that a lot of consumer preference changes that have happened will actually stay.”

Shifting Financial Strategies

The significant changes in the way merchants accept payments is driving a ripple effect for CFOs and treasurers who now need to rethink financial strategies for their organizations. The way businesses collect revenue has a widespread impact on other areas of the enterprise, including how merchants apply the funds they accept.

“The impact of the digital-first world, in the eye of CFOs and treasurers, goes way beyond accepting payments,” said Neukirchen, adding that accepting payments in the way consumers want to pay is important, but just as important is enabling digital and online payments made to their own suppliers as well. “Then, the next step is linking the two. How do you have a digitally integrated pay-in and pay-out solution, and bring the two together for efficient management of liquidity and balance sheet?”

When transactions occur across multiple channels, that liquidity management can become even more difficult. Data will be an important part of addressing these needs, with CFOs able to wield transaction information and apply that insight for other areas of the enterprise like marketing and inventory management. That data is also imperative to understanding financial positions and forecasting.

As CFOs look toward these actionable insights to meet customers’ shifting payments and buying demands, they’re also tasked with making sure investments in digital payments and commerce can be made without negatively impacting merchants’ margins.

Neukirchen said there must be trade-offs between the investments that merchants must make in various channels, including online and in-person scenarios. Again, data can play an important role in guiding CFOs toward the right investment moves. Today, ahead of the holiday shopping season, investing in digital-first must be a priority, but with buyer habits likely altered for the long haul, those investments in online are likely to benefit merchants well past the New Year.

“As businesses think about where to invest, where to put their priorities, how to best reach their customers and optimize their business model, the data is available,” said Neukirchen. “It’s through payments data, inventory data, balances and liquidity data, and pulling all of this together and making sense of it. It’s a very important differentiator when you think about who will be successful in the next few years, and who may be less successful.”