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Retailers and Shoppers Are Underestimating the Value of Physical Stores; Klarna Warns

The Buy-Now-Pay-Later (BNPL) provider Klarna has warned retail businesses not to underestimate the importance of physical stores and in-person shopping. 

Although there has been a significant turn to online shopping in light of the global pandemic, newly published research from Klarna,  which was detailed in their “Owning Omnichannel: Winning at Clicks and Bricks” report, highlights a considerable disconnect between retailers and shoppers.

With 89% of Klarna shoppers utilising multiple channels to search for products and spend their cash, it’s unsurprising that 73% of retailers are interested in increasing their level of investment towards omnichannel strategies; with an 8.16% average expected increase in spending.

However, faced with high consumer expectations – 60% of shoppers say that a poor experience on any channel will make them less likely to shop again with a brand – retailers could be in danger of misplacing investment, whilst also alienating huge sways of consumers. This is why retailers must fully understand what their customers value about the retail experience.

Demonstrating a perception gap between retailers and shoppers, 75% of retailers consider themselves to be either fairly or very sophisticated when it comes to omnichannel, yet 50% of Klarna users believe retailers are not joined up enough between their online and in-store operations.

When it comes to shopping in physical stores, the research highlights that physical retail is still an important channel, even for digital-savvy shoppers – with 51% of Klarna users shopping at retailers’ physical stores. However, some retailers misjudge the extent to which shoppers value in-store offerings.

Shoppers are nearly twice as likely to value seeing and feeling items they’re buying in real life (88% of Klarna shoppers vs. 45% of retailers). Meanwhile, 49% of shoppers value being able to visit showrooms and see items in-store, but pay online – whereas only 32% of retailers think this adds value for customers. What’s more, retailers consider human sales assistants to be more important than they are, with only 26% of customers saying they add value to their in-store experience, compared to 36% of retailers.

Retailers also fail to fully appreciate the importance of a smooth, easy experience when shopping online. 84% of Klarna shoppers say they value autofill functionality online, but only 33% of retailers think this adds value to the shopping experience. And, only 45% of retailers believe one-click payments or check out adds significant value for their consumers, whilst 65% of shoppers report this to be one of the most important aspects of their online shopping experience.

Alex Naughton, Head of Klarna UK and Ireland
Alex Naughton, Head of Klarna UK and Ireland

“Today’s consumers shop across a multitude of channels, from brands’ websites and physical stores to social networks and search engines – and they expect a smooth and consistent retail experience whatever channel or touchpoint they are engaging with,” comments Alex Naughton, Head of Klarna for the UK and Ireland. “So, it’s promising to see that retailers recognise the importance of having a great omnichannel retail experience. But, if they’re to see a return on their omnichannel investment, they need to ensure they avoid any disconnect and fully understand shopper priorities. It’s clear in-store shopping is still incredibly important for consumers, so retailers should look at how they can make their stores a more experiential, cultural space that inspires shoppers.”

Whilst there are clear mismatches between retailer and shopper expectations, encouragingly many retailers are on the right track. With 76% of shoppers valuing the ability to check stock levels in-store via a website or app, it’s assuring to find that 49% of retailers already offer this, and another 38% plan to introduce this over the next year. Meanwhile, 74% of shoppers say flexible payment options add value to their shopping experience, and, while just 50% of retailers currently offer this, a further 34% plan to introduce this in the next 12 months.

Howard Saunders, Retail FuturistHoward Saunders, Retail Futurist, added: “The pandemic acted as a cruel catalyst for a retail sector already battling competition from online brands whilst suffering upward only rents, rates, and taxes. Devastating though it’s been for so much of our high street, it has also shown the way ahead for those of us who believe in the importance of engaging towns and cities. Lockdown reminded us exactly how much we need our local high streets, not just for access to ‘stuff’ but as a means of feeling directly connected to our communities. Retailers learned that they must embrace the ‘omnichannel’ world to give their ever more demanding customers a broader brand landscape alongside real-world, old-fashioned hospitality. Humans are a social species and no economy-stopping pandemic will change that in a hurry.”


  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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