The number of people shopping in stores is predicted to drop as the cost of living continues to rise. Challenges may lie ahead for businesses both big and small across the UK, with recent research finding that 71% of SMEs view inflation as their biggest cause for concern this year.
New data from Square has also revealed a trend of “lunchflation” in the UK. Lunch item prices are rapidly increasing, with rates jumping by 3% year on year with soups leading the way, with an average mark-up of 36% as of March 2022. This is a clear indicator of recent setbacks for businesses from the past two years.
The upcoming months are likely to look as tumultuous as the start of the year, however, there are actions business owners and leaders can take to safeguard themselves against unprecedented challenges and enable continued recovery as businesses navigate the post-pandemic world. Implementing tech to streamline operations is a strong starting point and also acts as a foundation to grow and pivot a business.
Streamlining operations
Making operations more efficient should be at the top of every business owner’s to-do list, enabling employees to spend time on what really matters - building strong customer relationships, perfecting their product or service, building out their offering and creating an engaging brand story to ultimately drive sales.
By integrating technology into operations, businesses can easily boost efficiency and standardise processes across locations. We’ve purposely designed solutions such as the Square Dashboard so that businesses can track sales by employee, monitor inventory, manage timecards, accept payments and more. This way a business's entire team only needs to use and be trained on one system (and control access to certain features via employee passcodes), so everyone across multiple locations is using the same POS, which is all linked to the Dashboard.
Hospitality businesses can create seamless communication between multiple ordering channels from front to back of house. The benefits of investing in automation aren’t just felt by the restaurants, they trickle down to consumers, too. For 400 Degrees Pizzeria, a pop-up pizzeria in Cambourne, that meant giving customers the choice of how they were served, whether that be online, or in-person.
Flexibility for maximum customer reach
The pandemic accelerated e-commerce and it’s clear this shift online is here to stay. In the UK, the share of classic lunch items that were ordered in-person hasn’t returned to pre-pandemic levels, as consumers have had to pivot to placing orders online for delivery and pick-up. Despite this, a number of orders are still being placed in-person - highlighting the need for businesses to offer customers flexibility in how they order across platforms.
Going back to our previous seller example, 400 Degrees Pizzeria, is using technology to maximise orders from each end. The owner Sam Corbin told us; “I’ve been using the Square KDS, it brings together all the orders in one place no matter if they were face-to-face or online everything is just there at a glance. There are two KDS screens in the van with one at the prep side & an ‘expeditor station’ at the hatch. We mark off on our screens when it’s made and that in turn shows at the hatch - then I tap it away when it’s been collected. As we’re all able to see what’s going on clearly we can accurately predict timings for walk-ups and get orders out faster than ever.”
Whatever the next year throws at businesses, one thing is clear; those who embrace change and adopt technology will have what they need to thrive. The human-interaction element of dining and shopping will always be a huge part of the holistic brand experience, but businesses need to use the right tools to meet customers where they are, whether that’s online, in-person, or a mix of the two.
Recovery is still on the horizon
In recent years, it’s been encouraging to witness small businesses adapt and innovate not just to survive but continue growing. Many have embraced an omnichannel approach by enabling their customers to shop through their own sites, or on social media. Recent research shows that 73% of consumers are now actively shopping through social channels, showing the demand for this approach.
Staying agile and aware of the changing customer habits will enable businesses to bend and pivot. Employing the right technology early will help them to adapt fast and keep multiple revenue streams open.
In an announcement, Square said that its new name, effective December 10, “acknowledges the company’s growth” and “creates room for further growth.”
In a statement, Square CEO and co-founder Jack Dorsey said, “We built the Square brand for our Seller business, which is where it belongs [...] Block is a new name, but our purpose of economic empowerment remains the same. No matter how we grow or change, we will continue to build tools to help increase access to the economy.”
Dorsey founded Square in 2009 alongside Jim McKelvey with a focus on in-person payments and its smartphone-friendly card readers. Since, Square has added a peer-to-peer digital banking app and small business lending and started to offer crypto and stock trading.
Under the rebrand, there will also be a name change for Square Crypto, a separate part of the company focused on the advancement of bitcoin, which will soon become “Spiral”.
In a statement, Dorsey's company said that the name Block “has many associated meanings for the company — building blocks, neighborhood blocks and their local businesses, communities coming together at block parties full of music, a blockchain, a section of code, and obstacles to overcome.”
The announcement follows Dorsey’s resignation from his role as CEO at Twitter on Monday. He had served as the CEO for both Twitter and Square since 2015.
Key statistics from both reports include:
- 97% of consumers now make monthly retail purchases online.
- Half of UK stores now offer same-day in-store pick-up.
- 73% of consumers have bought products directly from social media in the past month, and 35% would be interested in a virtual reality (VR) shopping experience.
- 98% of restaurants have had to reorganise their business in order to survive the past 12 months.
- One in four consumers consider contactless technology to be critical to their dining experience.
- 91% of restaurants expect to earn revenue from takeaways in the next twelve months; while one in five expects the majority of sales to come from delivery and takeout sales.
Following the launch of these reports, Finance Monthly speaks to Justin Carty, owner and director of Square seller Coffi Co about the pandemic, the evolution of Coffi Co over the past 18 months, and the company’s goals for the next five years.
Throughout the peak of the pandemic, what were the toughest challenges that Coffi Co faced?
The last 18 months has presented unprecedented challenges to businesses of all sizes. For Coffi Co, one of our most difficult challenges was adapting to changing regulations to ensure we could keep our employees and customers safe, while still remaining open.
In a month’s time, we went from implementing social distancing, to closing up all of our shops. From there we totally changed our business and how we operate. We set up a home delivery service, click-and-collect offering and built a Coffi Co app to make it easy for customers to get their Coffi Co favourites, in a way that suits them best.
This month brought about an incredible amount of change, but having the right platforms in place ensured we could transition from in-store only to click and collect and home delivery quickly, which was essential to our business. For us, Square was invaluable in helping our business transition during this time of incredible change - enabling us to stay open and continue serving our local community in Cardiff.
How has your business evolved over the last 18 months?
How we operate as a business has wholly changed over the last 18 months. A year and a half ago, all orders would have been made directly at our shops in Cardiff, but now we only use our order-ahead app. It is simple to register your details and once you’ve signed up the ordering system is simple and easy to use. The response from the app is so positive that all business activity is now driven by Square and their order-ahead app. It’s reliable, very efficient, and has allowed us to continue trading during one of the most unpredictable years to date.
Having the right technology in place has enabled Coffi Co to adapt to changing regulations, implement new offerings and even open new locations, all while adhering to government guidelines to keep both staff and customers safe. One of our main challenges was not having the right tools to manage queues until we found Square. We were a modern operation surrounded by payment systems providers that were stuck in a different decade. Due to the scale of our business, we required a bespoke solution - and have implemented Square for Restaurants POS, which we use alongside Square KDS, Square Terminal and Square Stand.
Square was able to understand our needs and work to deliver a tailored solution for us, helping to ease the pressure on staff serving queues at the till, so they could focus on other parts of the business. We can now utilise these staff members to run our stores in the day to day operation.
Choosing the right technology has set our business up for growth and success. In the last year we have opened a new seafront location in Penarth and also a Gin and Bake lunch offering, to provide food and drink to our Cardiff community. While the last 18 months have been incredibly challenging for Coffi Co, it also has provided us with the opportunity to evolve and grow in entirely new ways.
What are your goals for the coming years?
At Coffi Co, our ambition has always been to provide the best dining and drink experience for those visiting us in Cardiff. In the next few years, we hope to expand our offerings even further - as now we offer venue hire, and we’re breaking new ground, as we’ve recently opened No. 73 by Coffi Co, luxury rooms and suites for those visiting the city.
On top of growing our business, we’re committed to continually giving back to our community. During lockdown, we provided free coffees and meals to NHS and frontline medical workers - and we’d like to embrace this community spirit as part of our business and how we operate moving forward.
Finance Monthly speaks to Saumil Mehta, General Manager of POS at Square, about the company’s new products, increased demand for omnichannel selling post-pandemic, and Square’s goals for the coming years.
In terms of supporting businesses, what would you say are the best features of Square Loyalty and Square Marketing?
Both Square Loyalty and Square Marketing have multiple features that are beneficial in the day-to-day running of a seller’s business, as well as the longer term.
Square Marketing simplifies how businesses engage with their customers as it fully integrates with the point-of-sale system as well as all other tools already being used by the business. One of the biggest challenges when it comes to standalone marketing tools is that businesses have to try and engage with their customers from various sources. With Square Marketing, businesses can streamline their communication by integrating with their point-of-sale, online store, invoicing system, appointments software and everything else. In the past, elaborate and effective email campaigns have often taken months to plan and have therefore mainly only been achievable for businesses with more resources and manpower. Square Marketing helps to change this by enabling sellers to create effective campaigns in less time; this means businesses with large marketing teams – and those without – can now reap the benefits.
Square Loyalty gives businesses the chance to really personalise the customer experience by allowing SMEs to stay on top of the changing needs of consumers, which evolved rapidly over the course of the pandemic. Deloitte research shows customers are looking for a more personalised experience when they shop for products or services - they want their needs anticipated, with offers and product suggestions tailored to their tastes. Square Loyalty lets businesses reward customers wherever they choose, whether that’s in-store or online, encouraging repeat customers through the implementation of a loyalty program built into the point-of-sale.
One of Square Loyalty’s key features is that it enables omnichannel selling. Would you say that there’s now a greater need for businesses to adopt omnichannel selling than there was pre-pandemic?
There is undoubtedly a higher demand for omnichannel selling since the start of the pandemic. Our recent UK research report, The Future of Retail uncovered that 97% of consumers now make monthly retail purchases online and 73% have bought products directly from social media in the past few months. These insights demonstrate that omnichannel selling is here to stay even now that in-person shopping restrictions have been lifted. Not only this, but eCommerce is also becoming an essential offering for businesses, who, without it, fail to tap into a significant portion of their customer base. Square Loyalty helps businesses accommodate this trend by providing an integrated solution to enable omnichannel outreach and sales.
Customers like the ease and convenience that comes with online shopping, but many still value in-person shopping in physical stores. Our same report shows that consumers missed various aspects of shopping in person during lockdown such as browsing through the stores for products (54%) and trying products in store (34%). This is where the benefits of an omnichannel offering come in for customers – they don’t have to choose either/or, but rather have multiple, integrated options open to them at their favourite businesses. For example, they may purchase an item online and then collect it from a physical store of their choosing. Ultimately, omnichannel is about meeting customers where they are and – if done successfully - creates loyal customers.
With the pandemic still ongoing, it’s likely the demand for omnichannel will only increase as consumers continue to adapt to the ‘new normal’ that involves balancing both everyday activities – like shopping – with existing restrictions and health & safety measures.
What would Square like to achieve over the next 5 - 10 years?
Saumil Mehta, General Manager of POS at Square - Image courtesy of Square
Whether in five years or 10, our mission will remain putting our sellers at the heart of everything we do through our purpose of economic empowerment. As technology advances and consumer demands change, our products will evolve along with them to ensure business owners have what they need to easily create the ideal user experience for their customers.
Tools like Square Marketing and Square Loyalty are critical in helping shape this trend, by allowing business owners of all sizes and sectors to tap into the changing needs and demands of consumers. Such tech is also crucial to not just building growth, but also supporting the resilience needed to thrive during unforeseen challenges.
On Thursday, SumUp said it was buying Fivestars for $317 million in a mix of stock and cash. Fivestars is an all-in-one payments and marketing platform that helps merchants up rewards schemes and promotions for customers.
SumUp was founded back in 2012 and is best known for its small credit card readers, which enable small businesses to accept payments. SumUp also provides users with other payment tools, such as the ability for merchants to set up their own online stores. The company currently has over 3 million merchants signed up across Europe, the United States, and Latin America.
As SumUp plans its expansion into the US, rivalry with big players such as Square and PayPal is bound to step up. However, SumUp says it believes there’s plenty of room for the companies to all co-exist.
Since starting out, SumUp has raised a total of $1.4 billion in equity and debt financing and has been backed by Bain Capital. Goldman Sachs, and Singapore’s Temasek.
Meanwhile, Fivestars has raised a total of $115 million before its deal with SumUp and has gained backing from investors such as Lightspeed Venture Partners and Menlo Ventures.
The announcement made on August 1 revealed that the two companies have entered into a “Scheme Implementation Deed” under which Square will acquire all of the issued shares in Afterpay. The transaction will be paid entirely in stock and has an estimated value of $29 billion based on Friday’s closing price of Square stock.
Afterpay allows users to purchase a product online or in-store and then pay for it later in four instalments. Only one quarter of the price is paid upfront, with subsequent quarters being paid off every two weeks. The service is interest-free, as Afterpay’s profit comes from retailers that pay to appear on the service. Afterpay is just one of many buy-now-pay-later companies that have thrived during the coronavirus pandemic as more people have turned to online shopping. Research firm CB Insights expects the sector to grow between 10-15 times by 2025.
In a statement, Square founder and CEO Jack Dorsey said that Afterpay and Square have a shared purpose, with both businesses being built to make the financial system fairer, more accessible, and more inclusive. Dorsey says he believes the merging of the two companies will bring more compelling products and services to consumers and merchants alike.
But according to James Butland, VP European Banking at international payments platform Airwallex, this is changing.
Innovative solutions and more customer centric business banking platforms are on the rise, and, as a result, SMEs are moving away from their current banks in their droves. This is highlighted by the UK’s Current Account Switch Service reporting that there were 17,687 business account switches using the service during Q2 of this year, compared to just 8,000 switches during the same period last year.
Clearly, SMEs are hungry for new services that help them to manage their money more effectively, and with Brexit and a fluctuating currency potentially causing issues, it couldn’t come sooner.
World changing SME banking
The need for services that better meet the demands of businesses has seen payment fintechs such as Accelerate, Square and Monzo partner with the likes of Mastercard, eBay and Visa to provide more up to date technology in the B2B banking world. These innovations are aimed at speeding up payments and helping SMEs to compete in an increasingly globalised and competitive economy.
Innovation within international payments has also seen similar developments. This is largely due to the opaque nature of current FX practices. A new paper from the European Central Bank recently revealed that banks across Europe have overcharged SMEs for foreign exchange services, and have earned hundreds of millions of euros each year, at the expense of their small corporate customers. These SMEs have often been presented with misleading exchange rates and secret charges by banks, while unfairly being offered lower exchange rates compared to larger businesses at the same time.
This is a big issue. Particularly as 232,000 of UK SMEs exported to overseas markets last year, representing 10% of the country's small and medium-sized businesses. It’s why companies such as Airwallex, through our Global Accounts and FX capability, is helping SMEs to break through murky FX practices, and access exchange rates that have been typically only available to large corporates. Customers can be shown correct and clear rates and can act as a local in new markets. These new platforms, services, and in some cases new banking entities, are removing the complexities of exporting overseas and therefore allowing SMEs to focus more on growing their business.
Partnership benefits for SMEs
SMEs desperately need these developments because previous legacy payments and slow banking processes are not only significantly slowing down the speed at which they can operate at but are also ultimately limiting their growth. The transparency available now to help SMEs understand FX rates and expenses alongside more innovation within payments and banking solutions will prove vital for smaller businesses going forward. This will provide them with confidence over their margins and allow them to grow through enabling them to provide far swifter payments, both nationally and internationally.
