• Andrew Abraham, Managing Director at Experian Data Quality


• 16.12.2021 08:00 am
#credit #datavalidation

Andrew Abraham, Managing Director of Experian Data Quality, discusses retail sector resilience as contact data validation requests jump and business credit scores stabilise

The retail sector has had a challenging two years, with lockdown restrictions forcing many retailers to close their doors or move online. In 2020, total retail sales volumes fell by 1.9% compared with 2019 – the largest annual fall on record. And with the latest working from home guidance, there are still bumps in the road ahead.

But retailers have shown surprising resilience and adaptability. The latest data from the Office for National Statistics suggested spending is boosting UK plc. Meanwhile, Barclaycard CEO Rob Cameron coined this Black Friday the ‘biggest yet’, with shoppers spending over one-fifth more than last year.

Online shopping driving retail growth

Businesses that managed to adapt and build a stronger digital presence are the ones who are really thriving. In fact, according to Experian Economics, online retail sales experienced four years of expected growth in just 12 months, rising from 12% to more than 34% of total retail spend – a level that previous estimates anticipated wouldn’t be reached until the start of 2025.

On Black Friday, in the UK & Ireland, Experian saw 6000 online data validation requests on average every minute. What’s more, looking across the whole of Cyber Week (23rd - 30th Nov), 207 million addresses, email addresses and phone numbers were collectively validated globally. That’s a 50% increase when compared to the same week in 2019 (206.8 million requests in 2021 vs. 136.1 million in 2019) – evidence of retailers’ growing online presence and the importance of the ‘Santa Economy’ season to retailers.

Contact data validation solutions, such as Experian’s, sit in the background of transactions, embedded everywhere that customer data is collected, from online checkout forms to point of sale systems in-store.

Validation data is a strong indicator of sales performance, with many global online retailers using this technology to verify shoppers’ details – be that email, address, or phone information - at the point of data entry. This technology helps retailers to reduce cart abandonment rates, protect against scammers and keep data records accurate and complete for customer communications – adding to customer experience and improving bottom lines.

Good quality data sits at the heart of the Black Friday and Cyber Monday operation, and is the mechanism which enables orders to be taken, validated, and distributed seamlessly in huge volumes. These discount events only run for a short time period, and data accuracy can make or break the season.

Retail businesses show strong financial recovery

Retailers’ resilience is similarly reflected in the improved average credit score of the sector. By pivoting to digital platforms and continuing to serve consumers despite restrictions and challenges, the average retail credit score was 19.2% higher in September 2021 compared to the same period last year. While the score of 31 is still below pre-pandemic levels, the sector shows stronger bounce-back and growth potential than other industries. For instance, by comparison, the travel industry’s credit score has dropped by 30.7% since the start of the pandemic.

It’s good news for any retailer looking to secure loans or financial support for digital transformation, investment in online services or more warehouses. Building this strong foundation will be key to meet the growing demand for online retail.

Strengthen your business offering

While it didn’t look bright for retail at the start of the year, as we head into 2022 the sector is looking in strong stead – armed with the tools to reap the benefits of online shopping. Experian’s automatic data validation solutions, for example, help retailers to stay on top of digital transactions – improving deliverability rates and preventing unwanted sign-ups. Meanwhile, we would encourage all businesses to keep a check on their credit histories and take steps to improve their scores where possible.

Maintaining a good business credit score can unlock growth opportunities with access to top loan rates. To improve your scores, you should keep tabs on your business credit report to understand the positive and negative factors in your history and plan the best path for progress. Furthermore, retailers should get their finances in check before the end of the year. Noting suppliers’ payment terms and filing annual returns on time can help improve your score, strengthening your business foundation as we move into the New Year.